2018 (9) TMI 433 - AAR - GST

Carry forward of CENVAT credit - transition to GST Regime - Whether the applicant is entitled to carry forward the accumulated cenvat credit as reflected in its Excise returns for the month of June- 2017 to GST regime in terms of provisions under the CGST Act, 2017, more particularly Section 140 of the CGST Act? - Whether the accumulated Cenvat Credit so carried forward, not being the credit availed under the GST regime, is required to be adjusted/restricted in the manner prescribed under Rules 42 and 43 of the CGST Rules, 2017? Held that - A plain reading of Section 97(2) clearly implies that the any question relating to CENVAT credit, which falls under transitional provision, shall be out of purview of Advance Ruling. Admissibility of input tax credit, as given in Section 97(2), relates to input tax credit as defined in Section 2(63) of CGST Act, 2017 read with Section 2(62) ibid and not the CENVAT carried forward in TRAN-1, which categorically pertains to pre-GST regime - thus, the question placed do not fall within the four corners of issues defined for seeking Advance Ruling under Section 97(2) ibid. When the question raised does not fall within the ambit of Section 97(2) and be that as it may, the issue has already been pending before the departmental authorities, there are no reason to take up the matter on merits. The application filed by the applicants is hereby rejected, being not maintainable.

Summary

Issues:
1. Entitlement to carry forward accumulated Cenvat credit to GST regime.
2. Adjustment/restriction of accumulated Cenvat Credit under GST regime.

Issue 1: Entitlement to carry forward accumulated Cenvat credit to GST regime

The case involved M/s. Sasan Power Ltd., engaged in electricity generation and coal extraction, seeking Advance Ruling on carrying forward Cenvat credit to the GST regime. The applicant had an unutilized Cenvat Credit balance pre-GST roll-out. The applicant used coal for power generation exempted from Central Excise duty and sold the resulting fly ash. Post-GST, the taxable event shifted to 'supply,' excluding self-use coal transfer. The applicant posed two questions: (i) Entitlement to carry forward Cenvat credit under CGST Act, 2017, and (ii) If yes, the adjustment/restriction under CGST Rules, 2017. The department confirmed the applicant's claim of credit under TRAN-1. The Authority noted the Cenvat credit issue under Section 140 of the CGST Act, 2017, and the department's scrutiny of the claimed credit in TRAN-1.

Issue 2: Adjustment/restriction of accumulated Cenvat Credit under GST regime

The Authority deliberated on the admissibility of the Cenvat credit balance from the last ER-1 filed in June 2017 under Section 140 of the CGST Act, 2017. The department had already examined the applicant's claim in TRAN-1. However, the Authority found that the question raised did not align with the issues defined for Advance Ruling under Section 97(2) of the Act. Section 97(2) pertains to input tax credit under the GST regime, not CENVAT carried forward in TRAN-1 from the pre-GST era. Additionally, Section 98(2) stipulated not admitting applications where questions were pending or decided in other proceedings. As the applicant had raised the issue before jurisdictional officers and faced audit objections, the Authority rejected the application at the admission stage under Sections 97 and 98(2) of the CGST Act, 2017.

In conclusion, the Authority rejected the applicant's request for Advance Ruling under Section 98 of the Madhya Pradesh Goods and Services Tax Act, 2017, citing that the application did not align with the defined issues for Advance Ruling and was already under consideration by the departmental authorities.