2020 (2) TMI 1454 - HC - GST

Seeking declaration that transitional Input Tax Credit is admissible to the petitioners - Section 140(3) of the GST Act - HELD THAT - On perusal of Section 140(3) it is clear that they nowhere provide for the petitioners to submit any CTD to claim the transitional credit. 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 Law - On perusal of the Rule 15 and more particularly explanation thereto it appears that Specified goods for the sub-rule (2) would mean such goods which have a value more than rupees twenty five thousand per piece and bear the brand name of the manufacturer or the principal manufacturer and are identifiable by a distinct number such as chassis or engine number of a car. Sub-rule (2) provides that 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 of cars. If the respondents are satisfied on basis of such documents that the Excise Duty has been paid by the manufacturer the Excise Duty paid should be allowed as transitional credit in the hands of the petitioners - Petition disposed off.

Summary

Issues Involved:
1. Quashing of impugned notice dated 18-12-2018.
2. Admissibility of transitional Input Tax Credit (ITC) under Section 140(3) of the CGST Act, 2017.
3. Requirement of Credit Transfer Documents (CTD) for claiming transitional ITC.
4. Verification of transitional ITC claims by the respondent authorities.

Detailed Analysis:

1. Quashing of Impugned Notice Dated 18-12-2018:
The petitioners sought to quash the notice dated 18-12-2018 issued by the respondent, which required them to provide credit transfer documents or vouchers from the dealers for the transitional credit claimed. The petitioners contended that it was not possible to get the excise invoices or duty-paying documents in their name for vehicles purchased from dealers.

2. Admissibility of Transitional Input Tax Credit (ITC) Under Section 140(3) of the CGST Act, 2017:
The petitioners argued that they were entitled to transitional credit for excise duty paid on vehicles and spare parts in stock as of 30th June 2017, even though they did not have excise invoices in their name for goods purchased from other dealers. They contended that Section 140(3) of the CGST Act, 2017 allows for such credit if the person has invoices or other prescribed duty-paying documents. The petitioners claimed that they had provided all necessary documents, including invoices showing payment of excise duty by the manufacturer.

3. Requirement of Credit Transfer Documents (CTD) for Claiming Transitional ITC:
The respondents argued that the petitioners must follow the procedure prescribed in Notification No. 21/2017, which requires obtaining CTD from the manufacturer to claim transitional credit. The petitioners countered that Section 140(3) does not mandate the submission of CTD and that they were not bound by the Cenvat Credit Rules, 2017 or the Notification No. 21/2017 for claiming transitional credit.

4. Verification of Transitional ITC Claims by the Respondent Authorities:
The court noted that the petitioners had submitted invoices from dealers and manufacturers showing payment of excise duty. It was observed that the respondent authorities could verify the payment of excise duty based on these documents. The court directed the respondents to consider the documents furnished by the petitioners and verify whether excise duty had been paid by the manufacturer. If satisfied, the respondents were to allow the transitional credit claimed by the petitioners.

Conclusion:
The court concluded that the respondents must verify the petitioners' claim for transitional credit based on the documents provided. If the documents satisfactorily evidenced the payment of excise duty by the manufacturer, the transitional credit should be allowed. The court directed the respondents to complete this verification within three months from the date of the order. The petition was disposed of with no order as to costs.