Pyramid Infratech Co vs. The Union Of INDIA Through The Secretary

Held

The Court held that the Order-in-Appeal dated September 30, 2024 (issued October 30, 2024) was passed without due consideration of the Petitioner's submissions and the documentary evidence, specifically the certificate from CIDCO confirming the deposit of service tax into the government treasury. The Court found that this constituted a clear non-application of mind. Consequently, both the Order-in-Appeal and the Order-in-Original dated September 30, 2023, were quashed and set aside. The proceedings were remanded to the Appellate Authority for de novo consideration. The Appellate Authority was directed to pass a reasoned and speaking order after granting a personal hearing to the Petitioner, preferably within three months. All contentions of the parties were expressly kept open. The ratio decidendi is that denial of transitional credit without considering documentary evidence proving the deposit of tax by the supplier, especially when such evidence is on record, amounts to a non-application of mind and warrants setting aside the impugned orders and remanding the matter for fresh consideration.

Facts

The Petitioner, Pyramid Infratech Co., sought to carry forward its CENVAT credit of Rs. 4,36,20,746/- under Form GST TRAN-1. The Respondent-Department initiated proceedings, issuing a show-cause notice alleging that the credit was inadmissible due to a delay of 61 days in filing the ST-3 return for April 2017 to June 2017. The Petitioner had filed its ST-3 return on October 15, 2017, and Form GST TRAN-1 on December 20, 2017. The Order-in-Original dated September 30, 2023, confirmed the demand, which was upheld by the Order-in-Appeal dated September 30, 2024 (issued October 30, 2024). The denial was primarily based on the ground that the service tax paid to CIDCO for land lease was not substantiated by documentary evidence showing CIDCO deposited the tax with the government.

Key Issues

1. Whether the Petitioner is entitled to carry forward the transitional credit of Rs. 4,36,20,746/- under Section 140 of the CGST Act, 2017, despite the delay in filing ST-3 returns, as argued by the Petitioner. 2. Whether the impugned orders passed by Respondent Nos. 3 and 4 are without jurisdiction and bad in law, as the Petitioner contends that the authorities are interpreting erstwhile laws based on existing GST laws and that issues regarding CENVAT credit demand have been settled. 3. Whether the delay in filing ST-3 returns constitutes a procedural lapse that should not result in the denial of the substantive benefit of transitional credit, as argued by the Petitioner. Petitioner's arguments: The Petitioner contended that the denial of transitional credit was erroneous as they had provided documentary evidence, including a certificate from CIDCO confirming the deposit of service tax into the government treasury and a receipt acknowledging payment. They argued that the delay in filing ST-3 returns was a procedural lapse and that the authorities failed to consider the submitted documents, leading to a non-application of mind. They also argued that the authorities were questioning the Petitioner based on erstwhile laws interpreted through the lens of GST laws. Respondents' arguments: The Respondents argued that the Petitioner's service tax returns were filed belatedly, justifying the invocation of Section 140 of the CGST Act to deny the GST TRAN-1 credit. They contended that the denial of credit was justified due to the delay in filing the returns.