Verify Transitional Credit Claim with Manufacturer's Excise Duty Payment

The court directed the respondent authorities to verify the petitioners' claim for transitional credit based on the documents provided, specifically examining whether excise duty had been paid by the manufacturer. If satisfied, the transitional credit should be allowed. The verification process was to be completed within three months from the date of the order, and the petition was disposed of with no order as to costs.

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Issues Involved:
1. Quashing of impugned notice dated 18-12-2018.
2. Admissibility of transitional Input Tax Credit (ITC) under Section 140(3) of the CGST Act, 2017.
3. Requirement of Credit Transfer Documents (CTD) for claiming transitional ITC.
4. Verification of transitional ITC claims by the respondent authorities.

Detailed Analysis:

1. Quashing of Impugned Notice Dated 18-12-2018:
The petitioners sought to quash the notice dated 18-12-2018 issued by the respondent, which required them to provide credit transfer documents or vouchers from the dealers for the transitional credit claimed. The petitioners contended that it was not possible to get the excise invoices or duty-paying documents in their name for vehicles purchased from dealers.

2. Admissibility of Transitional Input Tax Credit (ITC) Under Section 140(3) of the CGST Act, 2017:
The petitioners argued that they were entitled to transitional credit for excise duty paid on vehicles and spare parts in stock as of 30th June 2017, even though they did not have excise invoices in their name for goods purchased from other dealers. They contended that Section 140(3) of the CGST Act, 2017 allows for such credit if the person has invoices or other prescribed duty-paying documents. The petitioners claimed that they had provided all necessary documents, including invoices showing payment of excise duty by the manufacturer.

3. Requirement of Credit Transfer Documents (CTD) for Claiming Transitional ITC:
The respondents argued that the petitioners must follow the procedure prescribed in Notification No. 21/2017, which requires obtaining CTD from the manufacturer to claim transitional credit. The petitioners countered that Section 140(3) does not mandate the submission of CTD and that they were not bound by the Cenvat Credit Rules, 2017 or the Notification No. 21/2017 for claiming transitional credit.

4. Verification of Transitional ITC Claims by the Respondent Authorities:
The court noted that the petitioners had submitted invoices from dealers and manufacturers showing payment of excise duty. It was observed that the respondent authorities could verify the payment of excise duty based on these documents. The court directed the respondents to consider the documents furnished by the petitioners and verify whether excise duty had been paid by the manufacturer. If satisfied, the respondents were to allow the transitional credit claimed by the petitioners.

Conclusion:
The court concluded that the respondents must verify the petitioners' claim for transitional credit based on the documents provided. If the documents satisfactorily evidenced the payment of excise duty by the manufacturer, the transitional credit should be allowed. The court directed the respondents to complete this verification within three months from the date of the order. The petition was disposed of with no order as to costs.

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