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2024 (12) TMI 513 - HC - GSTTransition of CENVAT Credit - Interpretation of Section-140(1) of CGST Act - whether the transition of the credit is admissible or not on account of the pending enquiry under the CENVAT regime? - HELD THAT - It appears that the 1st respondent, after framing this question, has taken the view that the pendency of and enquiry, on the eligibility of the petitioner to claim such CENVAT credit, is sufficient to hold that the transition of credit under Section-140(1) of CGST Act is not permissible as the said provision stipulates that it is only eligible CENVAT credit that can be transitioned. This provision stipulates that a person shall be entitled to take in his electronic credit ledger the amount of CENVAT credit available as on 30.06.2017. The CENVAT credit which was available to the petitioner as on 30.06.2017 was Rs.2,48,23,034/-. The petitioner was entitled to utilize this credit under the CENVAT regime even during the pendency of the proceedings initiated under the show-cause notice dated 18.11.2019. It may also be noted that as on the date of transition, that is 01.07.2017, there was no show-cause notice or any doubt raised against the claim of the petitioner for availing of such CENVAT credit. The respondents 1 to 3 would contend that the words of eligible duties carried forward would mean only such duty/credit which is un-disputed and which is not under any cloud or dispute, and as such, the transition of the CENVAT credit of Rs.1,39,31,604/-, which was under a dispute or a cloud could not have been made. She would also submit that the show-cause notice does not amount to a duplication of Judgment - This contention cannot be accepted as mere issuance of a showcause notice which is subsequently kept in abeyance, cannot disentitle the petitioner from claiming the transition of the available CENVAT credit as on 30.06.2017 to the GST regime. This Writ Petition is disposed of setting aside the Impugned Order of the 1st respondent dated 30.06.2023 bearing DIN.No.20230655YL000000A330.
Issues:
Transition of CENVAT credit to GST regime; Interpretation of Section-140(1) of CGST Act; Eligibility of petitioner for CENVAT credit; Disallowance of CENVAT credit by respondent; Show-cause notices and Orders under Central Excise Act and GST Act. Analysis: The petitioner, previously registered under the Central Excise Act, transitioned CENVAT credit to the GST regime, facing an audit objection and subsequent show-cause notices. The first show-cause notice was issued in 2019, leading to an Order of abeyance in 2021 due to CESTAT's favorable decision. However, a second show-cause notice in 2021 demanded repayment of CENVAT credit, interest, and penalty. The petitioner contested the disallowance, citing Section-140(1) of the CGST Act, claiming proper transition of credit. Respondents argued the ineligibility of the petitioner for credit transition under the GST Act. The Court noted that the respondent's Order did not address the petitioner's eligibility for CENVAT credit but focused on the pending show-cause notice under the Central Excise Act. The respondent held that the credit transition was impermissible due to the ongoing enquiry on credit eligibility. The Court analyzed Section-140(1) of the CGST Act, emphasizing the entitlement of a registered person to transition CENVAT credit available as of 30.06.2017, regardless of pending proceedings. The respondent's interpretation of "eligible duties carried forward" was rejected, stating that a show-cause notice alone does not bar credit transition. Consequently, the Court set aside the respondent's Order disallowing the transition of CENVAT credit, cautioning that the decision does not determine the ultimate eligibility of the petitioner for credit. The Court directed the pending proceedings to proceed without influence from this Order. No costs were awarded, and pending petitions were closed as a result of the judgment.
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