Page 90 - GSTL_7th May 2020_Vol 36_Part 1

48 GST LAW TIMES [ Vol. 36
deavours of the State. In matters of economic policy, the accepted principle is
that the courts should be cautious to interfere. The interference by the Courts in a
complex taxation regime can have large-scale ramifications. Unless the provision
is plainly unjust or glaringly unconstitutional, the courts should show judicial
restraint. In complex economic matters, rules are generally based on trial and
error and their validity cannot be tested on any rigid prior considerations or by
applying straitjacket formulae.
52. One of the foundations of the argument that the time-limit in Rule
117 is unreasonable is that it takes a right. In view of two conclusions we have
reached much of the force of this argument is diluted. Firstly what is claimed by
the Petitioner is not a right but concession. Secondly, the Rule is not ultra vires.
Even on the aspect of unreasonableness, judicial pronouncements already hold
the field. Division Bench of this Court in JCB India Ltd. observed that the object
and purpose sought to be achieved of not permitting the existing arrangement to
continue endlessly. For the new regime to come into force, the transitional ar-
rangements have been made. Division Bench observed that Section 140 has a
clear nexus to the object sought to be achieved and can be struck down as having
no such relation or nexus. The Gujarat High Court in the case of Willowood on the
same aspect has observed thus in the economic matters of such vast scale and the
broader considerations of the State exchequer, cannot be kept out of purview
while interpreting a statutory provision. The Court noted that the entire exercise
was unprecedented in the Indian context. The claims of carrying forward of the
existing duties and credits during the period of migration, therefore, had to be
within the prescribed time. The Court observed that doing away with the time-
limit for making declarations could cause multiple large-scale claims trickling in
for years together after the new tax structure is put in place. The Bench observed
this would besides making matching of the credits impractical if not impossible,
also affect the revenue collection estimates. The view taken by the Gujarat High
Court in Willowood is that Rule 117 is not ultra vires and there is no indefeasible
right to carry forward Cenvat credit and the stipulation of the time-limit is rea-
sonable.
53. We do not find that the time-limit in the impugned rule is arbitrary
or unreasonable. To plan to allocate resources, it is necessary to know the
amount of taxes available by a particular time. For an efficient administration of
a tax system, certainty, especially in terms of time, is important. Calculations of
the tax liability dictated by subjective conditions can lead to uncertainty. Such
uncertainty makes it difficult to budget and ensure that funds are allocated
where they are most required. The time-limit for availing of input tax credit in
the transitionary provisions is thus rooted in the larger public interest of having
certainty in allocation and planning. The time-limit under Rule 117 is thus not
irrelevant.
54. Section 140 read with Rule 117 under Chapter XX deals with transi-
tional provisions for availment of Cenvat credit. It permits availment of Cenvat
credit, however within a stipulated transitional period. This availment is not ab-
solute and is with a time-limit. Upholding only the right to carry forward the
credit and ignoring the time-limit would make the transitional provision un-
workable. The credit under the transitional provision is not a right to be exer-
cised in perpetuity. By the very nature of the transitional provision, it has to be
for a limited period.

GST LAW TIMES  7th May 2020  90