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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 ..... tion of immovable property (other than plant and machinery) except where it is an input service for further supply of works contract service. Petitioner, in the instant case, not only seems to have carried forward the excess TDS amount as transitional credit believing it to be eligible ITC; though excepted under Section 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. 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 appellant has claimed state tax as transitional input tax credit, but there is no record of local purchase of taxable commodities during the tax period 2016-17 and 2017-18, nor any reflection of tax credit carried forward in the returns submitted by the appellant for the tax period 2016-17 a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ompany 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 amount of Rs. 71,556.00 was also paid by it [Annexure-3]. For the 2nd quarter from 01.07.2016 to 30.09.2016, the tax liability of Rs. 1,69,775.00 was paid with an excess amount of Rs. 1,73,420.00 [Annexure-4]. For the 3rd quarter from 01.10.2016 to 31.12.2016, petitioner paid the tax liability of Rs. 2,26,841.00 and according to the petitioner, an excess amount of Rs. 3,09,525.00 was paid [Annexure-5]. 5. Petitioner claims to have made a request vide letter dated 02.06.2017 to respondent No.4 to undertake assessment for the FY 2014-15, 2015-16 and 2016-17. According to the petitioner, it was entitled to claim refund of the excess amount. However, it appears that petitioner ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mmary 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, therefore, imposed tax as against the ineligible ITC amounting to Rs. 11,88,811.00 along with the applicable interest amounting to Rs. 10,69,930.00 at the rate of 24% p.a. as per Section 50(3) of the Act of 2017 and penalty equivalent to the tax amount i.e. Rs. 11,88,811.00 under Section 74 of the Act of 2017 totaling Rs. 34,47,552.00. 7. Petitioner being aggrieved, approached the appellate authority by presenting his memo of appeal in Form GST APL-01 [Annexure-14]. The appellate authority i.e. respondent No.3-Additional Commissioner of State Tax has, by the appellate order dated 16.03.2023, rejected the appeal, inter alia, holding as under : The case was fixed for hearing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 suppression of facts to evade tax, he shall serve notice on the person chargeable with tax require him to show cause as to why he should not pay the amount specified in the notice along with interest payable thereon u/s 50 and a penalty equivalent to the tax specified in the notice. Whereas in the present case the respondent had served the SCN on 23.09.2021 for the findings in connection with the financial year 2017-18 and opportunity to reply and physical appearance was also provided. Report regarding wrong availing of credit was also served along with the SCN to the appellant where it is mentioned that return not available during verification. As the facts ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 Appellant will not e entitled to avail the ITC of GST paid on goods and services used for construction as per the provision laid out in section 17(5) (c) and 17(5) (d) of the CGST Act, 2017. It is pertinent to mention that in the present case the appellant has claimed State Tax as Transitional Input Tax credit whereas there is no record of local purchase of taxable commodities during the tax period 2016-17 and 2017-18 nor any reflection of tax credit carry forwarded in the returns submitted by the appellant for the tax periods 2016-17 and 2017-18. In view of the above, after careful examination of the entire facts and circumstantial evidence, I fi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fund 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 for the petitioner, has also sought to draw the attention of this Court to certain forms submitted under the TVAT Act, 2004 i.e. Annexure-2 relatable to the last quarter of FY 2015-16 and other returns for the 1st, 2nd and 3rd quarter of the FY 2016-17 in order to submit that each of these returns showed payment of excess amount as TDS deducted by the TNGCL. As such, these amounts were available as excess Value Added Tax to the credit of the petitioner which either could have been refunded or carried forward to the GST regime as transitional credit. This aspect of the matter has not been duly considered by the respondent authorities while ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t 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 contains provisions prohibiting availment of input tax credit under the GST Act and, in our opinion, the interpretation of the proviso would be to restrict the migration of credit, if the credit pertains to the transactions which are prohibited under Section 17(5) of the JGST Act in which no input tax credit is available. Any contrary interpretation given to the proviso would have an effect of nullifying and/or setting at naught the real object of the transitional provision. 11. Mr. Karnajit De, learned Additional Government Advocate for the respondents-State, has referred to Section 17(5) of the Act of 2017 which contains provisions ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ndents-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 been annexed in support of the plea that petitioner was entitled to excess TDS amount deducted by TNGCL; either for refund purposes or to carry forward as transitional credit under Section 140(1) of the Act of 2017. Petitioner has, by filing TRAN-1 on 23.12.2017 in fact carried forward the amount of Rs. 11,88,811.00 as transitional credit believing it to be eligible ITC under the VAT regime on account of excess TDS deducted from the bills of the petitioner company by the service recipient i.e. TNGCL. However, in this regard, it is relevant to refer to the provisions of Section 140(1) which deals with transitional credit and is co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n 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 for making an outward taxable supply of the same category of goods or services or both or as an element of a taxable composite or mixed supply; (ii) membership of a club, health and fitness centre; (iii) rent-a-cab, life insurance and health insurance except where (A) the Government notifies the services which are obligatory for an employer to provide to its employees under any law for the time being in force; or (B) such inward supply of goods or services or both of a particular category is used by a registered person for making an outward taxable supply of the same category of goods or services or bo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d 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 appellant has claimed state tax as transitional input tax credit, but there is no record of local purchase of taxable commodities during the tax period 2016-17 and 2017-18, nor any reflection of tax credit carried forward in the returns submitted by the appellant for the tax period 2016-17 and 2017-18. 15. We have also scrutinized the memo of appeal filed in Form GST APL-01 [Annexure-14] in respect of the grounds now sought to be urged by the petitioner. However, as is apparent from perusal of the Form GST APL-01, the appellant has only raised three grounds grant of credit availed in TRAN-1; drop i ..... X X X X Extracts X X X X X X X X Extracts X X X X
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