Ms Usha Martin Limited Through Its Authorized Signatory Namely Dhanraj Parihar vs. Additional Commissioner Central GST And Excise

Held

The Court held that the adjudicating authority under Section 73 of the CGST Act, 2017, lacked jurisdiction to initiate proceedings for alleged contraventions of the Central Excise Act, 1944, and the Finance Act, 1994, read with CENVAT Credit Rules, 2004, concerning the transition of CENVAT credit through TRAN-1. The Court reasoned that while Section 174 of the CGST Act provides for the continuation of past legal proceedings and enforcement of liabilities as if the old Acts had not been repealed, it does not permit the initiation of new proceedings for past contraventions under the new GST regime. The Court emphasized that such a course would lead to uncertainty. The repeal and saving clause (e) under Section 174(1) allows for instituting proceedings in respect of inchoate rights, but not for transactions that were past and closed. The Court relied on Supreme Court judgments, including State of Rajasthan vs. Mangilal Pindwal, to explain that repeal of a statute is subject to exceptions for transactions past and closed. Therefore, the initiation of proceedings by the respondent under Section 73(1) of the CGST Act for alleged inadmissible CENVAT credit transition was beyond their jurisdiction. Consequently, the impugned adjudication proceedings and the Order in Original dated March 30, 2022, were quashed. The Court, however, permitted the respondent authorities to initiate proceedings under the provisions of the existing laws (CEA, 1944, Finance Act, 1994, read with CCR, 2004) for the relevant tax periods.

Facts

The petitioner, M/s Usha Martin Limited, challenged an order dated March 30, 2022, passed by the Additional Commissioner, Central GST and Excise, Jamshedpur. This order disallowed CENVAT credit amounting to Rs. 10,21,05,096/- that the petitioner had carried forward by filing TRAN-1, as per Section 140 of the CGST Act, 2017. The petitioner operates steel and wire rope divisions. The Steel Division, engaged in manufacturing iron and steel products, utilized iron ore from its captive Bokna mines and coal from its captive Brinda-Sesai mines. The petitioner had registered its Bokna Mines as an Input Service Distributor in 2008. Upon GST implementation, both mines were disclosed as additional places of business. The petitioner filed TRAN-1 to carry forward CENVAT credit, including credit related to input services received at Bokna and Brinda-Sesai mines. The impugned order disallowed credit pertaining to Bokna mines (Rs. 8,55,50,111/-) and Brinda Sesai mines (Rs. 15,98,697/-). Proceedings were initiated under Section 73 of the CGST Act.

Key Issues

1. Whether the adjudicating authority under the CGST Act, 2017, had the jurisdiction to decide upon the availment of CENVAT credit under the pre-GST regime (Central Excise Act, 1944, and Finance Act, 1994)? Petitioner's arguments: The petitioner contended that the adjudicating authority lacked jurisdiction to adjudicate CENVAT credit availed under the erstwhile laws. They argued that proceedings for wrongful availment of CENVAT credit should have been initiated under the Finance Act, 1994, and Rule 14 of the CENVAT Credit Rules, 2004. The petitioner cited pending litigations before CESTAT and Commissioner (Appeals) on similar issues for different periods. They also referred to Section 174 of the CGST Act (repeal and saving provisions), arguing that inchoate legal proceedings or recovery of arrears could be continued under the old laws, implying that new proceedings for past contraventions should not be initiated under the CGST Act. Revenue's arguments: The judgment does not explicitly record arguments made by the revenue on this specific issue. However, their action of initiating proceedings under Section 73 of the CGST Act implies a belief in their jurisdiction.