Ms Steel Authority Of INDIA Limited Reprr Thr Its Authorised Signatory Dgm F And A Rajeev Gupta vs. The State Of Jharkhand

Held

The Court held that the initiation of proceedings by the respondent under Section 73(1) of the CGST Act for alleged contravention of the Central Excise Act and Finance Act, read with C.C.R., against the petitioner for filing TRAN 1 in terms of Section 140 of the CGST Act for transition of CENVAT credit, alleged to be inadmissible under the existing law, was beyond the jurisdiction of the respondent. The Court reasoned that Section 73 of the CGST Act pertains to non-payment, short payment, erroneous refund, or wrongly availed/utilized input tax credit under the CGST Act, and does not cover CENVAT credit under the erstwhile laws. The Court also referred to Section 174 of the CGST Act (repeal and saving) and concluded that while past transactions were saved, the initiation of proceedings under the GST Act for contraventions under the repealed Acts was improper. Consequently, the impugned adjudication proceedings and the order-in-original were quashed. The Court directed the respondents to restore the amount of Rs. 30,29,99,999/- along with statutory interest to the petitioner's electronic Credit Ledger within four weeks. The respondents were granted liberty to initiate proceedings under the repealed VAT Act, 2005, if advised.

Facts

The petitioner, M/s. Steel Authority of India Limited, Bokaro Steel Plant, transitioned un-availed input tax credit from the Jharkhand Value Added Tax (JVAT) Act, 2005, to the Jharkhand Goods and Services Tax (JGST) Act, 2017. The Deputy Commissioner of State Tax initiated proceedings under Sections 73, 74, 122, and 132(1)(d) of the JGST Act, alleging the petitioner wrongly availed input tax credit on consumables (Rs. 31,90,42,496/-) and capital goods (Rs. 6,79,42,018/-) under the JVAT Act. The Assessing Officer denied the transition of this credit, raising a demand of Rs. 37,03,90,184/-, with interest and penalty. The Joint Commissioner of State Tax (Appeals) upheld this order. Subsequently, the respondent blocked SGST and Cess credit in the petitioner's ledger, then unblocked and adjusted SGST credit against the confirmed demand.

Key Issues

1. Whether the Joint Commissioner of State Tax (Appeals) passed the impugned order in violation of the principles of natural justice and legal provisions by denying the carry forward of disputed credit in Form GST TRAN-1? (Petitioner's contention: Yes, the order was passed without application of mind and with the intention to harass. Revenue's contention: Not recorded). 2. Whether the action of blocking and adjusting SGST and Cess credit against the confirmed demand was arbitrary and illegal? (Petitioner's contention: Yes, it was arbitrary and illegal. Revenue's contention: Not recorded). 3. Whether there is a restriction in carrying forward the balance outstanding in the VAT Return to the GST Regime under Section 140(1) of the JGST Act, as per Circular No. 33/07/2018-GST? (Petitioner's contention: No, provided the credit is not utilized. Revenue's contention: Not recorded). 4. Whether un-availed input tax credit of VAT paid on capital goods is eligible for carry forward under Section 140(2) of the JGST Act? (Petitioner's contention: Yes, it is validly earned. Revenue's contention: Not recorded). 5. Can a show cause notice under Section 73 of the JGST Act be issued for demanding transitional credit availed under Section 140 of the JGST Act? (Petitioner's contention: No. Revenue's contention: Not recorded). 6. Is Rule 121 of the CGST Rules, 2017 ultra vires Section 140 read with Section 164 of the CGST Act, 2017? (Petitioner's contention: Yes. Revenue's contention: Not recorded). 7. Is interest chargeable and penalty imposable in the given facts and circumstances? (Petitioner's contention: No. Revenue's contention: Not recorded).