Interim protection against transitional CENVAT credit reversal granted where recovery under GST rules caused prima facie prejudice.

Interim protection was granted against enforcement of Rule 44A of the CGST Rules and the related reversal and recovery of transitional CENVAT credit claimed under Section 140 of the CGST Act. The challenge concerned a notification requiring reversal of credit already availed on countervailing duty paid for imported gold dore bars. Finding a prima facie case and balance of convenience in favour of the petitioners, the Court held that coercive recovery would cause prejudice through electronic reversal of credit and cash deposit, so the respondents were restrained from taking recovery steps until the next hearing.

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Issues: Whether interim relief should be granted against enforcement of Rule 44A of the Central Goods and Services Tax Rules, 2017 and the consequential reversal and recovery of transitional CENVAT credit claimed under Section 140 of the Central Goods and Services Tax Act, 2017.

Analysis: The challenge was directed against the notification inserting Rule 44A and the consequential demand to reverse credit already availed in respect of countervailing duty paid on imported gold dore bars. The Court found that the petitioners had shown a prima facie case and that the balance of convenience was in their favour. In view of the asserted prejudice from electronic reversal of credit and cash deposit, interim protection was warranted pending further hearing.

Conclusion: Interim relief was granted and the respondents were restrained from taking coercive steps to recover the credit already availed by the petitioners until the next date of hearing.

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