TMI Blog2021 (9) TMI 676X X X X Extracts X X X X X X X X Extracts X X X X ..... y - appellant's claim for ITC of ₹ 7,20,147/- on inputs contained in semi finished work, does not appear to be correct, as a building under construction being attached to the earth can- not be called goods in terms of definition as per Section 2(52) mentioned above and in terms of various case laws erstwhile Central Excise Act, 1944. Therefore, in the case of building construction, the transitional credit of inputs already used in construction and contained in WIP as on 30.06.2017 is not admissible. Therefore, wrongly transferred ITC of ₹ 7,20,147/- is recoverable from the appellant. - the appellant is not entitled to take entire ITC of ₹ 14,73,718/- (₹ 7,53,571/- on inputs held in stock + ₹ 7,20,147/- on inputs contained in semi finished finished goods) in TRAN-1. Jurisdiction of issuance of SCN and passing of Impugned Order under Section 73 read with Rule 142 of the CGST Act/Rules, 2017 - proceedings initiated under Section 73 of the CGST Act, leading to confirmation of demand and recovery of transitional credit under Section 73(9) read with Rule 142 - HELD THAT:- The appellant have irregularly carried forward the ITC of ₹ 14,73,7 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nsport agency service, Construction of residential complex service, Sponsorship service provided to body-corporate or firm including sports sponsorships, Business support service, Legal consultancy service, Other Taxable Services Other than the 119 listed (out of which ST payable on certain services under Reverse Charge Mechanism (for short RCM). During the course of audit of the records of the appellant till 30.06.2017 and TRAN-1, conducted by the Internal Audit Team of the CGST Audit Commissionerate, Jaipur, it was observed that the appellant has wrongly/irregularly transferred/taken and utilized inadmissible Input Tax Credit (for short ITC) amounting to ₹ 14,73,718/- through Tran-1[Table 7(a)] against claimed to be Inputs and Inputs contained in Semi Finished Goods and Inputs contained in Finished Goods. As per details furnished by the appellant in Table 7(a) of TRAN-1, it appeared that the ITC involved in the present case, appeared to inadmissible to the appellant on various grounds, as follows:- (i) The Ready Mix Concrete(for short RMC) has been-received by the taxpayer after availing concessional rate of duty by the supplier of the goods as such the Cenvat Credit on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... demand alongwith interest and penalty, as proposed in show cause notice. 3. Being aggrieved the impugned order, the appellant has filed appeal on the various grounds, which are as under:- A. THE APPELLANT HAS VALIDLY CARRIED FORWARD THE CREDIT UNDER SECTION 140 OF THE CGST ACT, AND THUS, DEMAND CONFIRMED IN THE IMPUGNED ORDER IS NOT SUSTAINABLE. A.1 It is submitted that the carrying forward of credit by the Appellant was in accordance with provisions of Section 140 of the CGST Act, and thus, confirmation of demand in the Impugned Order is not sustainable. A.2 As the demand has been confirmed in the Impugned Order on various issues in background of Section 140, the arguments below will deal with each of the issues raised in the SCN and confirmed in the Impugned Order. RMC A.3 In the present case, it is not disputed that RMC, credit on which was carried forward by the Appellant in its Tran-1, was input held in stock and inputs contained in semi-finished or finished goods held in stock on the appointed day. A.4 Further, no part of Section 140(3) lays down any condition that the credit being carried forward must be admissible under the CC Rules. In the absen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ruction of the common area forms part of the consideration charged by the Appellant from buyers. Thus, even if the paver blocks and head gears form part of the common area, the cost of construction of common area forms part of the taxable value of construction services, and thus, the denial of credit is improper. A.10 In this regard, reliance is placed on decision of Hon'ble Tribunal in Abideep Interlock Pavers Pvt Ltd v. CCE, 2018-TIOL-3509-CESTAT- BANG. A.11 The Impugned Order has further observed that Service Tax is not leviable on goods/ immovable property and thus, value thereof was not part of construction services. A.12 It is pertinent to note here that credit on inputs and input services, utilized for construction service, is allowed under the GST regime. The composite supply of service of construction along with transfer of property in goods, is taxable as one supply of service. Therefore, credit on such inputs which are utilized in making taxable supply under GST should be available for set-off. A.13 Further, it was erroneously held that these goods are permanently embedded in the earth and thus, form part of immovable property. A.14 As explained a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at credit under the existing laws or ITC under the GST laws. No provision of the CC Rules or that of the CGST Act lays down that immovability is also a criterion for determining the admissibility of credit/ ITC. When the legal provisions are clear to that effect, the super-imposed restrictions applied in the impugned proceedings have no legs to stand. A.20 The SCN further refers to the definition of 'goods' under Section 2(52) of the CGST Act and alleges that building under construction, being attached to earth, cannot be called as goods. A.21 It may be noted that the aforesaid allegation in the SCN shows complete non-application of mind on behalf of the SCN-issuing authority. The subject-matter of provisions of Section 140(3) of the CGST Act is the inputs, which are used by the supplier. The output supply or the endresult of such supply is not the subject-matter of Section 140(3). The comparison of any inputs, on which credit is being sought to be availed, with the definition of 'goods' may be proper, but the said definition cannot be compared with the output supply or the end-result of such supply. A.22 In the instant case, the claim for credit by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ons: a) who was not liable to be registered under the existing law, or b) who was engaged in the manufacture of exempted goods or provision of exempted services, or c) who was providing works contract service and was availing of the benefit of notification No. 26/2012-Service Tax, dated the 20 th June, 2012, or d) a first stage dealer or a second stage dealer or a registered importer or a depot of a manufacturer. A.30 The opening portion of Section 140(3) uses 'comma' as punctuation mark and the word 'or' thereafter between each of the aforesaid category, intending that a person falling under any of these categories is covered under the scope of Section 140(3). The Appellant is squarely covered under clause (c) mentioned above. Thus, the contrary interpretation adopted in the Impugned Order has no legs to stand and deserves to be set aside. A.31 That the issuance of SCN and passing of Impugned Order under Section 73 read with Rule 142, in facts of the present case, is without jurisdiction; that the proceedings initiated under Section 73 of the CGST Act, leading to confirmation of demand and recovery of transitional credit under Section 73(9) rea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed or finished goods held in stock on the appointed day subject to the following conditions, namely:- (i) such inputs or goods are used or intended to be used for making taxable supplies under this Act; (ii) the said registered person is eligible for input tax credit on such inputs under this Act; (iii) the said registered person is in possession of invoice or other prescribed documents evidencing payment of duty under the existing law in respect of such inputs; (iv) such invoices or other prescribed documents were issued not earlier than twelve months immediately preceding the appointed day; and (v) the supplier of services is not eligible for any abatement under this Act : It has been observed that the appellant is availing abatement and paying GST @ 12% instead of 18% by availing abatement. As per SI. No. 3(i) of Notification No. 11/2017-CT (Rate) dated 28.06.2017, construction of residential complex attracts GST @18% [CGST @ 9% and SGST @ 9%] {which includes construction of complex, building, civil structure or a part thereof, including a complex or building intended for sale to a buyer, wholly or partly, except where the entire consideration has been receive ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on work-in-process stage on the appointed day, the same would not be covered within the terms 'semi-finished or finished goods' as the term 'goods' covers movable property and not immovable property. 10.7 In view thereof, the appellant is not entitled to avail input tax credit of Central Excise duty and VAT paid on pipes, under sub-sections (I) and (6) of Section 140 of the CGST Act, 2017 and the GGST Act, 2017. 7.2 I find that as per Section 2(59) of the CGST Act,2017, Inputs means any goods other than capital goods used or intended to be used by a supplier in course of furtherance of business. Whereas as per Section 2(52) of the said Act Goods means every kind of movable property other than money and securities but includes actionable claim, growing crops, grass and things attached to or forming part of the land which are agreed to be severed before supply or under a contract of supply. The appellant's claim for ITC of ₹ 7,20,147/- on inputs contained in semi finished work, does not appear to be correct, as a building under construction being attached to the earth can- not be called goods in terms of definition as per Section 2(52) mentione ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mentioned inadvertently in the impugned order. 11. I find that the appellant has also contended that the mandate of the said legal provisions has also not been followed in the present case; that Rule 142(1)(a) mandates that along with a SCN under Section 73, a summary thereof in Form GST DRC-01 shall be served electronically. Rule 142(5) further mandates that a summary of the order issued under Section 73 shall be uploaded electronically in Form GST DRC-07; that in the instant case, neither Form GST DRC-01A nor GST DRC-01/ Form GST DRC-07 has been issued/ served on the Appellant either physically or electronically on the common portal. 12. I find that audit of records of the Appellant for the period from April. 2016 to June, 2017 was carried out by the audit team from office of the Assistant Commissioner, CGST, Circle-A Jaipur during June, July August, 2018 and the audit observations were conveyed vide lAR No. 08/2018-19 (new) / 506/2017-18 (old) dated 24.09.2018. However, even after pointed out by the audit team of the department, the appellant has not deposited such irregular/wrongly taken and utilized ITC of ₹ 14,73,718/- . After this, I find that jurisdictional a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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