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TMI Blog2021 (7) TMI 457X X X X Extracts X X X X X X X X Extracts X X X X ..... ion 140 of the CGST Act 2017 read with Rule 117 of CGST Rules 2017 and the same was further taken to Electronic Credit Ledger. Once the Department has not disputed the eligibility or entitlement of credit then the failure of the appellant to distribute the same and transition to GST after coming into force of GST is only a procedural lapse and it will not affect the substantive right of the appellant because the failure to comply with the provisions of ISD are at best may be termed as procedural irregularity and it has been consistently held by various Courts that substantive right cannot be denied merely on procedural irregularity. Extended period of limitation - revenue neutrality - HELD THAT:- The extended period of limitation invoked by the Department is not sustainable in the present case because the appellant has not concealed any information from the Department and all the documents were provided by the appellant to the Audit Party and on the basis of Audit Report, the SCN was issued - Further the entire demand in the present case results into revenue neutral because even if the appellant had distributed the credit, it would have been available for utilization by appellant p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... India Pvt. Ltd. Year MPP B- 165 MPP B- 59 MPP B- 163 MPP C- 217 MPP-5A- BMS Ineligible credit pertaining to other units A B C D E F G=C+D+E+F 2014-15 834163 56342 56342 2015-16 1349873 105175 31926 40009 56530 233640 2016-17 13352582 82865 11696 37309 148378 280248 2017-18 408459 16694 3447 8802 21093 50036 TOTAL 3925077 204734 103412 86119 226002 6,20,266 Table B Common services CENVAT credit availed on invoices issued by service providers other than M/s. Expeditors Intl. India Pvt. Ltd. Period MPP-165 Common service tax MPP-5A- BMS MPP NLM Total ineligible credit pertaining to other units April 2014 to June 2017 A B C D E=B+C+D 2,88,652 6,04,338 2,67,654 1,48,352 10,20,344 2.1. The appellants vide their letter dated 23.02.2018 submitted that all the 9 units are based in the State of Karnataka under one registration GSTIN 29AABCM8269R1ZF under GST Law and the appellants have filed Form GST TRAN-1 and have carried forward the balance CENVAT credit as available in their ER-1 and ST-3 Returns for the period up to June 2017 into their Electronic Credit Ledger; that even if the credits were to be distributed to the r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 07.2017, the appellants have taken a single registration vide GSTIN 29AABCM8269R1ZF for all the 9 units in the State of Karnataka in terms of Section 25 of the CGST Act, 2017 wherein it prescribes for a single registration in a State. She further submitted that the unutilized credit from ER-1 Returns and ST-3 Returns which also contains the disputed credit has been transferred to Form GST TRAN-1 in terms of Section 140 of the CGST Act, 2017 read with Rule 117 of CGST Rules, 2017 which provide for carry forward of credit from erstwhile regime into the electronic credit ledger of the GST regime. She further submitted that the credit pertaining to other units is also merged in the electronic credit ledger and shall be utilized as a single unit and therefore there shall be no bifurcation of credit pertaining to different units and the same shall be considered as credit belonging to a single unit. She further submitted that the demand in the present case is not sustainable as the entire transaction is revenue neutral, as the credit even if distributed by the appellants to their other units and availed by such units, the credit in turn shall remain within the Appellants' Company only as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... distributor (ISD) may distribute the CENVAT credit in respect of the service tax paid on the input service to its manufacturing units or units providing output service, subject to certain conditions. The said Rule 7 of CCR, 2004 was amended vide Notification No.13/2016-CE(NT) dated 01.03.2016 and the phrase "may distribute" was substituted with "shall distribute" with effect from 01.04.2016. In support of her submission that prior to 01.04.2016, the appellant was not required mandatorily to distribute the service tax paid to its units. For this submission, she relied upon the following decisions: * Commr. of C.T., Pune-I, Commissionerate v. Oerlikon Balzers Coating India P. Ltd. - 2019 (366) E.L.T. 624 (Bom.). * Hindustan Zinc v. Commissioner of CGST, Udaipur reported in 2019 (4) TMI 475 and 2019 (370) E.L.T. 1582 (Tri. - Del.). * Gloster Cables Ltd. v. Commissioner of Central Tax, Medchal - 2018 (363) E.L.T. 1197 (Tri. - Hyd.) 4.2. The next submission of the learned Counsel for the appellant is that when the Department has not disputed the eligibility or entitlement of the credit then it is a settled law that substantial benefit of CENVAT credit cannot be denied on procedur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l lapse, especially in situation which is revenue neutral. Further, I find that in the case of Doshion Ltd. v. CCE, Ahmedabad (supra) wherein it has been held that procedural irregularity in the case of ISD distribution is a revenue neutral situation and there is no loss to the Revenue. Similarly, in the case of Commr. of C.T., Pune-I, Commissionerate v. Oerlikon Balzers Coating India P. Ltd (supra), it has been held by the Hon'ble High court of Bombay that the entire exercise in the case of non-distribution of credit by an ISD would be revenue neutral, as the distribution of CENVAT credit to the various units would result in lesser service tax being paid by cash on their taxable activity, as they would have utilized the CENVAT credit available for distribution for such payments. Further, Tribunal in the case of Hindustan Zinc v. Commissioner of CGST (supra) quashed the proceedings initiated by the Department on account of non-distribution of proportionate credit by an ISD on the ground that the said transaction is revenue neutral. Further, I find that for the period prior to 01.04.2016 i.e. for the period April 2014 to March 2016, the appellants were not liable to distribute CENVA ..... X X X X Extracts X X X X X X X X Extracts X X X X
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