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2021 (2) TMI 553 - Commissioner - GSTGrant of Bail - input tax credit in respect of the Service Tax paid by the appellant under RCM - ITC on in respect of the services they booked in their books of accounts - Section 140(1) of the CGST Act, 2017 and Section 140(5) of the CGST Act, 2017 - penalty - HELD THAT:- The existing Registrants under Central Excise, Service Tax and VAT on migration to GST can carry forward the balance of Cenvat credit on inputs, capital goods and input services lying in the last return filed. In the instant case, the appellant has made the payment of Service Tax on 6-7-2017 but the credit has been taken on 30-6-2017 which is not in accordance with the existing law i.e. Cenvat Credit Rules, 2004. Since, the appellant was not entitled to avail the credit in the month of June, 2017 they were not having any Cenvat credit balance legally in their return before the appointed day, therefore, were not entitled to transfer the said credit in Table 5(a) of TRAN-1 as ITC and was not in accordance with the transitional provision of Section 141(1) of CGST Act, 2017 and rightly disallowed by the adjudicating authority. Further, it is found that the appellant has taken the Cenvat credit of ₹ 61,518/- as ITC in Table 7(b) of GST TRAN-1 related to appellant itself. In the cases where the credit taken on or before 30-6-2017 should have been transferred in Table 5(a) of TRAN-1 instead of Table 7(b) and in some cases credit was taken in books of account after thirty days from the appointed day which is not in accordance with Section 140(5) of CGST Act, 2017 and was rightly disallowed by the adjudicating authority. Imposition of penalty - HELD THAT:- The appellant has already reversed the credit amounting to ₹ 2,32,334/- along with interest amounting to ₹ 20,719/- vide Challan No. 42433, dated 6-7-2017 prior to issue of show cause notice. The appellant has stated that issues are primarily relating to procedural violation and was unintentional due to provisions being new, lack of knowledge and such lapses are ought to occur during the initial phase of new law - it is also found that GST being a new law such lapses are ought to occur during the initial phase but it should not be with intent to evade tax. The penalty imposed under the provisions of Section 122(2) of the CGST Act, 2017 is set aside. The order to the extent of disallowance of ITC is upheld and the penalty imposed under Section 122(2) of the CGST Act, 2017 is set aside - appeal allowed in part.
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