M/S Hero Motocorp LTD. vs. Union Of INDIA & Ors.
Held
The Court allowed the writ petition. It quashed the instructions dated 05.07.2018 (referred to as 05.02.2017 in the facts section, likely a typographical error in the judgment text) issued by Respondent No. 3. Consequently, the communication dated 04.02.2019 issued by the office of the Commissioner of Central GST Audit-II, Delhi, which rejected the petitioner's request for allowing credit of unutilized ISD, was given no effect. The Court restrained the respondents from enforcing recovery of accumulated credit transitioned by the petitioner concerning its Input Service Distributor (ISD) registration, as provided under Section 140 of the Central Goods and Services Tax Act, 2017. The petitioner was granted liberty to approach the respondents for consequential relief. The ratio decidendi is that ISDs are entitled to transition accumulated unutilized credit under Section 140 of the CGST Act, 2017, and any instructions or communications to the contrary are invalid.
Facts
The petitioner, M/s Hero Motocorp Ltd., an Input Service Distributor (ISD) registered with the revenue, filed a writ petition challenging a communication dated 04.02.2019 from Respondent No. 4, which rejected its request for allowing accumulated credit transitioned under Section 140 of the Central Goods & Services Tax Act, 2017. The petitioner also challenged instructions dated 05.02.2017, issued by Respondent No. 3, which purportedly prohibited ISDs from transitioning accumulated unutilized CENVAT credit. The revenue, represented by Ms. Suhani Mathur, conceded that the writ petition could be allowed in view of prior judgments.
Key Issues
1. Whether the instructions dated 05.02.2017, issued by Respondent No. 3, which prohibit Input Service Distributors (ISDs) from transitioning accumulated unutilized CENVAT credit, are valid and enforceable under Section 140 of the Central Goods and Services Tax Act, 2017? Petitioner's contention: The petitioner argued that the issue was covered by judgments from the Bombay High Court in *Unichem Laboratories Limited v. Union of India* and *Colgate Palmolive (I) Limited v. Union of India*, and the Gujarat High Court in *Bodal Chemicals Ltd. v. Union of India*. These judgments presumably supported the petitioner's right to transition credit. Revenue's contention: The revenue, through Ms. Suhani Mathur, stated that in view of the judgments referred to by the petitioner, the writ petition could be allowed.
Sections Cited
Section 140
AI-generated summary — verify with the full judgment below
NEUTRAL CITATION NO : 2022/DHC/004366
W.P.(C)No.2032/2019 $~28 * IN THE HIGH COURT OF DELHI AT NEW DELHI %
Decision delivered on: 10.10.2022 + W.P.(C) 2032/2019
M/S HERO MOTOCORP LTD.
..... Petitioner
Through: Mr Tarun Gulati, Sr. Advocate with Mr Ashwini Chandrasekaran, Ms Priyanka Rathi and Mr Kumar Sambhav, Advocates.
versus
UNION OF INDIA & ORS.
..... Respondents
Through: Ms Suhani Mathur, Advocate.
CORAM:
HON'BLE MR JUSTICE RAJIV SHAKDHER
HON'BLE MS JUSTICE TARA VITASTA GANJU [Physical Hearing/Hybrid Hearing (as per request)] RAJIV SHAKDHER, J. (ORAL):
On 19.09.2022 when the matter had come up for hearing, the following had been recorded:
“1. The principal grievance of the petitioner is that the respondents/revenue are seeking to recover accumulated credit transitioned by it in terms of Section 140 of Central Goods & Services Tax Act, 2017 [in short, the “Act”] in respect of Input Service Distribution [in short, “ISD”]. 1. 1. The petitioner is an Input Servic
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