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2021 (9) TMI 676 - Commissioner - GSTRecovery of Input Tax Credit alongwith interest and penalty - Section 73(1) read with Section 140(3) of the CGST Act,2017 - credit denied on the ground that Ready Mix Concrete (RMC) has been-received by the taxpayer after availing concessional rate of duty - exempt goods - HELD THAT - The appellant has taken ITC amounting to ₹ 7,53,571/- on inputs held in stock as on 30.06.2017 in Trans-1 under the provisions of Section 140(3) of the CGST Act, 2017. Inputs contained in semi finished and finished goods - HELD THAT - As per Section 2(59) of the CGST Act,2017, Inputs means any goods other than capital goods used or intended to be used by a supplier in course of furtherance of business. Whereas as per Section 2(52) of the said Act Goods means every kind of movable property other than money and securities but includes actionable claim, growing crops, grass and things attached to or forming part of the land which are agreed to be severed before supply or under a contract of supply - appellant's claim for ITC of ₹ 7,20,147/- on inputs contained in semi finished work, does not appear to be correct, as a building under construction being attached to the earth can- not be called goods in terms of definition as per Section 2(52) mentioned above and in terms of various case laws erstwhile Central Excise Act, 1944. Therefore, in the case of building construction, the transitional credit of inputs already used in construction and contained in WIP as on 30.06.2017 is not admissible. Therefore, wrongly transferred ITC of ₹ 7,20,147/- is recoverable from the appellant. - the appellant is not entitled to take entire ITC of ₹ 14,73,718/- (₹ 7,53,571/- on inputs held in stock ₹ 7,20,147/- on inputs contained in semi finished finished goods) in TRAN-1. Jurisdiction of issuance of SCN and passing of Impugned Order under Section 73 read with Rule 142 of the CGST Act/Rules, 2017 - proceedings initiated under Section 73 of the CGST Act, leading to confirmation of demand and recovery of transitional credit under Section 73(9) read with Rule 142 - HELD THAT - The appellant have irregularly carried forward the ITC of ₹ 14,73,718/- deliberately with intent to avail irregular ITC. Had the information not been disclosed during the audit of the records, the facts would not have come to knowledge of the department. Thus, the appellant appears to have suppressed the facts from the department with intent to avail irregular ITC. In this manner, they appear to have contravened the provisions of Section 140 of the CGST Act, 2017. Therefore, the provisions of Section 73 of the CGST Act, 2017 are invokable for recovery of the said credit of ₹ 14,73,718/- from them. The appellant also appears liable to pay interest in terms of Section 50 of the CGST Act, 2017 and penalty in terms of Section 122 of the CGST Act, 2017. The audit of records of the Appellant for the period from April. 2016 to June, 2017 was carried out by the audit team from office of the Assistant Commissioner, CGST, Circle-A Jaipur during June, July August, 2018 and the audit observations were conveyed vide lAR No. 08/2018-19 (new) / 506/2017-18 (old) dated 24.09.2018. However, even after pointed out by the audit team of the department, the appellant has not deposited such irregular/wrongly taken and utilized ITC of ₹ 14,73,718/- - there was no facility/module to serve GST DRC-01 electronically on the common portal at the time of issuance of show cause notice, therefore the same was issued manually by the jurisdictional authority. Appeal dismissed.
Issues Involved:
1. Validity of Input Tax Credit (ITC) carried forward under Section 140 of the CGST Act. 2. Admissibility of ITC on specific items such as Ready Mix Concrete (RMC), electric switches, knives/cutters, paver blocks, and head gears. 3. Eligibility for ITC on inputs contained in finished and semi-finished buildings. 4. Applicability of Section 140(3)(v) regarding abatement. 5. Jurisdictional issues related to the issuance of Show Cause Notice (SCN) and the impugned order. Detailed Analysis: 1. Validity of Input Tax Credit (ITC) Carried Forward: The appellant argued that the credit carried forward was in accordance with Section 140 of the CGST Act. The adjudicating authority, however, found that the appellant had wrongly/irregularly taken and utilized inadmissible ITC amounting to ?14,73,718 through TRAN-1. The main issue was whether the appellant had validly carried forward this credit. 2. Admissibility of ITC on Specific Items: - Ready Mix Concrete (RMC): The appellant contended that the credit on RMC was admissible as it was input held in stock. The adjudicating authority disagreed, stating that RMC received at a concessional rate of duty is categorized as exempted goods, and thus, credit on such items is inadmissible under Rule 3 of the Cenvat Credit Rules, 2004. - Electric Switches: The appellant argued that electric switches are inputs and not capital goods, thus eligible for ITC. The adjudicating authority maintained that these items were capital goods under the previous regime and thus not eligible for ITC under TRAN-1. - Knives/Cutters: The impugned order confirmed the denial of credit on knives/cutters, relying on the proviso to Section 140(2) of the CGST Act, which allows carrying forward only unavailed credit on capital goods. - Paver Blocks and Head Gears: The appellant claimed that these items were used in common areas, which are part of the taxable value of construction services. The adjudicating authority, however, held that these items are part of immovable property and thus not eligible for ITC. 3. Eligibility for ITC on Inputs Contained in Finished and Semi-Finished Buildings: The appellant argued that the denial of credit on inputs held in finished and semi-finished goods was unjustified. The adjudicating authority referenced Section 2(52) and Section 2(59) of the CGST Act, stating that buildings under construction are immovable property and thus do not qualify as 'goods.' Consequently, the transitional credit on such inputs was deemed inadmissible. 4. Applicability of Section 140(3)(v) Regarding Abatement: The adjudicating authority found that the appellant was availing abatement and paying GST at a reduced rate of 12% instead of 18%, which made the ITC inadmissible under Section 140(3)(v). The appellant contested this, arguing that the abatement in question was not applicable under the CGST Act, and thus, the denial of credit was incorrect. 5. Jurisdictional Issues Related to the Issuance of SCN and the Impugned Order: The appellant contended that the SCN and the impugned order were issued without jurisdiction and that the proceedings under Section 73 of the CGST Act were beyond jurisdiction. The adjudicating authority found that the appellant had deliberately carried forward the ITC with intent to avail irregular credit, invoking the provisions of Section 73 for recovery. The appellant also argued that the confirmation of demand under the SGST Act was without jurisdiction, which the adjudicating authority acknowledged as an inadvertent error. Conclusion: The appeal was rejected, and the impugned order was upheld, confirming the recovery of the wrongly transferred ITC amounting to ?14,73,718 along with applicable interest and penalties. The adjudicating authority found that the appellant had contravened the provisions of Section 140 of the CGST Act and had suppressed facts with the intent to avail irregular ITC.
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