9911796707
TMI Blog2025 (2) TMI 96X X X X Extracts X X X X X X X X Extracts X X X X ..... ibed Form TRAN-1, as excisable inputs, pertaining to 11 (eleven) well identified Excise Invoices, whereby Petitioner had duly paid CENVAT Duty, amounting to Rs.8,62,566.00 and the said excisable goods pertaining to the said 11 (eleven) invoices were duly received in the petitioner's factory premises in the Month of July, 2017, accordingly accounted/ capitalized in the petitioner's Books of Account, instantly in the same month of July 2017. (b) For the grant of any other consequential relief/s for which petitioner is found entitled in the eye of law." Brief Facts of the Case 2. The petitioner is a public limited company incorporated under the provisions of the Companies Act, 1956. It is engaged in manufacturing business of MS-Bars and maintains its account on the basis of mercantile/accrual system. It is a 'person' within the meaning of the Central Goods and Services Tax Act, 2017 (hereinafter referred to as the 'CGST Act 2017'). The petitioner claims that it is filing periodical central excise returns under its respective PAN based Central Excise Registration ID. In the present GST regime, the petitioner has been allotted GSTIN ID. 3. In the month of June, 2017, the petitio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oner. The Order-in Original 6. A show-cause notice in prescribed form DRC-1 proposing recovery of credit amounting to Rs. 8,62,566/- was issued to the petitioner vide Annexure '5' and '5/A' (wrongly typed as Annexure '5/A' and '5/B' in the writ petition). Respondent no. 4 finally passed the order in original dated 27.07.2022 (Annexure '6'). A perusal of Annexure '6' would show that respondent no. 4 has considered the defence reply of the petitioner and has also given a personal hearing. In his ultimate analysis, the respondent no. 4 took a view that Section 140(5) of the CGST Act allows a registered person, credit of eligible duties and tax in respect of 'inputs' or 'input services' which were received on or after the appointed day but not on which the tax was paid earlier. Further, when it comes to the question of taking credit of the duty paid on the capital goods in transit received on or after 01.07.2017, no facility is provided to enable the assessee to claim credit of the excise duty paid on such capital goods. Respondent no. 4, therefore, confirmed the demand and ordered for recovery of Rs. 8,62,566/- as detailed in TRAN-1 under Section 73 of the CGST Act from the petitio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... put in the CENVAT Credit Rule, 2017 by superseding/rescinding the earlier CENVAT Credit Rule, 2004 which contained definition of capital goods, the petitioner would not be entitled to claim seamless transfer of the CENVAT credit in connection with the capital goods. 11. Learned ASG has relied upon the definition of the term 'input' as referred in Section 2 (59) of the CGST Act, 2017 and Section 140 (5)of the CGST Act, 2017 to submit that input does not include capital goods and facility of availing transitional credit would not be available to the petitioner in view of Section 140(5). Transitional credit would only be available to 'inputs' and not on the 'capital goods'. According to him, there is a clear demarcation between inputs and capital goods. 12. It is submitted that an identical question fell for consideration before the Hon'ble Gujarat High Court in the case of RSPL Limited vs Union of India reported in 2018 (19) GSTL 430 (GUJ). The Hon'ble Division Bench of Gujarat High Court has clearly opined that sub-section (5) of Section 140 of the CGST Act, 2017 allows a registered person, credit of eligible duties and tax in respect of inputs or input services which were receive ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wers conferred upon it under Section 37 of the Central Excise Act, 1944, no facility has been provided to enable the assessee to claim credit of the excise duty paid on such capital goods. 15. This Court has gone through the various provisions of the CGST Act, 2017 and the CENVAT Credit Rules, 2017. A brief history of the legislation on the subject would take this Court to the erstwhile Central Excise Rules, 1944 (hereinafter referred to as the 'Rules of 1944'). Rule 57(q) was inserted in the Rules of 1944 vide notification dated 01.03.1994 and sub-rule (1) of Rule 57(q) for the first time introduced the benefit of duty paid by a manufacturer on the capital goods used by him in his factory for payment of duty on excise leviable on its final product subject to the conditions imposed. The term "capital goods" was defined, however, a proviso to sub-rule (2) of Rule 57(q) made it clear that notwithstanding anything contained in sub-rule (1), no credit of the specified duty paid on capital goods shall be allowed if such duty has been paid on such capital goods before the first day of March, 1994. In this way, the facility of utilizing the specified duty paid on capital goods used by a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... de to him and includes (a) the integrated goods and services tax charged on import of goods, (b) the tax payable under the provisions of subsections (3) and (4) of section 9, (c) the tax payable under the provisions of subsection (3) and (4) of section 5 of the Integrated Goods and Services Tax Act, (d) the tax payable under the provisions of subsection (3) and sub-section (4) of section 9 of the respective State Goods and Services Tax Act, or (e) the tax payable under the provisions of subsection (3) and sub-section (4) of section 7 of the Union Territory Goods and Services Tax Act, but does not include the tax paid under the composition levy; 2(63) "input tax credit" means the credit of input tax. 17. The CGST Act also contains transitional provisions under Section 140. It is relevant to the transitional arrangements for input tax credit. Section 140 of the CGST Act is being reproduced hereunder for a ready reference:- "Section 140: Transitional arrangements for input tax credit - (1) A registered person, other than a person opting to pay tax under section 10, shall be entitled to take, in his electronic credit ledger, the amount of CENVAT credit Inserted ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... take, in his electronic credit ledger, credit of eligible duties in respect of inputs held in stock and inputs contained in semifinished or finished Substituted by Act 12 of 2020, S. 128(c), for "goods held in stock on the appointed day subject to" (w.e.f. 18-5-2020) [goods held in stock on the appointed day, within such time and in such manner as may be prescribed, 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: 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 re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... emi-finished or finished Substituted by Act 12 of 2020, S. 128(e), for "goods held in stock on the appointed day subject to" (w.e.f. 18-5-2020) [goods held in stock on the appointed day, within such time and in such manner as may be prescribed, 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 not paying tax under section 10; (iii) the said registered person is eligible for input tax credit on such inputs under this Act; (iv) the said registered person is in possession of invoice or other prescribed documents evidencing payment of duty under the existing law in respect of inputs; and (v) such invoices or other prescribed documents were issued not earlier than twelve months immediately preceding the appointed day. (7) Notwithstanding anything to the contrary contained in this Act, the input tax credit on account of any services received prior to the appointed day by an Input Service Distributor shall be eligible for distribution as Substituted by Act 12 of 2020, S. 128(f), for "credit under this Act even if" (w.e.f. 18-5-2020) [credi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cise (Goods of Special Importance) Act, 1957 (58 of 1957); (ii) the additional duty leviable under sub-section (1) of section 3 of the Customs Tariff Act, 1975 (51 of 1975); (iii) the additional duty leviable under sub-section (5) of section 3 of the Customs Tariff Act, 1975 (51 of 1975); Cl. (iv) omitted by Act 31 of 2018, S. 28 (w.r.e.f. 1-7-2017) [***] (v) the duty of excise specified in the First Schedule to the Central Excise Tariff Act, 1985 (5 of 1986); (vi) the duty of excise specified in the Second Schedule to the Central Excise Tariff Act, 1985 (5 of 1986); and (vii) the National Calamity Contingent Duty leviable under section 136 of the Finance Act, 2001 (14 of 2001), in respect of inputs held in stock and inputs contained in semi-finished or finished goods held in stock on the appointed day. Explanation 2.-For the purposes of Substituted by Act 31 of 2018, S.28, for "sub-section (5)" (w.r.e.f. 1-7-2017) [sub-sections (1) and (5)], the expression "eligible duties and taxes" means-- (i) the additional duty of excise leviable under section 3 of the Additional Duties of Excise (Goods of Special Importance) Act, 1957 (58 of 1957); (ii) the addition ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... input tax credit on such tax component would not be allowed. Sub-section (1) and (2) of Section 17 pertain to restriction of the tax credit when the goods or services are utilized partially for business purpose and partially for other purposes or partially for effecting taxable supplies and partially for non-taxable supplies, these provisions do not make any distinction between capital goods and inputs. 19. The distinction in the matter of giving benefit of CENVAT credit on capital goods during the transitional period may be found in Section 140 of the CGST Act. While this provision enables an assessee to carry forward and take credit of Patna High Court CWJC No.15940 of 2023 dt.30-01-2025 20/23 unutilized CENVAT credit paid on inputs as well as on capital goods, in the manner as may be prescribed and subject to the conditions contained in the provisions, sub-section (5) of Section 140 makes a distinction between the capital goods and inputs. This provides that a registered person would be entitled to take credit of eligible duties and taxes in respect of inputs or input services received on or after the appointed date but the duty on tax in respect of which has been paid by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rangements for input tax credit. Subject to contentions and in the manner as may be prescribed, the unused tax credit would be migrated to the GST regime. This section also would enable a registered person to claim credit of the duty paid prior to the appointed day on the inputs even though the inputs may be received after the appointed day. This section consciously does not provide any such facility in relation to the capital goods in transit. This demarcation itself would not be artificial, arbitrary or in any manner, discriminatory. The capital goods and inputs used in manufacturing process have always been treated differently and distinct treatment have been given under the earlier statutes. If the legislature therefore was of the opinion that in relation to capital goods in transit, duty paid before the appointed date cannot be claimed as a credit in the GST regime, we do not find that the distinction is in any manner artificial or arbitrary. 20. Article 14 as is well-known, prohibits class legislation but not reasonable classification. To bring in the element of discrimination in terms of Article 14 of the Constitution, the onus would be on the petitioner to establish that ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
