Page 110 - GSTL_2nd July 2020 _Vol 38_Part 1

28 GST LAW TIMES [ Vol. 38
(210) E.L.T. 178 (S.C.), wherein it was observed that the Rule 57E of the Central
Excise Rules, 1944 was a procedural provision, which provides procedure for
adjustment of MODVAT credit available to the taxpayer and, hence, the right
available under the substantive provision cannot be deprived for non-
compliance with the procedural provision. There is no consequence provided in
Rule 117 of GST Rules on account of failure to file GST TRAN-1. The argument of
the respondents is that the consequence is provided in sub-section (1) of Section
140 by way of a pre-condition for being entitled to transit the Cenvat credit in his
electronic credit register under the GST regime. We do not agree. Section 140(1)
is categorical. It states that the registered person “shall be entitled to take, in his
electronic credit ledger, the amount of Cenvat credit carried forward in the re-
turn relating to the period ending with the day immediately preceding the ap-
pointed day....”. Only the manner i.e. the procedure of carrying forward was left
to be provided by use of the words “in such manner as may be prescribed”. The
limitation on the right to carry forward the Cenvat credit is substantively provid-
ed by the proviso to the said section. Those are the only limitations on the said
statutory right. Under the garb of framing Rules - which are subordinate legisla-
tion, the width of those limitations could not have been expanded as is sought to
be done by introduction of Rule (1A). In absence of any consequence being pro-
vided under Section 140, to the delayed filing of TRAN-1 Form, Rule 117 has to
be read and understood as directory and not mandatory. Further, even in ALD
Automotive Pvt. Ltd. v Commercial Tax Officer (2019) 13 SCC 225 = 2018 (364) E.L.T.
3 (S.C.), while dealing with the question of whether the provision prescribing
time-limit for claim of Input Tax Credit is directory or mandatory in nature, it
was observed that “whether particular provision is mandatory or directory has
to be determined on the basis of object of particular provision and design of the
statute” and “such interpretation should not be put which may promote the pub-
lic mischief and cause public inconvenience and defeat the main object of the
statute”. Therefore, in the present cases, the purport of the transitory provisions
is to allow a smooth migration from the erstwhile service tax regime to the new
GST regime and the interpretation must be in consonance with the said purpose.
22. We, therefore, have no hesitation in reading down the said provi-
sion [Rule 117] as being directory in nature, insofar as it prescribes the time-limit
for transitioning of credit and therefore, the same would not result in the forfei-
ture of the rights, in case the credit is not availed within the period prescribed.
This however, does not mean that the availing of Cenvat credit can be in perpe-
tuity. Transitory provisions, as the word indicates, have to be given its due
meaning. Transition from pre-GST Regime to GST Regime has not been smooth
and therefore, what was reasonable in ideal circumstances is not in the current
situation. In absence of any specific provisions under the Act, we would have to
hold that in terms of the residuary provisions of the Limitation Act, the period of
three years should be the guiding principle and thus a period of three years from
the appointed date would be the maximum period for availing of such credit.
23. Accordingly, since all the Petitioners have filed or attempted to file
Form TRAN-1 within the aforesaid period of three years they shall be entitled to
avail the Input Tax Credit accruing to them. They are thus, permitted to file rele-
vant TRAN-1 Form on or before 30-6-2020. Respondents are directed to either
open the online portal so as to enable the Petitioners to file declaration TRAN-1

GST LAW TIMES  2nd July 2020  110