2021 (8) TMI 1072 - HC - Service Tax

SVLDRS - Refusing to issue the discharge certificate on the ground that, petitioner has illegally sought transitional credit of the disputed Cenvat credit under the GST Act - CENVAT Credit - GTA services - C F Agency services - sales to customers on for destination basis from its factory and depots - period from 2014 to June, 2017 - HELD THAT - Once the declarant had made payment of the estimated amount as per the statement in the form of SVLDRS-3 within the stipulated time, it was beyond the jurisdiction of the respondents to proceed with adjudication of the show-cause notice issued under the Central Excise Act with regard to the self same subject matter and pass impugned order-in-original, dated 12.10.2020. However, it is the matter of adjudication whether availing of Scheme would attach legitimacy to the Cenvat credit on GTA and C F Agency services to the tune of ₹ 17,34,56,893/- and the same would be eligible for the purpose of transition under Section 140 of the GST Act. With regard to the issue of the 1st respondent Designated Committee refusing to issue discharge certificate under Sub-section (8) of Section 127 of the Finance Act, there is nothing in the Scheme which empowers the said respondent to refuse issuance of the discharge certificate on the basis of any subsequent event apart from the fact of discovery of false statement relating to any material particular in the declaration. Availing of transitional credit by the petitioner under the GST Act on the Cenvat credit for GTA and C F Agency services under the Central Excise Act is a subsequent and separate transaction from the declaration made by him under the Scheme and the adjudication of such claim cannot be said to be barred in law or without jurisdiction. Impugned order set aside - petition allowed.

Issues Involved:
1. Eligibility of the petitioner to avail Cenvat credit for outward transportation services.
2. Entitlement of the petitioner to the benefits under the Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019.
3. Legitimacy of the refusal to issue a discharge certificate under the Scheme.
4. Validity of the adjudication proceedings under the Central Excise Act post declaration under the Scheme.
5. Eligibility of transitional credit under Section 140 of the GST Act.

Issue-wise Detailed Analysis:

1. Eligibility of the petitioner to avail Cenvat credit for outward transportation services:
The petitioner, engaged in manufacturing cement and clinker, availed Cenvat credit on GTA and C&F Agency services for outward transportation from the factory to customers' premises during the period from 2014 to June 2017. The respondent issued a show-cause notice on 04.06.2019, proposing recovery of irregularly availed Cenvat credit of ?17,34,56,893/- along with interest and penalty, arguing that the petitioner was not entitled to such credit for outward transportation services.

2. Entitlement of the petitioner to the benefits under the Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019:
The Scheme, introduced under Chapter-V of the Finance Act, 2019, aimed to resolve pending disputes under various laws subsumed under the GST regime. The petitioner made a declaration under Section 125 of the Finance Act, and the Designated Committee issued a statement (SVLDRS-3) indicating the amount payable after relief. The petitioner paid ?8,67,28,446.50 within the stipulated period, making them eligible for a discharge certificate under Section 127(8) of the Finance Act.

3. Legitimacy of the refusal to issue a discharge certificate under the Scheme:
Despite the petitioner fulfilling the payment requirements, the respondent refused to issue a discharge certificate, citing the illegal claim of transitional credit under the GST Act. The court noted that the Scheme mandates the issuance of a discharge certificate once the estimated amount is paid, barring any false statements in the declaration. The refusal based on subsequent transitional credit claims was deemed beyond the Scheme's scope.

4. Validity of the adjudication proceedings under the Central Excise Act post declaration under the Scheme:
The court held that once the petitioner paid the amount as per the SVLDRS-3 statement, the respondents lacked jurisdiction to proceed with adjudication of the show-cause notice under the Central Excise Act for the same subject matter. The impugned order-in-original dated 12.10.2020, passed by the Principal Commissioner of Central Tax GST Commissionerate, Tirupati, was set aside.

5. Eligibility of transitional credit under Section 140 of the GST Act:
The court opined that availing the Scheme does not automatically legitimize the Cenvat credit for GTA and C&F Agency services as eligible transitional credit under the GST Act. The adjudication of the show-cause notice dated 10.11.2020, concerning the transitional credit claim, was deemed valid and within jurisdiction. The matter was remanded to the adjudicating authority for a decision.

Conclusion:
(i) The impugned order-in-original dated 12.10.2020, was set aside.
(ii) The letter dated 24.11.2020, refusing to issue the discharge certificate, was set aside, and the matter was remanded to the Designated Committee to consider issuing the discharge certificate.
(iii) The respondents were directed to proceed with the adjudication of the show-cause notice dated 10.11.2020, allowing the petitioner to respond, and dispose of it expeditiously and in accordance with law.

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