TMI Blog2020 (2) TMI 1454X X X X Extracts X X X X X X X X Extracts X X X X ..... a person registered under the Central Goods and Services Tax Act, 2017, who was not required to register under the Excise Act shall be deemed to be in possession of a document evidencing payment of duty, if the manufacturer of the specified goods on which duty of Central Excise was leviable has issued a credit transfer document (CTD) to him, in relation to such specified goods held in stock by him on 1st of July, 2017 - In the facts of the case, the petitioners are not having CTD, but have produced on record the copies of the invoice received from the dealers along with copies of invoice issued by the manufacturer of the cars or spare parts (as applicable) in name of the dealers showing the payment of Excise Duty along with the Chassis Number of cars (in case of cars). The respondents are required to consider the documents furnished by the petitioners in support of the claim of transitional credit with regard to cars and spare parts lying in the stock of the petitioners as on 30th June, 2017 like invoices bearing the name of petitioners issued by the dealer and the invoices issued by the manufacturers in name of the dealer with details such as Chassis Number of the car in case o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... anufacturer. 2.1 It is the case of the petitioners that when the Central Goods and Services Tax Act, 2017 (for short, CGST Act, 2007 ) was implemented w.e.f. 1st July, 2017, it subsumed Central Excise as well as the Value Added Tax. The petitioners were having cars and spare parts in the stock as on 30th June, 2017 out of which, some cars were purchased directly from the manufacturer while remaining were purchased from other authorized distributers, who had in turn purchased them from the manufacturers. 2.2 According to the petitioners, the petitioners were liable to pay Goods and Services Tax under the CGST Act, 2017 on the supply of goods, which was with the petitioners in stock as on 30th June, 2017. 2.3 The petitioners were required to pay tax by way of GST on the goods on which the manufacturer had already paid excise duty in order to mitigate eventuality of double taxation in so far as the goods in stock as on 30th June, 2017 were lying with the registered person under the GST regime. Section 140(3) of the CGST Act, 2017 provided for transitional credit and accordingly a person is entitled to credit of duty in respect of inputs held in stock or contained in finish o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h the aforesaid prayers. 3. On 6-2-2019, this Court passed the following order : 1. Mr. Uchit Sheth, Learned Advocate for the petitioner has invited the attention of the court to the provisions of Section 140 of the Central Goods and Services Tax Act, 2017 and more particularly sub-section (3) thereof, which inter alia provides that a registered dealer as described therein, a first stage dealer or a second stage dealer or a registered importer or a depot of a manufacturer, shall be entitled to take credit of eligible duties in respect of inputs held in stock on the appointed day, subject to the conditions enumerated thereunder. It was submitted that all the five conditions enumerated under sub-section (3) of Section 140 of the Act are satisfied by the petitioner. Referring to clause (iii) of sub-section (3) of Section 140 of the Act, it was submitted that the same provides that the said registered person should be in possession of invoice or other prescribed documents evidencing payment of duty under the existing law in respect of such inputs. It was submitted that in the facts of the present case, no documents have been prescribed under the Central Goods and Services Tax Ru ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ubmitted that the Excise Duty is not paid by the petitioners on such vehicles which were purchased from other dealer(s) as it is mandatory on the part of the manufacturer to pay the Excise Duty prior to sale of the goods as per the provisions of the Central Excise Act, 1944. It was, therefore, submitted that in such circumstances, if the petitioners are not granted transitional credit, it would amount to double taxation, which is contrary to the intent and purpose of Section 140(3) of the CGST Act, 2017. 4.4 Mr. Sheth further submitted that the interpretation as canvassed by the respondent-authority is contrary to the object and purpose of the transitional credit provision, which is meant to avoid double taxation in case where goods contained in stock have already borne the tax under the earlier tax regime. 4.5 Learned Advocate for the petitioners therefore, prayed that the respondents be directed to grant the transitional credit as claimed by the petitioners. 5. On the other hand, Mr. P.Y. Divyeshwar, the Learned Advocate for the respondents vehemently opposed the petition and relying upon the averments made in Affidavit-in-Reply filed on behalf of the respondents, it was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .), wherein the Supreme Court has held that non-observance of even a procedural condition cannot be condoned because it is likely to facilitate commission of fraud and introduce administrative inconveniences : In Kedarnath Jute Manufacturing Co. v. Commercial Tax Officer, Calcutta and Ors. [1965] 3 SCR 626 There is an understandable reason for the stringency of the provisions. The object of Section 5(2)(a)(ii) of the Act and the rules made thereunder is self-evident. While they are obviously intended to give exemption to a dealer in respect of sales to registered dealers of specified classes of goods, it seeks also to prevent fraud and collusion in an attempt to evade tax. In the nature of things, in view of innumerable transactions that may be entered into between dealers, it will well-nigh be impossible for the taxing authorities to ascertain in each case whether a dealer has sold the specified goods to another for the purposes mentioned in the Section. Therefore, presumably to achieve the two-fold object, namely, prevention of fraud and facilitating administrative efficiency, the exemption given is made subject to a condition that the person claiming the exemption shall fu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mmediately preceding the appointed day; and (v) the supplier of services is not eligible for any abatement under this Act : Provided that where a registered person, other than a manufacturer or a supplier of services, is not in possession of an invoice or any other documents evidencing payment of duty in respect of inputs, then, such registered person shall, subject to such conditions, limitations and safeguards as may be prescribed, including that the said taxable person shall pass on the benefit of such credit by way of reduced prices to the recipient, be allowed to take credit at such rate and in such manner as may be prescribed. 7. On perusal of the aforesaid provisions, it is clear that they nowhere provide for the petitioners to submit any CTD to claim the transitional credit. 8. As far as the reliance placed on behalf of the respondents on the Cenvat Credit Rules, 2017 and the Notification No. 21/2017 is concerned, it is true that the Notification No. 21/2017 issued under sub-rule (2) of Rule 15 of Cenvat Credit Rules, 2017 prescribes procedure to avail the transitional credit of Cenvat by a dealer or a trader, who was not registered under the Central Excise ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ds on which duty of Central Excise was leviable has issued a credit transfer document (CTD) to him, in relation to such specified goods held in stock by him on 1st of July, 2017. 10. In the facts of the case, the petitioners are not having CTD, but have produced on record the copies of the invoice received from the dealers along with copies of invoice issued by the manufacturer of the cars or spare parts (as applicable) in name of the dealers showing the payment of Excise Duty along with the Chassis Number of cars (in case of cars). 11. Therefore, even though the petitioners are not having CTD the respondent-authorities can very well verify the payment of Excise Duty on the cars purchased by the petitioners from the dealers and on spare parts on the basis of documents submitted by the petitioners. 12. In such circumstances, the respondents are required to consider the documents furnished by the petitioners in support of the claim of transitional credit with regard to cars and spare parts lying in the stock of the petitioners as on 30th June, 2017 like invoices bearing the name of petitioners issued by the dealer and the invoices issued by the manufacturers in name of the d ..... X X X X Extracts X X X X X X X X Extracts X X X X
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