2022 (10) TMI 786 - HC - GST

Validity of order of the first Appellate Authority - challenge on the ground that there is no Tribunal constituted under Section 112 of the Goods and Service Tax Act, 2017 - entitlement to input tax credit (ITC) with regard to certain imports of capital goods - HELD THAT - The pre-condition for the claim of unavailed credit on capital goods that the assessee concerned ought to have claimed, at the original instance, at least a portion of the credit. Admittedly, in the instant case, the petitioner has made no claim at all - However, seeing as the Assessing Authority has not had any opportunity to address the claim of transitional credit as the claim was made for the first time in appeal, an opportunity is granted to the petitioner to make a claim before the Assessing Authority who shall, upon receipt of the claim, dispose the same within a period of two weeks from date of receipt, after hearing the petitioner. The impugned order is not interfered with in these circumstances but it is made clear that the Authority while disposing the request for transition, if and when made, shall take an independent view and not be bound either by the conclusion of the Appellate Authority or by the prima facie observations made in this order - writ petition disposed off.

Summary

Issues:
Challenge to order of first Appellate Authority regarding entitlement to input tax credit (ITC) for certain imports of capital goods under Goods and Service Tax Act, 2017.

Analysis:
The petitioner contested an order of the first Appellate Authority, arguing that no Tribunal was constituted under Section 112 of the GST Act. The petitioner believed it was entitled to ITC for specific capital goods imports. The petitioner failed to request transition of credit after the Customs Act was subsumed into the GST regime. Instead, the petitioner sought a refund through a manual revision of an excise return, which was rejected in an order-in-original.

During the first appeal, the petitioner raised an alternate claim for transition of credit, which was noted by the first appellate authority. However, the claim was ultimately rejected, with the Authority stating there was no provision in law for such transition. The provisions of Section 140(2) allowing transition of CENVAT credit for capital goods not carried forward were not considered.

The revenue's position was that transition of credit could only be permitted if a portion of the credit had been claimed initially. A Guidance Note for CGST Transition Credit supported this position, emphasizing the need for an initial claim to be made. Since the petitioner had not made any claim initially, the transition of credit was denied.

The Court granted the petitioner an opportunity to make a claim for transitional credit before the Assessing Authority, who must address the claim within two weeks of receipt. The impugned order was not interfered with, but it was clarified that the Assessing Authority should take an independent view on the transition claim, not bound by previous conclusions or observations.

In conclusion, the writ petition was disposed of with no costs, allowing the petitioner to make a claim for transitional credit before the Assessing Authority within a specified timeframe, emphasizing the need for an initial claim to be made for entitlement to transition credit.