2022 (8) TMI 1146 - HC - GST

Transition and distribution of CENVAT Credit by Input Service Distributor (ISD) of the balance of Service Tax/ Excise Duty as on 30.06.2017 - transition of credit under Section 140 of the CGST Act within the prescribed time - HELD THAT - Petitioner s recipient units can file revised declaration in Form GST TRAN 1, either electronically or manually (where electronically is not possible), for taking the credit already distributed to them by the ISD unit of Petitioner by issuing invoices - Once, such a revised declaration is filed by the concerned recipient units of Petitioner, the credit already taken by the said units shall be treated to have been taken validly on the date on which it was originally taken. However, no further credit based on revised declaration in Form TRAN-1 shall be claimed by Petitioner, as the said filing is purely for regularizing the earlier action of transition and distribution of Cenvat credit by the ISD registration of Petitioner. Once, the credit taken by the respective units is regularized by filing revised electronic or manual declaration (as the case maybe) in Form GST TRAN 1, the credit balance shown in Electronic Credit Ledger of the ISD unit of Petitioner shall be deemed to have lapsed/ deleted - Respondents and the authorities concerned shall not proceed to adjudicate the above and other Show Cause Notices issued to Petitioner and their units for transition of credit in the Petitioner s ISD registration and its subsequent distribution. Petition disposed off.

Summary

Issues:
Transition and distribution of CENVAT Credit by Input Service Distributor (ISD) under GST regime

Analysis:
1. The Petitioner filed a petition regarding objections raised on the transition and distribution of CENVAT Credit by ISD as of 30.06.2017. The Petitioner transitioned credit via Form GST TRAN-1 under Section 140 of the CGST Act within the prescribed time and manner.
2. The CENVAT credit transitioned was credited to the Electronic Credit Ledger of the ISD registration. The Joint Commissioner confirmed the transition and distribution of credit.
3. The Petitioner issued invoices to transfer credit to other units, which availed input tax credit in their Electronic Credit Ledger. However, 13 out of 18 recipient units received Show Cause Notices alleging erroneous transition and utilization of credit.
4. The Respondents contended that the transition was prohibited, ISD registration does not enjoy assessee status, and ISD is ineligible for ITC under Section 16.
5. The dispute focused on procedural transition issues, not credit eligibility. The Joint Commissioner confirmed the correct transition.
6. The Hon'ble Apex Court directed the opening of a common portal for filing forms for Transitional Credit and allowed revisions to address transitional credit issues.
7. The Court directed the Respondents to open the portal for Transitional Credit filing for two months. Recipient units can file revised declarations to regularize credit distribution.
8. Once revised declarations are filed, the credit balance in the ISD unit's ledger shall lapse. The Petition was disposed of with consent.

This detailed analysis covers the issues of transition and distribution of CENVAT Credit by ISD under the GST regime, highlighting the procedural and legal aspects of the judgment.