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TMI Blog2019 (7) TMI 1452X X X X Extracts X X X X X X X X Extracts X X X X ..... section 140 of the BGST Act that the credit earned got reflected on the electronic credit ledger on 28.8.2017 as admitted by Mr.. Kejriwal showing a credit balance of ₹ 42,73,891.00 as also taken note of in the order impugned - Section 73 makes a dealer liable for proceedings in case of short payment of taxes or erroneously refunded taxes or for wrongly availing or utilizing input tax credit. The legislative intent present in these provisions is eloquent and I am in no confusion to hold that be it a charge of wrong availment or utilization, each is a positive act and it is only when such act is substantiated that it makes the dealer concerned, liable for recovery of such amount of tax as availed from the input tax credit or utilized by him but in each of the two circumstances, the tax available at the credit of the dealer concerned must have been brought into use by him thus, reducing the credit balance - A plain reading of Section 73 would confirm that it is only on such availment or utilization of credit to reduce tax liability, which is recoverable under section 73(1) read alongside the other provisions present thereunder. In fact the position is made even more clear ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ture of certiorari for quashing of the order dated 6.11.2018 passed by the respondent no.3 being illegal and without jurisdiction in terms of Section 73(1) of the Bihar Goods and Service Tax Act, 2017 (hereinafter referred to as the Act for short); b) For issuance of a writ in the nature of mandamus directing the respondents specially the respondent no.3 for grant of transitional credit or adjustment of excess of input tax credit against future liabilities of the petitioner for a sum of ₹ 18,33,304.76 and ₹ 20,79,256.00 which amount is lying with the respondent department in terms of order of assessment for the financial year 2007-08 and 2011-12. (c) For holding and a declaration that once the respondent department is holding in hand the excess of input tax credit already standing to the credit of the petitioner the same has to be given adjustment against future liabilities and a denial of such adjustment would be an act giving rise to unjust enrichment and also would be violative of Article 265 of the Constitution of India. (d) For restraining the respondents specially the respondent no.3 from taking any coercive actio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the said cartridge to the tune of ₹ 112.52 by the Commercial Tax Officer, Patliputra Circle, Patna vide his order dated 7.9.2010 at Annexures 2 series. In a similar manner, an assessment order was passed for the financial year 2011-12 on 27.8.2016 showing an input tax credit of ₹ 20,79,256.00. However, on a default made by the petitioner on filing of annual returns that a penalty of ₹ 5000/- was imposed for which the assessing authority i.e. the Assistant Commissioner of Commercial Taxes, Patliputra Circle, Patna directed for issuance of demand notice which is enclosed with the assessment order at Annexures 2 series. As indicated, the assessment orders so passed for the period in question i.e. 2007-08 and 2011-12 shows input tax credit admissible to the petitioner to the tune of ₹ 18,33,304.76 and ₹ 20,79,256.00 and has attained finality because it has not been appealed against. According to the petitioner, though he was entitled to carry forward this input tax credit but due to inadvertent mistake of the Accountant, this was not reflected in the returns filed for the subsequent years and it is only in 2017 that the m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in support of his submissions has enclosed extract of the electronic cash ledger at Annexure 9 to the rejoinder. In so far as the application of the petitioner under section 140 of the BGST Act is concerned, the same came to be rejected by the order impugned passed by respondent no.3, the Assistant Commissioner of State Taxes, Patliputra Circle, Patna, impugned at Annexure 8 to the writ petition and while rejecting the same, the respondent no.3 has raised a demand on tax liability to the tune of ₹ 42,73,869.00 on which transitional credit was allegedly claimed and by imposing interest at the rate of 18% for availment of such credit quantified at ₹ 9,16,833.00 and imposing a penalty equivalent to 10% of tax quantified at ₹ 4,27,387.00 that a demand of ₹ 56,18,089.00 was raised which is followed by a demand notice and feeling aggrieved the petitioner is before this Court. Mr. Kejriwal, learned counsel for the petitioner while straightway inviting the attention of this Court to Section 140 of the BGST Act submitted that the same enables the taxpayers to carry forward the input tax credit under the Value Added Tax Act and/o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... recourse but in so far as the issue of claiming transitional BGST credit is concerned, since as according to the petitioner, he was entitled to claim such transitional credit, which on application made by the petitioner was reflected in his electronic credit ledger as also confirmed from the chart at Annexure 7 as on 1.7.2017 but until such time that the respondents can demonstrate that the petitioner either availed or utilized the said credit, no proceeding under section 73 of the BGST Act is sustainable and the exercise is dehors the statutory prescriptions. The short argument advanced by Mr. Kejriwal is that a mere reflection of the transitional credit on the application filed by the petitioner under section 140 of the Act , would not amount to either availing or utilizing the credit nor would be sufficient to invite a proceeding under section 73 of the Act until such time that the respondents by reference to records are able to demonstrate that the said credit was either availed of or utilized by the petitioner. As regarding utilization of the input tax credit of ₹ 96,077/- is concerned, learned counsel submits that apart from the fact that this cre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , it amounts to availment and the period for which such availment has been made by the petitioner, he is liable to pay interest as well as penalty. Learned counsel in support of his submissions has relied upon the judgment of the Supreme Court reported in (2011)4 SCC 635 ( Union of India ors. vs. Ind. Swift Laboratories Ltd.) and in particular reference to the opinion expressed at Paragraphs 15,16, 18 and 21 of the judgment it is submitted that the position has been clarified by the Supreme Court and the petitioner cannot escape liability. Learned State Counsel in reference to the stand taken by the department at paragraphs 5, 8, 13, 15 and 17 of the counter affidavit has submitted that the respondents in reference to the statutory prescriptions present in the BGST Act on the issue have suitably explained the reasons for initiation of the penal proceeding as well as for raising of the demand. Having heard learned counsel for the parties I am of the opinion that two preliminary issues fall for consideration and which has also been noted in the order of this Court passed on 15.3.2019 which reads under: (a) Whether or not the reflection of S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... BGST Act read with section 50 thereof, is in tune with the statutory provisions regulating such exercise, I am persuaded to bear note of the statutory prescriptions which lie at the foundation of such exercise and has been relied upon by the learned counsel for the parties. The order passed by the Assistant Commissioner of State Taxes put to challenge in this writ petition in so far as it raises a demand of tax together with interest and penalty thereon holds that since the claim of transitional BGST credit amounting to ₹ 42,73,869.00 could not be substantiated by the returns filed by the petitioner that for recovery of wrongly availed credit a proceedings under section 73 of the BGST Act, 2017 was initiated and show cause notice was served on the petitioner. This is the foundation for the penal proceedings. The order also records appearance of the representative of the petitioner, who submitted that the transitional credit was not utilized and thus, no penal proceeding was sustainable. The Assistant Commissioner of State Taxes by placing reliance on Section 142(3) of the BGST Act rejected the claim of transitional BGST credit amounting to ₹ 42,73, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion (10) for issuance of order. (3) Where a notice has been issued for any period under sub-section (1), the proper officer may serve a statement, containing the details of tax not paid or short paid or erroneously refunded or input tax credit wrongly availed or utilized for such periods other than those covered under sub-section (1), on the person chargeable with tax. (4) The service of such statement shall be deemed to be service of notice on such person under sub-section (1), subject to the condition that the grounds relied upon for such tax periods other than those covered under subsection (1) are the same as are mentioned in the earlier notice. (5) The person chargeable with tax may, before service of notice under sub-section (1) or, as the case may be, the statement under sub-section (3), pay the amount of tax along with interest payable thereon under Section 50 on the basis of his own ascertainment of such tax or the tax as ascertained by the proper officer and inform the proper officer in writing of such payment. (6) The proper officer, on receipt of such information, shall not serve any notice under sub-se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iod not exceeding ninety days: Provided that in the case of a claim under subsection (1) of Section 140, the application shall specify separately- (i) the value of claims under Section 3, sub-section (3) of Section 5, Section 6 and 6A and sub-section (8) of Section 8 of the Central Sales Tax Act, 1056 made by the applicant; and (ii) the serial number and value of declarations in Forms C and/or F and certificates in Forms E and/or H or Form I specified in Rue 12 of the Central Sales Tax (Registration and Turnover) Rules, 1957 submitted by the applicant in support of the claims referred to in subclause (i) above. (2) Every declaration under sub-rule (1) shall- (a) in the case of a claim under sub-section (2) of Section 140, specify separately the following particulars in respect of every item of capital goods as on the appointed day- (i) the amount of tax or duty availed or utilized by way of input tax credit under each of the existing laws till the appointed day; and (ii) the amount of tax or duty yet to be availed or utilized by way of input tax cr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vailable for six tax periods from the appointed date. (b) Such credit of State tax shall be availed subject to satisfying the following conditions, namely:- (i) such goods were not wholly exempt from tax under the Bihar Value Added Tax Act, 2005; (ii) the document for procurement of such goods is available with the registered person; (iii) the registered person availing of this scheme and having furnished the details of stock held by him in accordance with the provisions of clause (b) of sub-rule (2) of Rule 1, submits a statement of FORM GST TRAN 2 at the end of each of the six tax periods during which the scheme is in operation indicating therein the details of supplies of such goods effected during the tax period; (iv) the amount of credit allowed shall be credited to the electronic credit ledger of the applicant maintained in FORM GST PMT-2 on the Common Portal. (v) the stock of goods on which the credit is availed is so stored that it can be easily identified by the registered person. Rule 121. Recovery of credit wrongly availed.- The amount cred ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ub-section (5), (7), (8), (9) to (11). Despite the legal intent being so loud and clear, it is on absolute misappreciation of the statutory prescriptions and even when the amount of ₹ 42 lacs and odd yet remains to the credit of the petitioner which is also confirmed from the credit ledger status available at Annexure 7 that the Assistant Commissioner of State Taxes by treating the said amount to be a tax outstanding on wrong availment by the petitioner, initiates proceeding for recovery of the said tax amount and since according to the Assistant Commissioner of State Taxes it was an act of wrong availment by the petitioner, the respondent no.3 subjects him to interest as well as penalty which together quantifies a demand of ₹ 56,18,089.00. In my opinion, the Assistant Commissioner of State Taxes has somewhere got confused to treat the transitional credit claimed by the dealer as an availment of the said credit when in fact an availment of a credit is a positive act and unless carried out for reducing any tax liability by its reflection in the return filed for any financial year, it cannot be a case of either availment or utilization. I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 21 is that even a wrongly reflected transitional credit in an electronic ledger on its own is not sufficient to draw penal proceedings until the same or any portion thereof, is put to use so as to become recoverable. This important aspect of the matter has eluded the wisdom of the respondent no.3 while passing the order. In fact it is on a complete misappreciation of legal position which lies at the foundation of the demand raised by the impugned order whereby the credit amount reflected in the credit ledger to the tune of ₹ 42,73,869.00 has been treated as an outstanding tax liability against the petitioner to order for its recovery together with interest and penalty even when the electronic credit ledger status at Annexure 7 confirms to a credit in favour of the petitioner i.e. a negative tax liability. For the reasons and discussions above, the order dated 6.11.2018 passed by the respondent no.3, the Assistant Commissioner of State Taxes in purported exercise of power vested in him under section 73 of the BGST Act is held per se illegal and an abuse of the statutory jurisdiction and is accordingly quashed and set aside. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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