Dept. Can't Raise Their Hands In Despair For Technical Glitches In GST Portal: Gujarat HC Directs Dept. To Allow Manual Furnishing Of GSTR-6

The division bench of Justice J.B.Pardiwala and Justice Nisha M. Thakore observed that the writ petitioner/ taxpayer has been running from pillar to post requesting the respondents/ department to provide a solution and take care of the technical error and glitch that occurred as regards furnishing the GSTR-6 return for recording and distributing the Input Service Distributor (ISD) credit.

The court while criticising the act of the department said that as usual, there was no response at the end of the GSTN.

The writ petitioner, a public limited company, engaged in the business of manufacture of chemical products like H-Acid, Vinyl Sulphone, Dyes etc. The writ petitioner was registered as the ISD under the Cenvat Credit Rules read with the Central Excise Rules. Having regard to the same, the writ petitioner was availing the credit of various input transactions as the ISD for distributing proportionate credit to each of the business premises in accordance with Rule 7 of the Cenvat Credit Rules.

The Central Goods and Services Act ,2017 along with the CGST Rules came into force with effect from 01.07.2017. The un-utilized credit lying in the credit register of the assessees was allowed to be transferred and carried forward to the electronic credit ledger under the CGST Act by filing a return in the Form STR-3 detailing therein the un-utilized credit and other relevant information. A declaration in Form GST TRAN-1 was also required to be filed by the registered person under the CGST Act.

The writ petitioner filed GST TRAN-1 wherein the balance of the Cenvat Credit lying with the writ petitioner including the un-utilized balance of ISD Cenvat Credit. The writ petitioner filed a return in Form CGST-06 with details of balance of Cenvat Credit lying on 30.06.2017 for transferring such credit to the GST regime. However, on account of an error in the GST network, the Cenvat Credit balance in the return was shown at Rs.2,96,528/-. The ISD balance of Rs.20,52,989/- was not added or included in the balance of the ISD credit in the return.

The writ petitioner has been requesting the Nodal Officer and also the jurisdictional Assistant Commissioner of GST for correcting the balance in the ISD return by including the balance credit of Rs.20,52,989/-. Over a period of time, many representations have been filed by the writ petitioner as regards the aforesaid but of no avail.

Standing Counsel for the department submitted that the writ petitioner cannot redress any grievance as it failed to follow the due procedure for distributing the TRAN-1 credit to its branch offices/units in accordance with the existing law. In such circumstances, the transitional credit would not be available to the writ petitioner.

It was further submitted that the ISD mechanism facilitates distribution of credit of taxes paid to its units in the same tax period. The ISD itself cannot discharge any tax liability and remit the tax to the Government account.

Counsel for the writ petitioner has contended that the credit is a tax paid by the registered person on input transactions and therefore, the credit of such tax already paid to the credit of the Central Government is a vested right of the person. Such vested rights cannot be defeated on account of any irregularity in the system evolved by the Government.

The court directed the department to allow the writ petitioner to furnish manually the GSTR-6 return with details of the ISD credit and also permit distribution of such credit to the constituents of the writ petitioner within a period of six weeks.

Case Title: M/s Bodal Chemicals Ltd. Versus Union Of India

Citation: R/Special Civil Application No. 9151 of 2021

Counsel For Appellant: Advocate Amal Paresh Dave, Advocate Paresh M Dave

Counsel For Respondent: Advocate Priyank P Lodha

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