2025 (1) TMI 296 - HC - GST

Petitioner allowed to recredit reverse charge tax as Input Tax Credit under Section 142(3) CGST Act 2017

M/s. SRC Projects Private Limited, Versus The Assistant Commissioner of GST and Central Excise, Salem.

The HC directed the respondent to allow the petitioner to recredit the tax amount paid on reverse charge basis as Input Tax Credit in the Electronic ... Rejection of request of the petitioner to allow re-credit of the amount of tax paid by the petitioner on reversed charged basis as recipient of royalty services from the Government - Section 142 (3) of the Central Goods and Sales Tax (CGST) Act, 2017 would not come to the rescue of the petitioner or not - HELD THAT:- Although the petitioner was not entitled to cash refund under Section 142 (3) of CGST Act, 2017, the petitioner is entitled to recredit by virtue of the aforesaid Order. The respondent is directed to allow the petitioner to take recredit of the amount paid by the petitioner on reverse charge basis belatedly on 30.12.2017 as the Input Tax Credit in its Electronic Credit Ledger. Petition allowed. 1. ISSUES PRESENTED and CONSIDEREDThe core legal questions considered in this judgment include:Whether the petitioner is entitled to recredit of the tax amount paid on a reverse charge basis as Input Tax Credit (ITC) in the Electronic Credit Ledger under the Central Goods and Services Tax (CGST) Act, 2017.Whether Section 142(3) of the CGST Act, 2017, permits the recredit of the tax amount paid by the petitioner.The applicability of the prior order of the Madras High Court in W.P. Nos. 528, 1092, and 1160 of 2019 to the current case.The relevance of the Jharkhand High Court's decision in a similar case to the current proceedings.2. ISSUE-WISE DETAILED ANALYSISIssue 1: Entitlement to Recredit under CGST Act, 2017Relevant legal framework and precedents: The petitioner's claim for recredit is based on the provisions of Section 142(3) of the CGST Act, 2017, which deals with transitional provisions for carrying forward credit.Court's interpretation and reasoning: The court interpreted Section 142(3) as not providing for a cash refund but allowing for the recredit of the amount in the petitioner's electronic credit ledger.Key evidence and findings: The court noted the previous order dated 22.02.2022, which had set aside the impugned orders and remitted the matter for reconsideration, allowing for recredit rather than a cash refund.Application of law to facts: The court applied the provisions of the CGST Act, 2017, and its previous order to conclude that the petitioner is entitled to recredit the amount paid on a reverse charge basis.Treatment of competing arguments: The respondent relied on a decision from the Jharkhand High Court, which was deemed inapplicable by the court due to the specific prior order in the petitioner's case.Conclusions: The court concluded that the petitioner is entitled to recredit the tax amount in the electronic credit ledger.Issue 2: Applicability of Prior Court OrderRelevant legal framework and precedents: The court referred to its own prior order dated 22.02.2022, which had already addressed the issues related to the petitioner's claim.Court's interpretation and reasoning: The court reaffirmed its previous decision, which allowed recredit instead of a cash refund, and directed the respondent to comply with this order.Key evidence and findings: The court's prior order was pivotal, as it had already set the precedent for the current decision.Application of law to facts: The court applied its previous findings to the current facts, reiterating the petitioner's right to recredit.Treatment of competing arguments: The court dismissed the relevance of the Jharkhand High Court's decision, emphasizing the binding nature of its own prior order.Conclusions: The court concluded that the prior order is applicable and binding, necessitating the allowance of recredit.3. SIGNIFICANT HOLDINGSPreserve verbatim quotes of crucial legal reasoning:“The respondent is directed to allow the petitioner to take recredit of the amount paid by the petitioner on reverse charge basis belatedly on 30.12.2017 as the Input Tax Credit in its Electronic Credit Ledger.”Core principles established:The court established that under the CGST Act, 2017, recredit in the electronic credit ledger is permissible instead of a cash refund when transitional provisions are involved.The court emphasized the importance of adhering to prior court orders when they have set a precedent for similar issues.Final determinations on each issue:The petitioner is entitled to recredit the tax amount paid on a reverse charge basis as Input Tax Credit in the Electronic Credit Ledger.The prior order of the Madras High Court is binding and applicable, and the respondent must comply with it, allowing the recredit.The Jharkhand High Court's decision is not applicable to this case due to the specific circumstances and prior orders involved.