Page 86 - GSTL_6th August 2020_Vol 39_Part 1

12 GST LAW TIMES [ Vol. 39
Ltd. v. Union of India [(2020) Taxmann.com 415 = 2020 (38) G.S.T.L. 10 (Del.)]
(Brand Equity Treaties) and Micromax Informatics (cited supra), wherein the Court
held that Cenvat credit had accrued and vested in the assessee and is, conse-
quently, the property of the assessee. By Order dated 19-6-2020 in SLP Nos. 7425-
7428 of 2020 [2020 (38) G.S.T.L. J24 (S.C.)], the Hon’ble Supreme Court granted a
stay of the operation of the judgment in Brand Equity Treaties. At this juncture, it
is pertinent to point out that Brand Treaty Equities was decided prior to the
amendment to Section 140 of the CGST Act whereby the words “within such
time” were introduced. On the other hand, SKH Sheet Metals Components was de-
cided after the amendment; nonetheless, the Delhi High Court concluded that
the amendment settles the question as to the power to frame rules fixing the
time-limit for filing the declaration but does not fix a time-limit for transitioning
credit.
16. By contrast, a Division Bench of the Bombay High Court interpreted
Rule 117 of the CGST Rules in NELCO Limited v. Union of India [2020 SCC Online
Bom 437 = 2020 (36) G.S.T.L. 24 (Bom.)] (NELCO) as intra vires Section 140 and as
imposing a reasonable time-limit for availing of ITC. NELCO was decided before
Section 140 was amended. Even so, the Court concluded that Section 164 of the
CGST Act is wide enough to enable the framing of rules fixing a time-limit to
claim Transitional ITC. In addition, the Court concluded that ITC is a concession
which is required to be availed of within the prescribed time, failing which it
would lapse. The Gujarat High Court also considered this question in Willowood
Chemicals Ltd. v. Union of India [2014 (306) E.L.T. 551] (Willowood). In Willowood,
1
the Gujarat High Court concluded that Transitional ITC is a concession and that
Rule 117 is intra vires Section 140 of the CGST Act.
17. Section 140 of the CGST Act read with Rule 117 of the CGST Rules
enables a registered person to carry forward the accumulated ITC under erst-
while tax legislations and claim the same under the CGST Act. In effect, it is a
transitional provision as is evident both from Section 140 and Rule 117. In light of
the judgment of the Supreme Court in Jayam, the contention of the Learned
Counsel for the Petitioner to the effect that ITC is the property of the Petitioner
cannot be countenanced and ITC has to be construed as a concession. In addition,
it is evident that ITC cannot be availed of without complying with the conditions
prescribed in relation thereto. Prior to the amendment to Section 140 of the CGST
Act, the power to frame rules fixing a time-limit was arguably not traceable to
the unamended Section 140 of the CGST Act, which contained the words “in
such manner as may be prescribed”, because such words have been construed by
the Supreme Court in cases such as Sales Tax Officer, Ponkuppam v. K.I. Abraham
[(1967) 3 SCR 518] as not conferring the power to prescribe a time-limit. Never-
theless, in our view, it was and continues to be traceable to Section 164, which is
widely worded and imposes no fetters on rule making powers except that such
rules should be for the purpose of giving effect to the provisions of the CGST
Act. A fortiori, upon amendment of Section 140 by introducing the words “within
such time”, the power to frame rules fixing time-limits to avail Transitional ITC
is settled conclusively. In SKH Sheet Metals, the Delhi High Court concluded, in
Paragraph 26, that the statute had not fixed a time-limit for transitioning credit
by also referring to the repeated extensions of time. Given the fact that the power
to prescribe a time-limit is expressly incorporated in Section 140, which deals
with Transitional ITC, and Rule 117 fixes such a time-limit, we are unable to sub-
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1 Reference seems to 2018 (19) G.S.T.L. 228 (Guj.) : Editor.
GST LAW TIMES  6th August 2020  86