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TMI Blog2023 (12) TMI 151X X X X Extracts X X X X X X X X Extracts X X X X ..... r referred to as "Act of 2017"], confirming the demand raised in the show cause notice and holding the petitioner liable to pay the tax amount of Rs. 11,88,811.00 along with penalty of equivalent amount and interest as per provisions of Section 50(3) of the Act of 2017 i.e. the total amount of Rs. 34,47,552.00. 3. Petitioner company is registered under the Act of 2017. It is running business in dealing with various works and services such as laying of gas pipelines and other works contract. Petitioner was also registered under TVAT Act, 2004. It is also dealing with laying of underground PE Pipelines and above ground GI installations for CGD at Agartala for Tripura Natural Gas Company Limited (hereinafter referred to as "TNGCL"). 4. It is the case of the petitioner that it had submitted VAT returns in Form-X under TVAT Act, 2004 for the 4th quarter from 01.01.2016 to 31.03.2016 and paid the tax liability of Rs. 2,01,218.00 during the said quarter and the excess amount paid by the petitioner was Rs. 5,91,200.00 [Annexure-2]. Thereafter, it again submitted the VAT returns for the 1st quarter from 01.04.2016 to 30.06.2016 and paid the tax liability of Rs. 1,19,260.00 and an excess a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e has utilized the amount paid through the aforementioned application as intimation of voluntary payment for the reasons detailed therein. In Form GST DRC-01, a show cause notice under Section 74(1) of the Act of 2017 [Annexure-10] was issued to the petitioner company. Thereafter, the petitioner sought personal hearing by requesting for a date between 15th and 20th October, 2021 in view of the Durga Puja festival [Annexure-11]. Respondent No.4 had asked the petitioner to furnish reply by 07.10.2021 or appear on 05.10.2021 at 11.30 at the office of the respondent No.4. Thereafter, the adjudication order dated 18.11.2021 was passed under Section 74 of the Act of 2017 and a summary of the order was also issued in Form GST DRC-07 which states that while filing GST Form TRAN-1 on 23.12.2017 against SGST for Rs. 11,88,811.00 in the year 2017-18, the verification of transitional credit claim for the year 2017-18 of the aforesaid taxpayer was undertaken by the Inspector of State Tax and the scrutiny of the returns revealed that the taxpayer had filed GST Form TRAN-1 by which it sought to carry forward ineligible ITC amounting to Rs. 11,88,811.00. The adjudication order at Annexure-13, ther ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... RAN-1 should be granted; interest and penalty as demanded by the assessing authority should be dropped and deleted. Observation: From the SCN vide no.ZD160921000503W dt. 23.09.2021 it would appear that the respondent had intimated the appellant about the discrepancies observed during verification of documents that "VAT amount/deduction amount paid through Challan/deduction certificate with VAT return cannot be claimed as Transitional Credit so the Tax, Penalty & Interest should be paid through Voluntary Payment-DRC-03" and the appellant was liable to pay Rs. 11,88,811.00 (as the amount was disallowed as ineligible ITC claim) along with interest of Rs. 10,69,930.00 and penalty Rs. 11,88,811.00. The SCN was issued u/s 74 of GST Act, 2017. Sec. 74 of GST Act, 2017: Determination of tax not paid or short paid or erroneously refunded or input tax credit wrongly availed or utilized by reason of fraud or any willful misstatement or suppression of facts. (1) Where it appears to the proper officer that any tax has not been paid or short paid or erroneously refunded or where input tax credit has been wrongly availed or utilized by reason of fraud, or willful-misstatement or suppres ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ds or provision of exempted services or who was providing works contract service and was availing of the benefit of notification No.26/2012-Service Tax, dated the 20th June, 2012 or a first stage dealer or a second stage dealer or a registered importer or a depot of manufacturer, shall be entitled to take, in his electronic credit ledger, credit of eligible in respect of inputs held in stock and inputs contained in semi-finished or finished goods within such time and in such manner as may be prescribed subject to conditions mentioned in clauses (i), (ii), (iii), (iv) and (v) of Section 140(3). Sec 17(5) (c) works contract services when supplied for construction of an immovable property (other than plant and machinery) except where it is an input service for further supply of works contract service. The appellant indulged in "providing consumer connectivity works for laying of underground PE pipelines and above ground GI installations for CGD at Agartala for Tripura Natural Gas Company Limited" and comes under the ambit of sec 17(6) where it is stated that pipelines laid outside factory premises does not include plant and machinery as described in sec 17(5) (c). Hence the Appe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Jharkhand High Court has held that the legislature in its wisdom has provided for migration of unadjusted credit amount of VAT and allow migration of TDS amount under the GST regime, as otherwise the said unadjusted TDS amount would have become refundable to the assesse immediately after repeal of the aforesaid JVAT Act. Therefore, the legislature instead of providing refund of unadjusted TDS and entry tax to the assesse, provided a mechanism to enable the assesse to migrate the aforesaid credits under the GST regime for its adjustment against its output tax liability. This was to avoid the cumbersome process of asking assesse to claim refund of the amount of unadjusted TDS, Entry Tax and Input Tax Credit instead providing, inter alia, to allow the assesse to migrate the said amount under the GST regime as facilitation for adjustment against output tax liability. It is in this context that the proviso to Section 140(1) of the Act of 2017 is required to be interpreted. It is submitted that the petitioner has only carried forward the unadjusted TDS amount as eligible ITC to the GST regime as transitional credit under Section 140(1) of the Act of 2017. 9. Mr. Deb, learned counsel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ean that if there is an expressed prohibition under the GST Act for claiming input tax credit, then the benefit of transitional credit would not be available. Para 15 thereof is extracted hereunder: "15. It is in the aforesaid context that the proviso to Section 140(1) of the JGST Act is required to be interpreted. Proviso to Section 140(1) of the JGST Act provides that a registered person shall not be allowed to tax credit where the said amount of credit is not admissible as input take credit under the GST Act. It was contended by the Respondents that since TDS was in the nature of output tax, it was not admissible as input tax credit under the GST Act and, hence, cannot be allowed to be migrated. In our opinion, the aforesaid restrictive interpretation sought to be given to the proviso is beyond the scheme of transitional provision. On the contrary, a harmonious interpretation is to be given to the proviso and the term used in the proviso, namely, "not admissible as input tax credit" could only mean that if there is an express prohibition under the GST Act for claiming input tax credit, then the benefit of transitional would not be available. Section 17(5) of the JGST Act con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ered into between the petitioner and TNGCL related to supply for construction of immovable property (other than plant and machinery), and that such input service was not to be used for further supply of works contract service. As such, no grounds have been made out by the petitioner for interference in the adjudication order and the appellate order. Therefore, the writ petition deserves to be dismissed. 12. We have considered the submission of learned counsel for the parties at length and taken note of the pleadings in the writ petition and also the supporting documents. We have also gone through the Counter Affidavit of the respondents-State and the Rejoinder Affidavit filed thereto. 13. The case of the petitioner, as is borne out from the conspectus of facts taken note of in the previous paragraphs, is of transition of and availment of excess amount of TDS under the VAT regime as transitional credit under the GST regime in terms of Section 140(1) of the Act of 2017. It is not in dispute that the petitioner has been providing the service of laying of gas pipelines to the TNGCL. VAT returns for the respective period i.e. last quarter of 2015-16 and three quarters of 2016-17 have ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... credit under this Act i.e. GST Act. Sub-clause (ii) thereof also provides that such amount of credit won't be admissible where the company has not furnished all the returns required under the existing law for the period of six months immediately preceding the appointed date. What is not admissible to be availed as ITC is provided under Section 17(5) which is extracted hereunder: "17. (5) Notwithstanding anything contained in sub-section (l) of section l6 and sub-section (1) of section I 8, input tax credit shall not be available in respect of the following, namely:- (a) motor vehicles and other conveyances except when they used- (i) for making the following taxable supplies, namely:- (A) further supply of such vehicles or conveyances; or (B) transportation of passengers; or (C) imparting training on driving, flying, navigating such vehicles or conveyances; (ii) for transportation of goods; (b) the following supply of goods or services or both:- (i) food and beverages, outdoor catering, beauty treatment, health services, cosmetic and plastic surgery except where an inward supply of goods or services or both of a particular category is used by a registered person fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 17(5) (c), but also seems to have availed it since upon scrutiny of its returns, such discrepancy was found in the notice issued under GST ASMT-10 under Section 61 of the Act of 2017 followed by the notice under Section 74(1) of the Act of 2017. These provisions of the Act of 2017 permit of no exception. 14. Learned appellate authority has duly considered the facts and the legal issues involved and also the plea raised by the petitioner, and rightly come to a decision that since the appellant indulged in providing consumer connectivity works for laying of underground PE pipelines and above ground GI installations for CGD at Agartala for TNGCL, it came under the ambit of Section 17(5) (c), since it did not include "plant and machinery" as per Section 17(6), where it is stated that pipelines laid outside factory premises does not include plant and machinery as described in Section 17(5) (c). As such, the appellate authority rightly held that the petitioner company is not entitled to avail the ITC of GST trade on goods and services used for construction as per Section 17(5) (c) and Section 17(5) (d) of the Act of 2017. The appellate authority has also found that though the appellan ..... X X X X Extracts X X X X X X X X Extracts X X X X
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