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2024 (9) TMI 1475 - HC - GSTTransition of Input Tax Credit without actually filing a return under the provisions of the Central Excise Rules, 2001 for the month of July 2017 - HELD THAT - As long as the petitioner was entitled to avail Input Tax Credit under the provisions of the CENVAT Credit Rules, 2004, it cannot be allowed to be lapsed, unless the provisions of the CENVAT Credit Rules, 2004 itself provided for its lapsing. In this connection, the decision of the Hon'ble Supreme Court in COLLECTOR OF CENTRAL EXCISE, PUNE VERSUS DAI ICHI KARKARIA LTD. 1999 (8) TMI 920 - SUPREME COURT was invited wherein, it has been held ' There is no provision in the rules which provides for a reversal of the credit by the Excise Authorities except where it has been illegally or irregularly taken, in which event it stands cancelled or, if utilised, has to be paid for. The credit in the instant cases having been taken validly, is, therefore, indefeasible.' Thus, the credit which was earned by the petitioner cannot be defeated under the provisions of the CENVAT Credit Rules, 2001. As far as the procedural irregularity committed by the petitioner in following the procedures under Section 140 of the Central Goods and Services Tax (CGST) Act, 2017 is concerned, the same has to be condoned as the procedures cannot come in the legitimate way of grant of Input Tax Credit - In this connection, the decision of the Hon'ble Supreme Court in COMMISSIONER OF SALES TAX, UP. VERSUS AURAIYA CHAMBER OF COMMERCE, ALLAHBAD 1986 (4) TMI 50 - SUPREME COURT , is relevant wherein, the Hon'ble Supreme Court has held that procedures are handmaids of justice and not mistress of law. The impugned order dated 04.08.2021 is liable to be quashed. Accordingly, it is quashed - Petition allowed.
Issues: Challenge to Impugned Order; Input Tax Credit Transition; Jurisdiction of State Officers; Merits of the Writ Petition; Appeal of Previous Court Decision
In the judgment delivered by Honourable Mr. Justice C. Saravanan of the Madras High Court, the petitioner challenged the Impugned Order-in-Original No.03/2021-DC TPR (GST) dated 04.08.2021, which confirmed the demand proposed in Show Cause Notice Reference No.01/2019 (DC) dated 13.11.2019. The dispute revolved around the transition of Input Tax Credit by the petitioner without filing a return under the Central Excise Rules, 2001 for July 2017. The petitioner had received a Letter on 21.12.2018, instructing to reverse the credit transitioned on 22.12.2017 under Section 142 of the CGST Act, 2017. Subsequently, a Show Cause Notice was issued leading to the impugned order. The petitioner argued that after receiving the Letter, they filed related returns under Rule 12(5) of the Central Excise Rules, 2001, curing any default. They contended that the CENVAT credit transitioned under Section 140 of the CGST Act, 2017 should not have been denied. Additionally, the petitioner claimed that being assigned to State Officers rendered the proceedings initiated by the respondent without jurisdiction. The respondent opposed the petition, arguing that the transitioned credit was not reflected in returns filed before the Letter was issued, and hence, could not be regularized. The respondent also cited an appeal against a previous court decision by the Department. The court considered the arguments presented by both parties. It held that as long as the petitioner was entitled to avail Input Tax Credit under the CENVAT Credit Rules, 2004, it could not lapse unless specifically provided for in the rules. Referring to a Supreme Court decision, the court emphasized that validly taken credit is indefeasible. The court concluded that the earned credit could not be defeated under the CENVAT Credit Rules, 2001. Regarding procedural irregularities under Section 140 of the CGST Act, 2017, the court opined that such irregularities should not hinder the legitimate grant of Input Tax Credit, citing a Supreme Court decision. The court found fault with the petitioner for not filing returns before transitioning the credit but noted that the petitioner had filed the returns subsequently, curing any lacuna. Consequently, the court quashed the impugned order dated 04.08.2021, allowing the writ petition with consequential relief to the petitioner and closing the connected Writ Miscellaneous Petition without costs.
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