Page 84 - GSTL_6th August 2020_Vol 39_Part 1

10 GST LAW TIMES [ Vol. 39
time-limit for filing the tax return under Section 19(11) of the TNVAT Act was
mandatory because it used the word “shall”. By analogy, he contended that the
time-limit in Rule 117 should also be construed as mandatory. With regard to the
judgment of the Division Bench of the Delhi High Court, he pointed out that the
operation of the said judgment was stayed by the Supreme Court [2020 (38)
G.S.T.L. J24 (S.C.)] and that there was a judgment of the Division Bench of the
Bombay High Court [2020 (36) G.S.T.L. 24 (Bom.)] to the contrary.
11. We considered the submissions of the Learned Counsel for the re-
spective parties and examined the records.
12. The statutory and constitutional challenge, in this case, is on the ba-
sis that Rule 117 of the CGST Rules is ultra vires Section 140 of the CGST Act and
Article 14 and 300A of the Constitution. At the time of arguments, the Learned
Counsel for the Petitioner did not pursue the constitutional challenge. As regards
the contention that Rule 117 is ultra vires Section 140 of the CGST Act, on examin-
ing Rule 117 of the CGST Rules and Section 140 of the CGST Act, we find that
Section 140 stipulates that a registered person making a claim for input tax credit
should furnish a return, within such time, and in such manner as may be pre-
scribed. As stated earlier, the rule making power is contained in Section 164,
which is couched in wide terms, and enables the Government to frame rules to
give effect to the provisions of the Act and, in particular, to make rules for mat-
ters that are required to be prescribed by the CGST Act. Interestingly, the power
to frame rules with retrospective effect is also conferred subject to the limitation
that it should not pre-date the date of entry into force of the CGST Act. Pursuant
thereto, Rule 117 was framed whereby a time-limit was fixed for submitting the
online Form GST TRAN-1. By the Finance Act of 2020, the words “within such
time” were introduced in Section 140, with retrospective effect from 1-7-2020,
thereby conferring expressly the power to prescribe time-limits in Section 140
even without relying entirely on the generic Section 164. In this statutory context,
we find ample reason to conclude that Rule 117 of the CGST Rules is intra vires
Section 140 of the CGST Act but none to conclude otherwise.
13. The Learned Counsel for the Petitioner contended that ITC is the
property of the registered person, such as the Petitioner, and that consequently
Rule 117 should not be construed in such manner as to divest a person of proper-
ty. The question as to the nature of ITC was considered by the Hon’ble Supreme
Court in Jayam (cited supra), albeit in the context of the TNVAT Act, wherein the
Hon’ble Supreme Court categorically concluded that ITC is a form of concession
provided by the legislature and that it can only be availed of by satisfying pre-
scribed conditions. Paragraphs 11 and 12 of the said judgment are significant and
read as follows :
“11. From the aforesaid scheme of Section 19 following significant
aspects emerge :
(a) ITC is a form of concession provided by the legislature. It is
not admissible to all kinds of sales and certain specified sales
are specifically excluded.
(b) Concession of ITC is available on certain conditions men-
tioned in this section.
(c) One of the most important condition is that in order to enable
the dealer to claim ITC it has to produce original tax invoice,
completed in all respect, evidencing the amount of input tax.

GST LAW TIMES  6th August 2020  84