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2019 (7) TMI 1452 - HC - GSTTransitional Credit/adjustment of excess of input tax credit against future liabilities of the petitioner - purchase of cartridge - unjust enrichment - financial year 2007-08 and 2011-12 - credit reflected in the ledger - whether, the credit reflected in the electronic credit ledger of the petitioner amounts to either availment or utilization of the credit? - HELD THAT:- While Section 73 of ‘the BGST Act’ enables proceedings for determination of tax not paid or short paid or erroneously refunded or input tax credit wrongly availed or utilized for reasons other than fraud or willful misstatement or suppression of fact, where such default is committed by reason of fraud or willful misstatement or suppression of fact, a similar procedure inviting such action is provided under section 74 of ‘the BGST Act’ - It is undisputed that it is on the application made by the petitioner under section 140 of ‘the BGST Act’ that the credit earned got reflected on the electronic credit ledger on 28.8.2017 as admitted by Mr.. Kejriwal showing a credit balance of ₹ 42,73,891.00 as also taken note of in the order impugned - Section 73 makes a dealer liable for proceedings in case of short payment of taxes or erroneously refunded taxes or for wrongly availing or utilizing input tax credit. The legislative intent present in these provisions is eloquent and I am in no confusion to hold that be it a charge of wrong availment or utilization, each is a positive act and it is only when such act is substantiated that it makes the dealer concerned, liable for recovery of such amount of tax as availed from the input tax credit or utilized by him but in each of the two circumstances, the tax available at the credit of the dealer concerned must have been brought into use by him thus, reducing the credit balance - A plain reading of Section 73 would confirm that it is only on such availment or utilization of credit to reduce tax liability, which is recoverable under section 73(1) read alongside the other provisions present thereunder. In fact the position is made even more clear by reading the said provision alongside sub-section (5), (7), (8), (9) to (11). The Assistant Commissioner of State Taxes has somewhere got confused to treat the transitional credit claimed by the dealer as an availment of the said credit when in fact an availment of a credit is a positive act and unless carried out for reducing any tax liability by its reflection in the return filed for any financial year, it cannot be a case of either availment or utilization. It is rightly argued by Mr. Kejriwal that even if the respondent no.3 was of the opinion that the petitioner was not entitled to such transitional credit at best, the claim could be rejected but such rejection of the claim for transitional credit does not bestow any statutory jurisdiction upon the assessing authority to correspondingly create a tax liability especially when neither any such outstanding liability exists nor such credit has been put to use. This important aspect of the matter has eluded the wisdom of the respondent no.3 while passing the order. In fact it is on a complete misappreciation of legal position which lies at the foundation of the demand raised by the impugned order whereby the credit amount reflected in the credit ledger to the tune of ₹ 42,73,869.00 has been treated as an outstanding tax liability against the petitioner to order for its recovery together with interest and penalty even when the electronic credit ledger status at Annexure 7 confirms to a credit in favour of the petitioner i.e. a negative tax liability. The order dated 6.11.2018 passed by the respondent no.3, the Assistant Commissioner of State Taxes in purported exercise of power vested in him under section 73 of ‘the BGST Act’ is held per se illegal and an abuse of the statutory jurisdiction and is accordingly quashed and set aside - Petition allowed.
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