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TMI Blog2023 (10) TMI 793X X X X Extracts X X X X X X X X Extracts X X X X ..... Act or the JGST Act. The Revenue had also disallowed the amount of purchases shown by the Petitioner on the ground that the details mentioned in JVAT 410 and 411 (i.e., details of inward supplies) is not in consonance with online returns i.e., JVAT 200 filed by its Sellers. In this regard the amount involved Rs. 8,57,911.31/-. On this issue it is observed that the AO for the purpose of transition of credit is only required to verify the figures specified in the TRAN-1 and whether conditions under Section 140(3) are satisfied. From a perusal of the impugned appellate order it is evident that the transitional credit has been disallowed not because of non-conformity with condition stipulated in Section 140(3) but because of considerations which were the subject matter of assessment under JVAT Act - Undoubtedly, tax paid on purchases of medicine products / food products is admissible as tax under JGST Act, more particularly because it does not fall within any of categories specified under Section 17(5) of the JGST Act. This court has therefore clearly held that under the garb of disallowing transitional credit, the Assessing Officer under the JGST Act cannot conduct an assessment of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ST DRC-13 dated 10.3.2021 (Annexure - 10) as the same is thoroughly illegal and arbitrary and is based on an erroneous order. (v) For the issuance of appropriate writ/ order / direction including a writ in the nature of a mandamus to the Respondent State Bank of India to release the Petitioner's Bank Account to extent of Rs. 19,69,441 which has been kept on hold since 19.3.2021 as the same is beyond its authority and de hors the provisions of the JGST Act. 3. The case of the petitioner is that it primarily deals in medicine and medicinal products through its depot in the State of Jharkhand. Under the JVAT Act, more particularly under Section 9(2), tax on medicinal products could be levied at the first point of sale on the MRP thus, the Petitioner on purchase of the medicinal products, paid tax at the MRP. At the time of resale, the Petitioner could recover the tax paid from the buyer. Upon coming into force of the Jharkhand Goods and Service Act, 2017 (hereinafter to be referred as JGST Act), the Petitioner transitioned credit amounting to Rs. 87,34,107/- in terms of Section 140(1) and 140(3) of the JGST Act. It is the case of the petitioner that u/s 140(1) transition can be cl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Jharkhand stating that period of limitation under Section 112 for filing an appeal to the Appellate Tribunal would be counted from the date that the president of such tribunal enters office. No such appointment has been made till date and therefore the limitation period for filing such appeal has not commenced. Thereafter, the Respondent authorities issued a notice for recovery under Section 79 of the JGST Act in Form GST DRC-13 to the Petitioner s bank, i.e., State Bank of India on 10.03.2021 demanding payment of Rs. 19,69,441/- (i.e., Rs. 31,97,333.59/- determined in the Appellate Order Rs. 12,27,892/- deposited as pre deposit during appeal). SBI informed the Petitioner that its account had been put on hold to the extent of Rs. 19,69,441/. The Petitioner wrote to the Respondent Department requesting that its bank account be released as it was considering filing an appeal before the Tribunal. In the meantime, the Assessment Order for the period 2016-17 was passed under the VAT Act, in which no discrepancy was found in the figures of purchases disclosed by the Petitioner. 4. M.S. Mittal, Sr. Advocate assisted by Mr. Salona Mittal, learned for the petitioner made the following subm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... petitioner is a medicine trader and the petitioner has shown an amount of Rs 6,42,595.45/- as Input Tax Credit (ITC) for the first quarter for the financial year 2017-18, whereas, it had claimed an amount of Rs 6,39,335/- in Form GST TRAN-1 under the Jharkhand Goods and Services Act, 2017 (hereinafter mentioned as JGST Act) in column 5 (C) and the petitioner had further claimed an amount of Rs. 80,94,772/- as ITC in column 7 (C) in the said form. He further submits that the concerned authority on receiving the petitioner s form GST TRAN-1, vide letter issued through process no. 9444 dated 18.01.2018 requested the petitioner to appear along with the requisite documents on 25.01.2018 for asserting the said claim. Further, post to issuance of letter an e-mail was also sent to the petitioner on 23.01.2018. Thereafter, the discrepancies in the documents made available to the concerned department vis- -vis the claim of transitional ITC by the petitioner, the concerned authorities decided to issue show cause notice to the petitioner under section 73(1) of the JGST Act, in which the petitioner was asked to explain as to why the penalty and interest should not be imposed upon him under sect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stant writ application is in relation to the denial of transition of input tax from the erstwhile regime i.e., the Jharkhand Value Added Act, 2005 and the JGST Act, 2017. From records it further appears that the initiation of proceedings is bad in law, inasmuch as, in this case only a summary of show cause notice in DRC 01 was served and not the proper show cause notice. Admittedly, the Petitioner was only served a summary of show cause notice in Form DRC 01 and not a proper show cause notice under Section 73 of the JGST Act. The issuance of a proper show cause notice is not evident from the order sheet. Neither the Respondents have brought on record any proper show cause notice in its counter affidavit. In this regard, this Court in Juhi Industries (P) Ltd. versus State of Jharkhand, reported in 2022 SCC OnLine Jhar 816 , by placing reliance upon NKAS Services Pvt. Ltd. v. State of Jharkhand, passed in W.P.(T) No. 2444 of 2021, has held that 13. In view of the aforesaid facts and the settled preposition of law, the foundation of the proceeding in both the cases suffers from material irregularity and hence not sustainable being contrary to Section 74(1) of the JGST Act; thus, the s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vident from the judgment passed by the Hon ble Apex Court in State of Jharkhand v. Bihar Sponge Iron Ltd., 2021 SCC OnLine SC 997 . In this case, the contention regarding irregularity in the notice had been taken for the first time before this Court and the entire proceedings had been set aside on the ground on irregular show cause notice itself. The Hon ble Supreme Court confirming the order of this Court held as under 4. The High Court, as per our understanding of the impugned judgment, allowed the writ petition on the finding reached by it that the show cause notice dated 13.05.2010 issued by the Assistant Commissioner of Commercial Taxes under Rule 58 of the Jharkhand Value Added Rules, 2006 was not in conformity with the provisions of the Act and Rules. 5. Having said that, it proceeded to conclude that all steps taken on the basis of such show cause notice stood effaced and set aside, including the order of penalty. 6. Significantly, the ground which appealed to the High Court was not raised by the respondent before the first authority or in the proceedings arising from the show cause notice upto the Tribunal. This plea was obviously taken before the High Court for the first ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tax paid. Further, said section contemplates that even for good and sufficient reasons to be recorded in writing where a dealer is prevented from furnishing tax invoices in original the prescribed authority may even then allow ITC by recording its reason. Thus, Section-18(6) of the JVAT Act, 2005 does not contemplate production of JVAT -404 Forms as a mandatory condition for availing benefit of ITC. However, Rule- 35(2) of the JVAT Rules, 2006 stipulates further condition of production of JVAT 404 Form as requirement for claiming benefit of ITC. To this extent, Rule- 35(2) of the JVAT Rules, 2006 is inconsistent with the provision of Section- 18(6) of the JVAT Act, 2005 and is required to be held directory in nature and not mandatory. Thus, requirement of Form JVAT 410/4111 in support of these purchase invoices was / is not required under the JVAT Act or the JGST Act. 10. It further transpires that the Revenue had also disallowed the amount of purchases shown by the Petitioner on the ground that the details mentioned in JVAT 410 and 411 (i.e., details of inward supplies) is not in consonance with online returns i.e., JVAT 200 filed by its Sellers. In this regard the amount involved ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ner at hand. It is neither the allegation against the petitioner that he had not furnished his returns required under the existing law for the period of six months immediately preceding the appointed date as per clause (ii) to the proviso to Section 140. In substance, the contraventions which have been alleged and the proceedings which have been initiated under Section 73 (1) of the C.G.S.T. Act are in relation to violation of the C.E.A. and Finance Act read with C.C.R. The gist of the imputation is that the petitioner could not claim the CENVAT credit in lieu of invoices raised by its Bokna mines as both of them were independent entities. Similar was the imputation in respect of the previous show-cause notices issued under the existing law which are pending adjudication before the learned CESTAT or the Commissioner(Appeals) for different periods and in some of which the petitioner has already got a stay by the learned CESTAT. Whether the CENVAT credit under the existing law were admissible to be availed and transitioned by the petitioner was not an issue lying within the jurisdiction of the C.G.S.T authorities to be proceeded against and determined under the relevant provisions of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sed wherein it has been categorically accepted by the Respondent Department that during the said Assessment year, the Petitioner has made a purchase of Medicine of Rs. 67,56,17,903/- against which the petitioner has submitted 4 JVAT 410/411 amounting to Rs. 67,56,17,903/-, no discrepancy was found. Thus, the impugned appellate order is also perverse, inasmuch as, it held that for the year 2016-17 the Petitioner had shown excess purchases (as per Form JVAT 410/411); thus, the same is in teeth of the assessment order for the very same year passed by the Revenue under the JVAT Act. 13. It is also necessary to observe that under Section 142(8)(a) of the JGST Act, if any sum is found to be recoverable from a dealer in respect of assessment done under the existing law, i.e., the JVAT Act, the same can be covered as an arrear of tax under the JGST Act. Thus, the interest of the revenue is already protected. It appears that the actions of the Respondent Bank in holding the amount is invalid. There exists no such provision in the JGST Act which allows the Respondent Bank to put the Petitioner s Bank Account on hold for such a substantial sum of money. Even if such power can be remotely trac ..... X X X X Extracts X X X X X X X X Extracts X X X X
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