Page 71 - GSTL_7th May 2020_Vol 36_Part 1

2020 ] NELCO LTD. v. UNION OF INDIA 29
difficulties’ under Rule 117(1A) and the role of the IT Redressal Cell and whether
by creating categories discretion is being fettered; (iv) relief to the Petitioner, if
any.
15. First, we take the ground of ultra vires. Second, the challenge based
on Article 14 of the Constitution of India. Third, the aspect of technical difficul-
ties under Rule 117(1A) and last, the relief to the present Petitioner.
16. In short, the Petitioner’s contentions on the first aspect are: Rule 117
is ultra vires of Section 140 and is not traceable to any provision of the Act. The
phrase used in Section 140 as “prescribed manner” cannot mean a rule making
power to prescribe the period of limitation. This phrase is judicially construed.
The Supreme Court and various High Courts have construed the phrase “pre-
scribed manner” as not to include the power to make rules imposing a time-limit.
After the judicial pronouncement, if the Legislature later has used the same
phrase, it has to be construed as it is judicially interpreted. There is intrinsic evi-
dence in the Act itself to show that whenever the Legislature wanted to confer
rule-making power, specific phraseology is used. Therefore, whenever the Legis-
lature wanted to confer rule-making power to prescribe time-limit, it has been
specifically so prescribed. It is a uniform and settled legislative practice to use the
phrase “prescribed manner” when the Legislature does not intend to confer rule-
making power to provide limitation. The rule-making power to prescribe time-
limit cannot be traced to general rule-making power under Section 164. Merely
because the Rules have been placed before the Parliament does not cure the in-
herent lack of power. Section 140 prescribes a self-declaration to be confirmed
later during the stipulated period and therefore, no prejudice to the Respondents.
Rule 117 so far as it prescribes time-limit to submit TRAN-1 Form cannot be
traced either to Section 140 nor to Section 164 nor any other provision of the Act.
Therefore, Rule 117, to the extent it provides a time-limit, is ultra vires of the par-
ent statute. The input tax credit has always been a core feature of goods and ser-
vices tax all over the world and denial of the input tax credit when the levy is
imposed on output strikes at the core. Under the new GST law, every supply is
taxable. The GST is applicable on the appointed date, despite the contract entered
into. Provisions are made for the automatic transaction to GST to enable the col-
lection of GST for output, and there is no choice. Under the scheme of the Act,
therefore the input tax credit for the earlier period has to be given. Filing of the
form is necessary only for the procedural formalities, and therefore, filing of re-
turn is contemplated. However, the Parliament has given a right to the input tax
credit for the earlier period under Section 140(1), and this right cannot be taken
away by rules. A right to input tax credit existed under the old regime and also
the same is continued under the new regime.
17. The reply of the Respondents, in brief, is as follows. There is a pre-
sumption to the legality and validity of subordinate legislation, and the burden is
heavy on those who assert its invalidity. Even with subordinate legislation, the
Court should be slow in concluding invalidity. The input tax credit, in the transi-
tionary provision under Section 140, is a nature of exemption and is not a matter
of right. Section 140 is a transitional provision which by very nature is limited by
the time duration. The provisions under the Act could have easily taken away
the input credit accrued under the earlier regime, but by way of concession, in-
put credit is continued with conditions. As regards the rule making power, Sec-
tion 164(2) is the general rule making power. Section 164(2) is couched in most
extensive terms, and Rule 117 is traceable to this power. The time-limit under
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