2022(09)LCX0220

Jekson Vision Private Limited

Versus

Union of India

R/SPECIAL CIVIL APPLICATION NO. 8557 of 2022 decided on 23-09-2022

2022:GUJHC:67580-DB

IN THE HIGH COURT OF GUJARAT AT AHMEDABAD

R/SPECIAL CIVIL APPLICATION NO. 8557 of 2022

FOR APPROVAL AND SIGNATURE:

HONOURABLE MR. JUSTICE N.V.ANJARIA

and
HONOURABLE MR. JUSTICE BHARGAV D. KARIA

JEKSON VISION PRIVATE LIMITED
Versus
UNION OF INDIA

Appearance:
MR HARDIK P MODH(5344) for the Petitioner(s) No. 1
MR UTKARSH R SHARMA(6157) for the Respondent(s) No. 1,2,3
NOTICE SERVED for the Respondent(s) No. 4

CORAM:    HONOURABLE MR. JUSTICE N.V.ANJARIA
                and
                HONOURABLE MR. JUSTICE BHARGAV D. KARIA

Date : 23/09/2022

ORAL JUDGMENT

(PER : HONOURABLE MR. JUSTICE BHARGAV D. KARIA)

1. Heard learned advocate Mr. Hardik P. Modh for the petitioner and learned advocate Mr. Utkarsh Sharma for respondent nos. 1 to 3.

2. Having regard to the controversy involved in this petition, with the consent of the learned advocates for the respective parties, the petition is taken up for final hearing.

3. Rule returnable forthwith. Learned advocate Mr. Utkarsh Sharma waives service of notice of rule on behalf of the respondent nos. 1 to 3.

4. The petitioner has preferred the present petition claiming the following reliefs:

“a) this Hon'ble Court may be pleased to issue a Writ of Mandamus, or a Writ in the nature of Mandamus, or any other appropriate Writ, Order directing the Respondents to accept the Revised Excise Return (Annexure

D) of the Petitioner attempted to be filed for the month of June 2017 manually;

b) That pending the hearing and final disposal of this Writ Petition, this Hon'ble Court be pleased to restrain the Respondents from adjudicating the impugned Show Cause Notice No. VI/1b-370/IA/AP-37/ C-VI/20-21 dated 18.11.2021 (Annexure L);

c) interim and ad-interim relief in terms of prayer clauses (b) above;

d) for costs of the Petition and orders thereon; and

e) for such further and other reliefs, as this Hon'ble Court may deem fit and proper in the nature and circumstances of the case.”

5. Brief facts of the case are that the petitioner is a company incorporated under the provisions of the Companies Act, 1956 and is engaged in manufacture and supply of machines and mechanical appliances used in pharmaceutical packaging lines under the HSN code of 8479. The petitioner is providing services and paying service tax for maintenance service under forward charge and paying service for specified services under reverse charge basis. The petitioner was earlier registered under the Central Excise Act, 1944 and under Finance Act, 1994 for service tax. With the advent of Goods and Service tax in India with effect from 1.07.2017, the petitioner is also registered as a supplier in the State of Gujarat under the Central Goods and Services Tax Act, 2017 (For short “CGST Act”) and Gujarat Goods and Service Tax Act, 2017 (For short “GST Act”).

5.1) It is the case of the petitioner that under the erstwhile regime, the petitioner availed CENVAT Credit of duty and taxes paid on such inputs, capital goods and input services in terms of the CENVAT Credit Rules for carrying out manufacturing activities.

5.2) The petitioner filed its original Excise return ER-1 electronically for June 2017 within due date on 08.07.2017 on the ACES portal showing nil credit balance in CENVAT Credit in its RG Registers i.e., CENVAT Credit Registers on 30.06.2017.

5.3) It is the case of the petitioner that the return uploaded by the petitioner was rejected without citing any reason on 12.07.2017. The petitioner therefore, once again uploaded the original Excise return on 12.07.2017 for June 2017 and the return uploaded on 12.07.2017 was successfully accepted on 15.07.2017.

5.4) After filing of the Excise return on 15.07.2017, the petitioner received some Bill of Entries filed for import of goods from their Customs House Agent (CHA). Additionally, the petitioner received some invoices from their transporters for the services rendered in the month of June 2017. It is the case of the petitioners that goods were imported in the month of June 2017 and transportation services were received by the petitioner in the month of June 2017 and therefore, the tax paid on such goods and services related to the period of June 2017 and the same could not be mentioned in CENVAT Credit in the Excise return filed originally on 08.07.2017 due to non-submission of the documents by CHA and the transporters in time.

5.5) Upon noticing the aforesaid inadvertent error, the petitioner sought to file revise Excise return which was originally filed on 08.07.2017. However, in terms of the provision of Rule 12(8)(a) of the Central Excise Rules, 2002 (for short 'the Rules, 2002'), the revised return was to be filed by the end of the calendar month in which the original return was filed. But since the portal for filing of Excise returns electronically was having some technical glitches, the petitioner could not file the Revised Excise return electronically. The petitioner however, attempted to revise the return till 25.07.2017.

5.6) It is the case of the petitioner that since the Excise return for the month of June 2017 was not revised electronically due to technical glitch and the last date for filing revised return was on 31.07.2017 in terms of Rule 12(8) of the Central Excise Rules, the petitioner vide letter dated 29.07.2017 requested respondent no.4 to amend the Excise return manually. All the details along with the revised closing balance of CENVAT Credit of Rs. 16,43,117/- was manually submitted to the respondent no.4 vide the said letter dated 29.07.2017 on 08.08.2017 and the petitioner requested to amend the said portion in the Excise return manually.

5.7) It is the case of the petitioner that with effect from 01.07.2017, a host of indirect taxes, including Excise duty, Service tax and Value Added Tax, had been replaced with GST. One of the key features of GST is seamless flow of Input Tax Credit to avoid cascading of taxes. In order to maintain a seamless flow of Credit, the provisions under the CGST Act prescribe the transitional arrangement for carry forward and availment of Credit of eligible indirect taxes paid on the goods and services procured under the erstwhile regime. In this regard, Section 140 of the CGST Act inter alia provides for the transition of the following Credit to the GST regime:

i) Closing balance of Credit of erstwhile taxes in the last return filed prior to the introduction of GST.

ii) Un-availed Credit of taxes paid on capital goods procured in the erstwhile regime.

iii) Credit relating to goods exempted under the earlier regime which are taxable under the GST regime.

iv) Credit of in transit goods and services on which taxes are paid In the erstwhile regime and such goods and services are received in the GST regime.

5.8) It is the case of the petitioner that transitional mechanism under Section 140(1) of the CGST Act inter-alia allowed transition of CENVAT Credit of taxes, duties and cesses levied on inputs, capital goods and inputs services which were duly reflected and carried forward in the last return filed in the pre-GST regime. It is the case of the petitioner that in view of Section 140(1) of the CGST Act, the petitioner was entitled to carry forward the transitional CENVAT Credit as reflected in the last return filed under the pre-GST regime by filing Form GST TRAN - 1 in terms of Rule 117 of the Central Goods and Services Tax Rules, 2017. Accordingly, the petitioner was entitled to carry forward transitional CENVAT Credit of Rs. 16,43,117/- as per Section 140(1) of the CGST Act and the petitioner claimed the same amount of Rs. 16,43,117/- towards transition credit in terms of Section 140(1) of the CGST Act and filed Form GST TRAN-1 on 28.08.2017.

5.9) Meanwhile, the petitioner vide letters dated 26.03.2018 and 13.08.2018 intimated to respondent No. 2 about the technical glitch on the ACES portal and requested to allow the CENVAT Credit as transitional credit under the GST regime.

5.10) The petitioner also vide E-mail dated 24.08.2018 to respondent no.4 explained the whole issue and requested for revision of the Excise return. It is the case of the petitioner that no response had been received from the Revenue Department for the correspondence made by the petitioner from time to time.

5.11) It is the case of the petitioner that since, GST was new regime and the petitioner was unaware about the processes to be followed, the petitioner had inadvertently again made claim of ITC for an amount of Rs. 16,43,117/- in their GST return filed for the month of July 2017. However, the same was reversed by the petitioner voluntarily on 23.04.2020.

5.12) It is the case of the petitioner that since the petitioner had adequate balance of Rs. 16,43,117/- in their Electronic Credit Ledger from the period of date of inadvertent amount claimed while filling GST return for the between July 2017 to 23.04.2020, the petitioner had not paid interest on the said amount as the net liability was Nil.

5.13) In the 39th GST Council meeting held on March 14th 2020, GST Council Meeting declared that the interest on delayed GST payments would be applicable only on net tax liability i.e. after the deduction of the available input tax credits. The interest on a delayed GST payment will no longer be charged based on the gross tax liability. This change will be applicable retrospectively with effect from 1st July, 2017, the date on which GST legislation came into force. Accordingly, Section 50 was proposed to be amended through Section 103 of the Finance Bill, 2021. Further in the 45th GST Council meeting, the Council had held that interest on net basis would be applicable only on utilized ITC balance and not on unutilized ITC balance.

5.14) The Audit party conducted audit of GST records of the petitioner for the period from July 2017 to March 2019. During such Audit, the audit party found that the petitioner carried forward CENVAT Credit of Rs. 16,43,117/- in Column No. 5(a) of Form GST TRAN-1 whereas as per Original Excise return for the period of June 2017, closing balance of CENVAT Credit was shown NIL. The audit party therefore, concluded that the petitioner wrongly carried forward excess amount of transitional Credit of Rs. 16,43,117/-.

5.15) The petitioner filed reply dated 26.10.2021 before the Superintendent, GST Audit department submitting all the facts and the contentions.

5.16) The audit conducted by the CGST officers culminated into issuance of the Final Audit Report No. GST 184/2021-2022 dated 02.11.2021 whereby it was alleged that the petitioner wrongly availed and utilized transitional credit in Tran-1.

5.17) It is the case of the petitioner that respondent no.3 - Assistant Commissioner, CGST (Audit) vide the show cause notice dated 02.11.2021 had only considered the original Excise return filed by the petitioner showing "NII" balance and had not considered the revised Excise return filed vide letters /e-mail sent by the petitioner from time to time.

5.18) The petitioner therefore, vide letters dated 17th December, 2021 and 13th January, 2022 sought time for filing reply to the impugned Show Cause Notice.

5.19) The petitioner had also preferred Special Civil Application No. 5559 of 2022 before this Court challenging the Show Cause Notice dated 18.11.2021 but the same was withdrawn by the petitioner vide order dated 23.03.2022 with a liberty to file appropriate Writ Application with respect to the issue as regards filling of the revised Excise return.

5.20) The petitioner being aggrieved by the inaction on the part of the respondent Nos. 2 and 4 for not communicating about the revised Excise return which in turn lead to issuance of Show cause notice dated 18.11.2021 proposing to recover eligible transitional Credit of Rs. 16,43,117/-, has preferred the present petition.

6. Learned advocate Mr. Hardik Modh for the petitioner submitted that the petitioner had tried to file the revised Excise return on the ACES portal but the same could not furnished due to technical glitch of the portal. The Petitioner, therefore, vide letter dated 29.07.2017 furnished the revised excise return to the respondent No. 4. But no communication was received from the respondent No. 4 against the said letter. The petitioner again vide letters dated 26.03.2018 and 13.08.2018 addressed to respondent No. 2 & 4 explained the facts of the case and again requested to consider the revised Excise return and allow the transitional credit and it was therefore, submitted that the respondents are duty bound to revise the Excise return of the petitioner.

6.1) It was submitted that the petitioner approached respondent Nos. 2 and 4 numerous times for accepting revision of the Excise return for the month of June 2017, however, the respondent has not taken any decision on the revised return filed by the petitioner and failed to allow CENVAT Credit as per the provisions of the Central Excise regime.

6.2) Reliance was placed on the decision in case of Everyday Health (India) Pvt. Ltd. Vs. Commissioner of CGST & CE Mumbai East reported in [2018 (10) TMI 1077 - CESTAT Mumbai] wherein it is held that since the revised ST-3 returns were filed manually and the same were available with Department for necessary verification, the matter was remanded back to the original authority for verification of the ST-3 return manually filed by the appellant therein. It was submitted that accordingly, the respondent in the present case also should have considered the revised return and allowed the transitional credit to the tune of Rs. 16.43 lacs.

6.3) It was submitted that the Courts have time and again accepted the validity of manual returns filed by an assessee. Hence, the revised Excise return filed manually on account of technical glitch on account of filing electronically, is to be treated as a sufficient compliance with respect to filling of return and it is incumbent upon the respondent to accept the manual return filed by the petitioner. In support of such submission, reliance was placed on the following judgments:

1) Paharpur Cooling Towers Ltd vs. UOI & Ors. reported in [2019-TIOL-2803- Calcutta High Court-GST]

2) Super Plast Poly Products India Private Limited vs. State of Kerala reported in [2018 (18) GSTL 221 (Ker.)];

3) Adfert Technologies Pvt. Ltd. vs. UOI & ORS. reported in [2019-TIOL-2519-HC-P&H-GST];

4) Siddharth Enterprises vs. Nodal Officer reported in [2019 (29) GSTL 664 (Guj.)]

6.4) In support of his submission that the cases where the assessee had challenged the inaction of the Department, this Court had issued directions to the Department to take action within a prescribed time period, reliance was placed on the following judgments:

1) Shardaben Jayantilal Patel V/s. Union of India reported in [2021 (49) G.S.T.L. 245 (Guj.)];

2) Red coin Paper Product V/s. Deputy Commissioner of State Tax reported in [2019 (27) G.S.T.L. 183 (Guj.)]

6.5) It was submitted that the show cause notice dated 18.11.2021 allegedly denies transitional credit due to "Nil" balance shown in the Central Excise return for the month of June 2017. It was submitted that the allegation levelled in the notice is contrary to the provisions of Section 140(1) of the CGST Act, in terms of which a registered person is eligible to transition the amount of CENVAT Credit availed in the last return furnished under the erstwhile regime, subject to the fulfillment of the following conditions:

a) The transitional Credit should be admissible as Input Tax Credit under the CGST Act;

b) The registered person should have furnished all the returns required under the erstwhile law for the period of six months Immediately preceding the appointed date; and

c) The Credit should not relate to goods manufactured and cleared under any exemption notification.

6.6) It was submitted that in the present case, there is no dispute as regards fulfillment of the afore-stated conditions. The respondents recognizes and acknowledges the fact that the revised Excise return has been filed by the petitioner, although the same has been done manually.

6.7) Learned advocate Mr. Modh submitted that the respondents ought to have appreciated that the Excise return was uploaded on 08.07.2017 but rejected due to some system error. It was again filed on 12.07.2017 and accepted on 15.07.2017, therefore, it was submitted that the original Excise return was filed within the due date. It was submitted that the petitioner subsequently filed the revised return manually within time limit as prescribed under Rule 12(8)(a) of the Excise Rules.

6.8) It was submitted that the petitioner has fulfilled all the conditions of Section 140(1) for carrying forward of CENVAT Credit to the GST regime, and therefore, the action of the respondent to deny the transitional Credit is illegal, arbitrary and de hors the authority of law bestowed upon the respondents. It was submitted that in seeking to deny the transitional Credit, the respondents have acted illegally and in excess of their jurisdiction under Section 140(1) of the CGST Act.

6.9) It was submitted that assuming without admitting that the manual Excise return filed by the petitioner cannot be said to be a valid return, then also, computerization of return filing is merely a means for processing the disclosures and claims of the assessee in a transparent and time efficient manner. However, if there are any shortcomings in the computerized facility, the same cannot whittle down the vested rights of the assessee in any manner. Thus, in a scenario where the online facility does not function appropriately, the Government ought to provide alternate measures to protect the vested rights of the assessee.

6.10) It was submitted that the actions of the respondents are contrary to settled position in law that substantive rights cannot be curtailed for mere procedural infirmities such as manually filing of Excise return.

6.11) Reliance was placed on decision of the Bombay High Court in the case of Tata Projects Ltd. vs. Deputy Commissioner of Income Tax reported in [2017 (88) Taxmann 325 (Bombay)] wherein the Income Tax Department was unable to process the online returns of the assessees due to the online system failure. The Bombay High Court held that where the returns cannot be processed due to system failure, the Department ought to process the returns manually to avoid any undue hardship to the assessees.

6.12) Reliance was also placed on decision of Bombay High Court in the case of Shapoorji Pallonji & Co. vs. Deputy Commissioner of Income Tax 3(1) and another reported in [2016 (76) Taxmann 92 (Bombay)] wherein it has been held that where computer systems act as a hindrance for the Department to discharge its statutory obligations, the Department must take alternate steps to avoid any hardship to the assessees.

6.13) Learned advocate Mr. Modh submitted that where the substantive conditions have been fulfilled by the assessee, credit of taxes cannot be denied on the basis of procedural infirmities. In support of such submission, reliance is placed on the decisions of Bharat Heavy Electricals Limited vs. Commissioner of Central Excise, Bhopal reported in [2016 (332) E.L.T. 411 (M.P.)] and Commissioner of Central Excise vs. Home Ashok Leyland Ltd. reported in [2001 (134) ELT 647 (Mad.)] wherein it is held that in the situation where the substantive rules for availment of Credit have been fulfilled, the vested right over the credit cannot be restricted merely because a procedural requirement has not been fulfilled.

6.14) It was further submitted that the transitional credit proposed to be denied to the petitioner due to non-filing of revised Excise return electronically relates to the eligible taxes already paid by the petitioner on procurement of goods and services under the erstwhile tax regime. It was submitted that the Hon'ble Supreme Court in the case of Eicher Motors vs. Union of India reported in [1999 (106) ELT 3 (SC)] has held that the right to credit accrues in favour of the assessee on the date when the taxes on the raw materials or the inputs are paid and that right crystallizes when the goods are received in the factory of the assessee. It was further submitted that the Hon'ble Supreme Court in the case of Collector of Central Excise, Pune vs. Dai Ichi Karkaria Ltd. reported in [1999 (112) ELT 0353 SC] has held that once a manufacturer avails eligible credit of duties and there are no provisions under Credit Rules which provides for the reversal of the Credit, the Credit availed by the manufacturer becomes indefeasible. It was submitted that the actions of the respondents in denying the transitional Credit are directly in the teeth of the said principles enunciated by the Hon'ble Supreme Court. It was submitted that credit of taxes paid on the goods and services under the erstwhile regime is a vested right acquired by the petitioner which cannot be curtailed merely for the reason that the revised Excise return was filed manually by the petitioners.

6.15) Learned advocate Mr. Modh submitted that various assessee across the country who faced technical issues with the GSTN portal because of which they were unable to file Form GST TRAN - 1 by the due date i.e. 28.08.2017 had approached the respective High Courts by way of Writ Petitions for obtaining suitable reliefs and the High Courts by allowing the petitions of the aggrieved party, have held that the entitlement of the Credit of carried forward eligible duties is a vested right and the same cannot be curtailed or defeated on account of procedural lapses and accordingly, directed the Government to reopen the portal or accept a copy of Form GST TRAN -1 manually. Reference in this regard was made to the decision of this Court in case of M/s. Siddharth Enterprise through Partner Mahesh Liladhar Tibdewal vs. The Nodal Officer reported in [2019 (9) TMI 319 Gujarat] wherein the petitioner was unable to file Form GST TRAN-1 within the due date because of poor internet connectivity and technical glitches on the GSTN portal. It was submitted that this Court inter-alia held that Article 300A of the Constitution provides that no person shall be deprived of property saved by authority of law and even if the right to property is no longer a fundamental right it is still a constitutional right. It was submitted that the Court further held that CENVAT Credit earned under the pre-GST regime is the property of the assessee and it cannot be appropriated for merely falling to file a declaration in the absence of law in that respect. It was submitted that similar observations were also made in the decision rendered by the High Court of Delhi in case of Lease Plan India Pvt. Ltd. vs. Govt. of National Capital Territory of Delhi and Ors. in W.P. (C) No. 3309/2019 and in case of Krish Automotors Pvt. Ltd. vs. Union of India and Ors. reported in [2019 (9) TMI 817 - Delhi].

6.16) It was therefore, submitted that the High Courts have allowed the Writ Petitions of the aggrieved parties in cases where Form GST TRAN - 1 was not filed at all for whatsoever reasons. Whereas, in the present case even though the petitioner has rightly carried forward the eligible transitional Credit in Form GST TRAN - 1, proposed denial of the same by the respondents is completely unreasonable and unjustified and the actions of the respondent seeks to divest the petitioner of its vested rights in the said transitional Credit which cannot be permitted to sustain.

6.17) It was submitted that as per Section 174(2)(c) of the CGST Act, the omission of Excise Act (except in relation to goods included in entry 84 of the Union List of the Seventh Schedule to the Constitution) shall not affect any right, privilege, obligation or liability acquired, accrued or incurred under the repealed Excise Act. It was submitted that the respondents have failed to consider that the above saving provision under Section 174(2)(c) of the CGST Act which categorically preserves the right of the assessee accrued under the Excise Act. It was submitted that the saving clause under Section 174(2)(c) of the CGST Act does not contain the words 'unless a different intention appears'. Thus, it is clear that the saving of the right accrued under the repealed act is absolute and unconditional. Hence, the right of the petitioner to avail the CENVAT Credit in terms of the Excise Act read with the Credit Rules is absolute and is not taken away. The respondents therefore, by proposing to deny the transitioned credit to the petitioner have acted in teeth to the aforesaid saving clause. In support of such contention, reliance was placed on the decision of the Hon'ble Supreme Court in the case of Southern Petrochemical Industries Co. Ltd. Vs. Electricity Inspector and Etio reported in [AIR 2007 SC 1984] wherein it is held that in absence of the words 'unless a different intention appears' which occur in Section 6 of the General Clauses Act, 1897, the vested right accrued under the erstwhile legislation would survive the repeal. It was therefore, submitted that the respondents have acted illegally by curtailing the right of CENVAT Credit accrued to the petitioner under the Excise Act and the rules made thereunder as the same is ultra vires the saving clause under Section 174(2)(c) of the CGST Act.

6.18) Learned advocate Mr. Modh submitted that it is a settled position in law that in the cases where the assessee comes out of the scheme of CENVAT Credit, such assessee would be entitled to the refund of the closing balance of the CENVAT Credit. In this regard, reliance is placed on the decision of the Karnataka High Court in the case of Union of India vs. Slovak India Trading Co. Pvt. Ltd. reported in [2006 (201) ELT 559 (Kar.)] which judgment was affirmed by the Apex Court in [2008 (223) ELT A170 (SC)] wherein it is held that in light of the assessee coming out of the credit scheme, the unutilized balance of the Credit ought to be refunded to the assessee under Rule 5 of the erstwhile Credit Rules.

6.19) It was submitted that assuming without admitting that the revised Excise return filed manually cannot be considered as a return filed, then the refund is to be granted on the basis of CENVAT Credit available in the CENVAT Credit account and mere non-disclosure of CENVAT Credit in the original Excise return is only a procedural requirement and would not disentitle the petitioner for refund. In this regard, reliance is placed on the decision of the Tribunal in the case of Serco Global Services Pvt. Ltd. vs. CCEx, Delhi-III [(2015) 39 STR 892 (Tri. - Del.)] wherein it is held that refund to be granted on the basis of closing balance of CENVAT Credit available in the CENVAT Credit account and not on the basis of closing balance of CENVAT Credit shown in the return. It was therefore, submitted that without prejudice to the other submissions, the petitioner should be granted the refund of closing balance of CENVAT Credit as appearing in the CENVAT Credit account of the petitioner.

6.20) Learned advocate Mr. Modh submitted that the purported action of respondents to not allow the transitional credit to the petitioner is arbitrary and hence violative to Article 14 of the Constitution of India. Furthermore, it was submitted that respondents by disallowing the carried forward CENVAT Credit would severely dent the working capital of the petitioner and thereby diminish its ability to continue with the business, hence the action of the respondents is violative to Article 19 (1) (g) of the Constitution of India. It was submitted that the proposed action of the respondents to recover the transitioned CENVAT Credit is also violative of Article 300A of the Constitution of India, as the CENVAT Credit standing in favour of the petitioner under the erstwhile law is the property of the petitioner and the petitioner cannot be deprived of the said property saved by authority of law.

6.21) It was submitted that the petitioners had filed Special Civil Application No. 5559 of 2022 before this Court challenging the Show Cause Notice dated 18.11.2021, but, the same was allowed to be withdrawn vide Order dated 23.03.2022 with liberty to file appropriate Writ Application with respect to the issue as regards filing of the revised return.

7. On the other hand learned advocate Mr. Utkarsh R Sharma for the respondent submitted that the audit of GST records of the petitioner was conducted by the audit team for the period from July 2017 to March, 2019 and as per the Audit report dated 2.11.2021, it was found that wrong availment and utilisation of transitional credit in TRAN-1 remained unsettled. It was further submitted that during the audit, on verification of Tran-1 filed by the petitioner, it has been found that they had taken the credit of Rs. 16,43,117/- in the return. The said amount was reflected in the Electronic Credit ledger vide Credit Entry dated 28.08.2017. It was further found that the petitioner did not have closing balance in ER-1 and ST-3 return as on 30.06.2017 and therefore, the petitioner could not have availed Input Tax Credit through Tran-1 in terms of the provisions of section 140(1) of the CGST Act and section 140(1) of the GST Act and the petitioner would be liable to reverse the Input Tax Credit along with interest and penalty.

7.1) It was submitted that it was further noticed that the petitioner had taken the credit of IGST amounting to Rs. 16,43,117/- once again through GSTR3B return filed in the month of July, 2017 which amount was also included in the Electronic Credit Ledger amounting to Rs. 91,07,712/- at Entry No. 1 dated 19.08.2017. It was further stated that the petitioner had reversed this amount of Rs. 16,43,117/- as is evident from Entry no.3 dated 23.04.2020 in the Electronic Ledger. It was submitted that the petitioner has not paid the interest on the delayed reversal of the wrongly availed Input Tax Credit and therefore, the petitioner is liable to pay interest.

7.2) Learned advocate Mr. Sharma relied upon Section 140(1) of the CGST Act which provides for transitional arrangement for availing input tax credit available with the supplier under any existing law before the appointed day and also relied upon Rule 117 of the CGST Rules and Rule 117 of the GST Rules which envisages the procedure to be followed by the supplier for availing the input tax credit.

7.3) Relying upon such provisions of law, it was submitted that the supplier would not be entitled to avail the input tax credit of Rs. 16,43,117/- as they had no balance of Cenvat Credit in their ER1/ST3 returns as on 30.06.2017 and there is contravention of provisions of Section 140(1) of the Act as the petitioner has wrongly carried forward input tax credit which was not in the balance as on 30.06.2017.

7.4) It was further submitted that the Cenvat Credit of Rs, 16,43,117/- wrongly carried forward by the supplier and utilised by them is to be demanded and recovered under the provisions of section 73(1) of the CGST Act read with the provisions of Rule 121 of the CGST Rules. It was submitted that supplier would also be liable to pay interest on the wrong availment and utilisation of Cenvat Credit under the provisions of section 50 of the CGST Act. It was submitted that the petitioner was also liable for a penal action under the provisions of section 73(1) of the CGST Act. It was therefore, submitted that the attempt on part of the petitioner to seek direction to accept the revised Excise return is illegal and bad in law.

8. Having heard the learned advocates for the respective parties and having considered the materials on record, it is not in dispute that the petitioner has fulfilled the condition of section 140(1) of the CGST Act for carry forward of the Cenvat credit to the GST regime. The denial of carry forward of such transitional credit by the respondents on the ground that manual excise return filed by the petitioner cannot be said to be valid return, is without any basis.

9. It is a trite law that computerization of return filing is merely a means for processing the disclosures and claims of the assessee in a transparent and efficient manner. However, if there is any shortcoming in the computerized facility, as it has occurred in the facts of the case when the petitioner was unable to file the original excise return due to some technical issues in the ACES portal and the petitioner was compelled to file return manually along with letter dated 29.07.2017 which was reminded to the respondents by the subsequent letter, the petitioner cannot be denied the benefit of filing such excise return in manual form for transitional credit under section 140(1) of the CGST Act.

10. This Court as well as other High Courts have time and again have held that where the online facility does not function appropriately, alternative measures to protect the vested rights of the assessees are required to be provided. It is also a settled legal position that substantive rights cannot be curtailed for mere procedural infirmities such as manually filing of excise return. There is no denial on part of the respondents that the petitioner has filed excise return manually or there is adequate balance of Rs. 16,43,117/- in their Electronic Credit Ledger while filling GST return for the between July 2017 to 23.04.2020 and therefore, it cannot be said that there was a wrong carry forward of transitional credit of Rs. 16,43,117/- by the petitioner so as to recover such transitional credit from the petitioner.

11. The Bombay High Court in case of Tata Projects Ltd. vs. Deputy Commissioner of Income Tax (supra) has held that wherein the Income Tax department was unable to process the online returns of the assessee due to technical glitches, the department ought to have processed the returns manually to avoid any undue hardship to the assessee.

12. Similarly, in case of Shapoorji Pallonji & Co. vs. Deputy Commissioner of Income Tax 3(1) and another (supra), it was reiterated that where computer systems act as a hindrance for the department to discharge its statutory obligations, then alternative steps are required to be taken by the department to avoid any hardship to the assessee.

13. The petitioner is entitled to get the transitional credit as it is a right vested by statute and merely because the petitioner was unable to file GST TRAN – 1 by the due date i.e. 28.08.2017, it cannot be said that the entitlement of the credit of carry forward of eligible dues would vanish.

14. In view of the above, the attempt on behalf of the respondent authority to deny the transitional credit on the ground that the petitioner has not filed valid excise return and has not paid interest on the delayed reversal of the wrongly availed input tax credit of Rs. 16,43,117/- in contravention of the provisions of section 140 of the CGST Act, is not tenable. It cannot be said that the petitioner wrongly carried forward the Cenvat credit by way of transitional credit under CGST Act and the supplier would be liable to pay interest on the wrong availment and utilisation of Cenvat credit under the provisions of section 50 of the CGST Act. The petitioner was not at fault for not able to file return on ACES portal and the petitioner has already filed excise return manually which is not in dispute.

15. In such circumstances, the respondent authorities are directed to accept the revised excise return which is filed by the petitioner manually on 29.07.2017 which was duly intimated to the respondents as the petitioner was not able to revise the return by incorporating the Cenvat credit amounting to Rs. 16,43,117/- due to some issue in website.

16. On accepting the revised excise return, the petitioner is therefore, entitled to submit the revised GST Tran-I so as to claim transitional credit under section 140(1) of the CGST Act.

17. Such exercise shall be completed within a period of 12 weeks from the date of receipt of copy of this order.

18. Petition is accordingly disposed of with aforesaid directions. Rule is made absolute to the aforesaid extent.

(N.V.ANJARIA, J)

(BHARGAV D. KARIA, J)