Malabar Cements Ltd. Vs Assistant Commissioner

FULL TEXT OF THE JUDGMENT/ORDER OF KERALA HIGH COURT

1. The present writ petition has been filed seeking quashing of Exhibits P-4 and P-5 orders passed by the 2^nd and 3^rd respondents respectively, whereby the petitioner’s claim for transitional credit in respect of inward supplies made before 01.07.2017 have been denied and the petitioner’s application for extending the limitation for claiming the transitional credit within the extended period of limitation of sixty days has been rejected by the 2^nd respondent Commissioner vide Exhibit P-4 order.

2. After the GST Act came into force with effect from 01.07.2017, the input tax credit in respect of the inward supplies before 01.07.2017 could have been claimed under the provisions of GST Act within a period of thirty days and with the extended period of limitation of thirty days by the Commissioner as provided under Section 140 of the GST Act. Sub-section (5) of Section 140 of the GST Act reads as under;

(5) “A registered person shall be entitled to take, in his electronic credit ledger, credit of eligible duties and taxes in respect of inputs or input services received on or after the appointed day but the duty or tax in respect of which has been paid by the supplier under the existing law, within such time and in such manner as may be prescribed, subject to the condition that the invoice or any other duty or tax paying document of the same was recorded in the books of account of such person within a period of thirty days from the appointed day:

Provided that the period of thirty days may, on sufficient cause being shown, be extended by the Commissioner for a further period not exceeding thirty days:

Provided further that said registered person shall furnish a statement, in such manner as may be prescribed, in respect of credit that has been taken under this sub­section.”

3. Thus, from perusal of Sub-section (5) of Section 140 of the GST Act, it is evident that beyond the period of thirty days an assessee can claim the transitional credit of input tax within another thirty days on an order passed by the Commissioner. Unless the order is passed by the Commissioner extending the period of limitation up to sixty days or less than , an assessee cannot claim the input tax credit in respect of the inward supply taken before 01.07.2017. In the present case, the petitioner claimed input tax credit in his return after the initial period of thirty days expired, but without any order from the Commissioner extending the period of limitation beyond thirty days. He filed an application after five years for extending the time of limitation for claiming transitional credit. The Commissioner therefore, has rejected the application in Exhibit P-4 order stating as under;

“This refers to your application under Ref No.1, corrigendum under Ref. No.2 and letter under Ref. No.3 on the subject. Records show that the TRAN – 1 return is filed by the applicant on 27.12.2017. The application for extension as per the first proviso to Section 140 (5) should have been submitted within a reasonable time, i.e. before filing of TRAN-1 return. The application has been received in this office on 24.1.2023, more than five years of filing of TRAN – 1 return, for which no cause has been provided. Also, the application has ben filed consequent to finding of irregularity in the SSCA on Transitional Credits by the C & AG. As such, the application filed by you under Section 140 (5) of the CGST Act, 2017 is rejected.”

4. I do not find that the Commissioner has committed any error of law or jurisdiction in rejecting the application which has been filed belatedly after five years from the prescribed date. As the limitation period was not extended, the petitioner has been denied the benefit of transitional credit in respect of input tax vide Exhibit P-5 order in original dated 13.03.2023.

5. In view thereof, I do not find much substance to entertain this writ petition. However, if the petitioner is aggrieved by the merits of the order dated 13.03.2023 in Exhibit P-5, he may take recourse of statutory remedy, if any, available to him. So far as the question of limitation is concerned, the period spent in prosecuting this writ petition shall be excluded while calculating the period of limitation in filing the appeal against Exhibit P-5 order.

With the above view this writ petition is finally disposed of.