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TMI Blog2021 (8) TMI 318X X X X Extracts X X X X X X X X Extracts X X X X ..... 2020 Excess ITC claim (wrong availment in TRAN-1) for the period Sept-2018 Rs. 1,21,395/- , Interest and penalty 2. Brief Facts of the case:- 2.1 M/s Parle Biscuits Pvt Ltd., Plot E-7A-E-8, RIICO Industrial Area, Neemrana, Alwar having GSTIN 08AAACP0485D1ZO is engaged in manufacturing of Sugar Candy (CETSH No.17049020) and Chocolaty Melody (CETSH No.18069010). 2.2 The officers of Central Excise and Service tax Audit Commissionerate conducted audit of the records of the appellant. During the course of audit of their records, it is noticed that the appellant was having Closing Balance of Cenvat Credit of Rs. 1,65,653/- (Central Excise & Service Tax Credit) in its ER-1 Return filed for the period June, 2017. However, in their Tran-01 statement, they had carried forward a total ITC of Rs. 2,87,048/-. During the course of audit of their records, it was noticed that the appellant has transferred Education Cess and Secondary Higher Education Cess Credit lying with them at the end of June-2017 to TRAN-1 which does not appeared to be correct as per Transitional provisions defined in the Central Goods and Services Tax Act, 2017. 2.3 Further, it was observed that the appellant appear ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... impugned Order without considering and appreciating the submissions made, provisions of law, judgments, CBIC instructions, etc. in support of which, the following submissions are made, without prejudice to each other: 2. Section 140 of the CGST Act; 2017 did not have any specific prohibition on transition of accumulated CENVAT credit of EC and SHEC to GST regime until the said provision was made effective on 01.02.2019: i. Section 140(1) of CGST Act, 2017 permitted transition of CENVAT credit carried forward in the last ER-1 Return filed in June, 2017. Further, the section did not have any specific prohibition on transition of accumulated CENVAT credit of EC and SHEC to GST regime and permitted the transition of all the CENVAT credits (which included CENVAT credit of EC and SHEC). It is an admitted fact that the EC and SHEC were eligible for CENVAT credit, which were validly claimed by the Appellant at the outset itself. Hence, in view of the provisions of section 140 at the time of transition as well as at the time of submission of form TRAN 1 which permitted the transition of entire CENVAT credit balance, without specifically restricting transition of credit of EC and SHEC, th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... claim, the Appellant cannot be considered to have claimed incorrect ITC. v. The Assistant Commissioner has erred in holding that the show cause notice has been correctly issued under the pre-amendment provisions. In this regard, the Appellant submit that the CGST Amendment Act, 2018 was brought into effect from 01.02.2019 which stated that eligible duties does not include EC & SHEC. Before this date, the pre amended provisions allowed the Appellant to take the credit of EC & SHEC in Form Tran- 1 which was then reversed in Form GSTR -3B even before the amendment was brought into effect. The Assistant Commissioner has himself relied on amended provisions of law to hold that the credit of cess cannot be transitioned, and accordingly, the conclusion in para 18(iii) of the impugned OIO, holding that as per preamendment provisions, the Appellant was ineligible is clearly incorrect and shows lack of application of mind. In view of the same, the impugned 0I0 should be set aside. vi. The position of the Appellant was validated and accepted by the Madras HC in the case of Sutherland Global Services Pvt. Ltd. [2019-VIL-536-MAD], regarding valid claim of ITC on EC and SHEC in Form Tran-1 i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ppellant is not required to pay any interest on the amount of EC and SHEC credit reversed under section 50 (3) of the CGST Act, 2017. The fact that the Assistant Commissioner has confirmed the demand of interest under section 50(3), despite clear submissions that interest under section 50(3) can be demanded only due to mismatches in disclosure of liability under section 42 and 43 and not for any other reason, clearly shows non application of mind and the order should be set aside on this ground. Without prejudice to anything mentioned above, it is submitted that interest can at best, be levied from the date of claiming and utilizing the credit to the date of reversal and not from the date of introduction of GST and that too, as a short payment of tax. Hence, in the unlikely event. The interest demand is sought to be confirmed, the interest should be computed only for the period of filing Tran 1 and utilizing such credit, till the date of reversal of credit, as a short payment of tax. Which attracts interest @ 18% p.a. and not @ 24% p.a. 5. Penalty under section 122(2)(b) of the CGST Act, 2017 not leviable: The Appellant though availed EC and SHEC credit in Tran 1 on the basis of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... angalore-I (T-Bang)] * Star India Pvt. Ltd. v. Commissioner - [2006 (1) STR 73 (S. C.)] * Merit Organics Ltd. v. CCEx and Cus, Vapi 12009 (234) ELT 353 (T-Ahmd)] 4. Personal hearing in the matter was held on 11.06.2021 through virtual mode, wherein Sh.Kartik Solanki and Sh.Samir Kapadia, Authorized Representative of the appellant both appeared for personal hearing and reiterated the grounds of appeal and explained the same in details. Further, they requested for three days time for additional submission that has been allowed to them. In view of submission they requested for decision in favour of the appellant. 5. Discussion and findings : Issues involved in the present case for consideration are : (a) Whether Carried forward of Education Cess, Secondary & Higher Secondary Education Cess and KrishiKalyan Cess (KKC) through TRAN-1, is permissible under GST law or not ? (b) Whether liability of interest and penalty accrues when ITC of Cesses is reversed, or not ? (a) In respect of issue at Sr. No. (a) I find that :- 1. After 01.06.2015 provisions levying Education Cess (hereinafter referred as 'Ed. Cess' for sake of brevity) and Secondary and Higher Secondary Educat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... those specified laws, which also go to the General Revenue of the State. Fees is yet another impost which has the basis of quid pro quo at its back." The same view has been taken by the larger bench of the Hon'ble Supreme Court of India in the case of Unicorn Industries vs UOI (2019 370 ELT 3) held that :- "education cess, secondary and higher Education cess, NCCD etc. which are all additional levy are independent in nature and do not take the colour of basic levy." 4. CBIC vide its Circular No.87/06/2019-GST dated 02.01.2019 has also clarified vide para 5, mentioned herein below, that transition of cesses is not allowed :- "5. No transition of credit of cesses, including cess which is collected as additional duty of customs under sub-section (1) of section 3 of the Customs Tariff Act, 1975, would be allowed in terms of Explanation 3 to section 140, inserted vide sub-section (d) of section 28 of CGST Amendment Act, 2018 which shall become effective from the date the same is notified giving it retrospective effect." 5. By Reversing the Credit pertaining to Ed. Cess and SHE in GSTR-3B for the month of September-2018 does not mean that the appellant became so entitled to c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s it categorical that the transition the CENVAT Credit pertaining to cesses is not allowed and intention of legislature was very clear that these are dead claim and ought not to be transitioned. Thus, the amendment vide Section 140 through CGST Amendment Act, 2018 was done retrospectively w.e.f. 01.07.2017 because transition of cesses was never intended by the legislature. 9. In view of the above, it is ample clear that carry forward of cesses as ITC through TRAN-1 by the appellant was not proper and in the instant case bounteous statutory provisions are available to restrict admissibility of cesses as ITC in GST to appellant. 10. In view of the foregoing discussions, the contention of the appellant is not tenable as all the contention put forth by the appellant have been discussed in detail in the above said judgement of Hon'ble High Court of Madras. Therefore, I do not find any point to retreat the same. (b) In respect of issue at Sr. No. (b) I find that :- 1. With regard to interest and penalty, I find that the intention of the Legislature was never to transition the CENVAT Credit pertaining to cesses for the fact that Explanation (3) to Section 140, which barres t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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