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TMI Blog2025 (1) TMI 773X X X X Extracts X X X X X X X X Extracts X X X X ..... ct in relation to a registered person means the Central tax, State tax, integrated tax or Union territory tax charged on any supply of goods or services or both made to him and includes the tax payable under the provisions of sub-sections (3) and (4) of section 9 of the CGST Act and SGST Act and sub-sections (3) and (4) of section 7 of the Union Territory Goods and Services Tax Act. Thus, on a first blush, it appears it is not an input tax and therefore, not an input tax credit. However, the provisions of section 140 of the CGST Act, stipulates transitional arrangement for input tax credit - the credit available as per the existing law in form of Cenvat credit or any other input tax credit, would fall within the scope of input tax credit under the CGST Act also. Therefore, we are of the opinion that the petitioner was liable to pay interest as computed under the provisions of section 50 (3) for wrongly availing Cenvat credit and the petitioner has rightly deposited such amount after the impugned order was passed. Imposition of penalty under Section 122(2)(b) read with Section 74(1) of the CGST Act - absence of fraud, willful misstatement, or suppression of facts - HELD THAT:- The p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ABLE MR. JUSTICE BHARGAV D. KARIA) 1. Heard learned advocate Mr. Sanket Gupta for learned advocate Mr. Anand Nainawati for the petitioner and learned advocate Mr. C.B. Gupta for the respondents. 2. Having regard to the controversy involved in this matter, which is in a narrow compass, with the consent of the learned advocates for the respective parties, the matter is taken up for hearing. 3. Rule returnable forthwith. Learned advocate Mr. C.B. Gupta waives service of notice of rule on behalf of the respondents. 4. By this petition under Article 226 of the Constitution of India, the petitioner has prayed for the following reliefs: a. Issue a Writ of Mandamus or any other writ, order or direction to quash and set aside the Impugned Order-in-Appeal No. KCH-EXCUS-000-APP-061-2021-22-GST-ADC dated 14.02.2022 passed by Ld. Commissioner (Appeals), CGST CE, Rajkot and consequently sanction the refund claim filed by the Petitioner seeking refund of the interest. b. Issue directions to the Respondents to refund the amount paid by the Petitioner towards the interest (Rs. 24,72,165/-) under Section 50 (3) of CGST Act and pre-deposit of Rs. 2,08,412/- mistakenly paid by them towards penalty und ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... remained unaccounted for the said period and the correct amount of credit was carried forward in Form TRAN-1. 10. Thereafter respondent no. 2 by letter dated 31.12.2018 informed the petitioner that as per section 140 of the CGST Act only portion of Cenvat Credit that is reflected in the closing balance in Form ST-3 can be availed as input tax credit to be carried forward in GST regime. 11. It is the case of the petitioner that respondent no. 2 thereafter issued letter dated 27.03.2019 asking the petitioner for reversal/payment of differential amount of credit of Rs. 99,46,810/-. The petitioner by letter dated 03.04.2019 contended that entire amount of credit declared in Form GST TRAN-1 is required to be carried forward as alleged excess credit pertained to the invoices which could not be declared due to restrictions over second revision of the Form ST-3 for the last quarter of FY 2017-2018. 12. It appears that thereafter show cause notice dated 25.04.2019 was issued to recover the alleged excess credit of Rs. 99,46,810/- under section 74 (1) read with section 122 (2) (b) of the CGST Act. 13. Being aggrieved, the petitioner preferred Special Civil Application No.6418/2019 challengin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ction 122 (2) (b) of the CGST Act and hence challenge is restricted by the petitioner to levy of interest and penalty only. The petitioner has also remitted the amount towards tax being Rs. 27,78,825/- by Form GST DRC-03 dated 02.09.2021 and further to avoid any dispute, the petitioner has also paid the amount of Rs. 24,72,165/- towards interest on the same day. 19. The petitioner being aggrieved by the Order-in-original dated 11.08.2021 passed by respondent no. 3 preferred an appeal under section 107 of the CGST Act challenging the levy of interest and penalty by respondent no. 3. 20. It is the case of the petitioner that as per the provisions of section 107 of the CGST Act to prefer an appeal, the petitioner is required to deposit an amount equal to 10% of the amount of tax in dispute as pre-deposit. 21. According to the petitioner, as the petitioner was not disputing the tax amount and he discharged the same in its entirety, no pre-deposit was required to be made while preferring the appeal as the appeal was restricted to challenge the levy of interest and imposition of penalty. However, the petitioner while preferring the appeal made a deposit of Rs. 2,08,412/- on 27.10.2021 un ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... contemplated under CGST Act, 2017. 26. Reliance was placed on definition of input tax credit as provided under section 2 (63) read with definition of input tax as per section 2 (62) of the CGST Act, 2017. Referring to both the definitions it was submitted that transitional credit does not get covered either under input tax or input tax credit and therefore, it cannot be construed to be input tax credit for the purpose of section 74 of the CGST Act, 2017 as carried forward Cenvat credit cannot be charged either under Central Tax or State Tax under the CGST Act, 2017. It was submitted that the provisions of section 74 of the CGST Act, cannot be attracted in case of Cenvat Credit carried forward under section 140 of the CGST Act and therefore, interest and penalty could not have been levied by the respondent authority. 27. It was further submitted that the petitioner has deposited the amount of Rs. 27,78,825/- on 02.09.2021 and therefore, no interest or penalty could have been levied. 28. Learned advocate Mr. Gupta referred to and relied upon the provisions of section 50 (3) of the CGST Act to submit that no interest can be charged as the credit amount availed does not satisfy the de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d that the petitioner is a Government company consisting of senior IAS, IFS, IRTS, IRS officers appointed by the Government of India and hence it cannot be said that any personal benefit of the officers was involved for carrying forward of Cenvat Credit. 33. It was also submitted that the account of the petitioners is subject to regular audits by the Comptroller and Auditor-General of India as per section 102 of the Major Ports Act, 1963 and, therefore, it cannot be said that the petitioner could have intentionally or deliberately claimed excess amount of credit. 34. On the other hand, learned advocate Mr. C.B. Gupta appearing for the respondents submitted that the petitioner has admitted excess carry forward of Cenvat Credit and has already deposited the amount of interest and hence, the interest and penalty was rightly levied under the provisions of the CGST Act. 35. It was submitted that the contention raised on behalf of the petitioner that Cenvat credit cannot be part of input tax credit is not tenable as definition of input tax as per section 2 (62) of the CGST Act is an inclusive definition. It was therefore, submitted that whenever inclusive definition is given in a statute ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... registered person, means the Central tax, State tax, integrated tax or Union territory tax charged on any supply of goods or services or both made to him and includes- (a) the integrated goods and services tax charged on import of goods; (b) the tax payable under the provisions of sub-sections (3) and (4) of section 9; (c) the tax payable under the provisions of sub-sections (3) and (4) of section 5 of the Integrated Goods and Services Tax Act; (d) the tax payable under the provisions of sub-sections (3) and (4) of section 9 of the respective State Goods and Services Tax Act; or (e) the tax payable under the provisions of sub-sections (3) and (4) of section 7 of the Union Territory Goods and Services Tax Act, but does not include the tax paid under the composition levy; (63) input tax credit means the credit of input tax; 50. Interest on delayed payment of tax (1) Every person who is liable to pay tax in accordance with the provisions of this Act or the rules made thereunder, but fails to pay the tax or any part thereof to the Government within the period prescribed, shall for the period for which the tax or any part thereof remains unpaid, pay, on his own, interest at such rate, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uch person, whichever is higher .. 43. On perusal of the above provisions of the GST Act, it is clear that the interest can be levied under section 50 (3) of the CGST Act which has been substituted by the Finance Act, 2022 with effect from 01.07.2017 where the input tax credit has been wrongly availed and utilized. The definition of input tax credit as per section 2 (63) means the credit of input tax whereas input tax has been defined in section 2 (62) of the Act in relation to a registered person means the Central tax, State tax, integrated tax or Union territory tax charged on any supply of goods or services or both made to him and includes the tax payable under the provisions of sub-sections (3) and (4) of section 9 of the CGST Act and SGST Act and sub-sections (3) and (4) of section 7 of the Union Territory Goods and Services Tax Act. Thus, on a first blush, it appears it is not an input tax and therefore, not an input tax credit. However, the provisions of section 140 of the CGST Act, stipulates transitional arrangement for input tax credit. When the Cenvat credit which is carried forward as per the return relating to period ending with day immediately preceding the appointing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lant's main contention against the imposition of penalty is that they being a Government entity, personal interest of anybody is not involved and there is no intention to claim more credit than legally available to the Appellant. On the other hand, the adjudicating authority while imposing penalty has categorically observed as under: The Noticee had wilfully taken cenvat credit in its trans-1 for which it was not eligible e.g. KKC, Input Tax Credit in respect of Indian Port Association etc., and deliberately mis-stated the facts in its Trans-1, so as to utilize this Cenvat credit in its payment of out GST liability and this facts was unearthed only during the verification of Tran-1. I find that the Noticee did not intimate, on its own, to the department about this availment of ineligible Cenvat Credit in its Tran-1 and thereby his intention to evade taxi. Therefore, the Noticee is liable for penalty u/s 74 (1) of the CGST Act, 2017 read with section 122 (2) (b) of the CGST Act, 2017. I find that adjudicating authority is right in observing that above ineligible availment of ITC would have remained concealed if the department had not initiated the verification of the Trans-1 fil ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... en verification was made by the respondent authority, the petitioner accepted that Cenvat credit to the extent of Rs. 27,78,825/- could not have been carried forwarded and therefore, the provisions of section 122 (1) (b) read with section 74 (1) could not have been invoked by the adjudicating authority, more particularly, when the petitioner has not challenged the confirmation of demand of the excess ITC claimed in Form TRAN-I. 47. Reliance placed by the appellate authority on the decision in case of Union of India v. Rajasthan Spinning Weaving Mills reported in 2009 (238) ELT 3 (SC) discussing the imposition of penalty under section 11AC of the Central Excise Act, 1944 which is stated to be pari-materia provision for levy of imposition of penalty under the GST Act is not applicable in the facts of the case as there was no conscious or deliberate wrong doing on part of the petitioner and as such, the order passed by the adjudicating authority confirming the disallowance of claim of the petitioner of transitional Cenvat Credit of Rs. 27,78,825/- out of transitional Cenvat credit of Rs. 99,46,810/- cannot be said to be claim made for a reason on account of fraud or any suppression of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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