M/S Aditya Medisales Limited Through Its Director Mr Rajiv Pandya vs. The State Of Jharkhand Through The Secretary Commercial Taxes Deptt

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 CENVET Credit as being inadmissible under the existing law, was beyond their jurisdiction. 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 empower the authorities to determine the admissibility of CENVAT credit under the existing law. The Court found the appellate order to be perverse as it contradicted the assessment order for the same period passed under the JVAT Act, which found no discrepancy in the petitioner's purchases. The Court also held that the action of the Respondent Bank in holding the petitioner's bank account was invalid, as there is no provision in the JGST Act allowing such action for such a sum, and even if Section 83 were applicable, the attachment exceeding a year needed to be released. The writ application was allowed.

Facts

The petitioner, M/s. Aditya Medisales Limited, challenged an appellate order dated 27.8.2019 by the Joint Commissioner of State Taxes (Appeals), Ranchi, which denied transitional credit of Rs. 23,86,069, imposed a penalty of Rs. 2,38,606.98, and interest of Rs. 5,72,656.76. The petitioner also challenged summary show cause notices and orders issued under the Jharkhand Goods and Services Tax (JGST) Act, 2017, arguing they lacked proper particulars and detailed reasoning. The petitioner had transitioned credit under Sections 140(1) and 140(3) of the JGST Act. The appellate authority accepted the Section 140(1) transition but partially rejected the Section 140(3) claim. Subsequently, a notice under Section 79 was issued to the petitioner's bank, State Bank of India, to recover Rs. 19,69,441, leading to the petitioner's bank account being put on hold.

Key Issues

1. Whether the initiation of proceedings under Section 73 of the JGST Act for alleged contravention of the Central Excise Act and Finance Act, read with C.C.R., by filing TRAN 1 for transition of CENVAT Credit, was within the jurisdiction of the CGST authorities? The petitioner argued that the proceedings were bad in law as only a summary of show cause notice was served, not a proper show cause notice as required by Rule 142(1)(a), and that the JGST authorities lacked jurisdiction to adjudicate the admissibility of CENVAT credit under the existing law. The petitioner relied on the judgment in Juhi Industries (P) Ltd. The revenue did not record any specific arguments on this point in the provided text. 2. Whether the appellate order, which held that transitional credit of Rs. 23,86,069.85 under Section 140(3) was illegal, is perverse given that an assessment order for the year 2016-17 under the JVAT Act found no discrepancy in the petitioner's purchases? The petitioner contended that the appellate order contradicted the JVAT assessment order. The revenue did not record any specific arguments on this point in the provided text. 3. Whether the action of the Respondent Bank in putting the petitioner's bank account on hold under Section 79 of the JGST Act is valid, especially when the attachment has exceeded a year?