Transitional Credit

[R N Desai]

Respected experts,

We had purchased certain inputs in the month of June, 2017.

The inputs were received and consumed in the same month.

The bills were raised by the supplier in the month of June, 2017 but were received and accounted in July, 2017.

We claimed Cenvat Credit in GST TRAN-1 which was filed within the stipulated time.

The Department is proposing to dis-allow the same on the ground that we should have claimed it in the monthly return of June, 2017. Transitional provisions are not attracted when input are received and consumed in the pre-GST regime.

Similar is the situation for services received and consumed in June, 2017.

Please give your valued views.

[KASTURI SETHI]

The department's view appears to be not correct. It is a matter of 'time factor'. Credit cannot be denied on the procedural or technical ground. You have paid duty/tax and you have used the same in the manufacture of taxable/dutiable goods. Still I am of the view that the department may issue show cause notice. Relief is possible only through litigation.You can easily trace out the decision of AAR in your favour.

[Himansu Sekhar]

If we strictly you should have claimed the same in june return and revised the return.But how could you get the inputs without the invoices and consumed thecsame? In this regard objection of deptt. Sustainable. Please clarify the same.

[KASTURI SETHI]

The question raised by Sh.Himansu Sekhar Ji is very very relevant. Experts can help you if full facts are disclosed here. More questions arise like (i) What is the date of invoice ? (ii) What is the date of entry in the books of account ? What is the date at the entry gate ? How did it happen ? There may be many factors for such delay like natural causes and un-natural causes. If transaction is genuine, credit cannot be denied on the basis technical or procedural lapse. Pl. answer the queries so that the experts are able to help you.

[Ganeshan Kalyani]

You statement states that input received and consumed in the June 2017 but invoice received in July 2017. This seems to be incorrect because unless you have invoice you cannot account it in the books. Goods in transit case is different.

[KASTURI SETHI]

Sh.Ganeshan Kalyani Ji,

It appears that the querist has no answer to the questions asked for by the experts.

[Mukesh Mudi]

Dear Sirs,

The facts are as under:

Date of invoice : 15.06.2017

Date of entry at the gate : 20.06.2017

How did it happen : Invoice was with Stores.

Date of clearance by QC : 25.06.2017.

Date of GRN : 26.06.2017

Date of recept of invoice by the Finance Department : 01.07.2017

Date of entry in the books of account : 02.07.2017

Date of filling TRAN-1 : 27.09.2017

If you have some case law, kindly favour me.

[KASTURI SETHI]

Dear Querist,

In view of the information supplied by you, let me examine the issue and I shall revert soon.

[Ganeshan Kalyani]

The credit is eligible to you. Only there is timing difference. Your facts will help you to succeed.

[KASTURI SETHI]

I have made all-out efforts to trace out case laws in your favour. There is no case law or decision of AAR on this very specific issue. However, I am of the view that there are so many documentary evidences in your favour. Credit cannot be disallowed on procedural lapses. You have not caused any loss to the revenue. You will have to face the litigation and I am cock-sure that decision will be in your favour. There is no other escape route. The issuance of SCN by the department is certain.

[KASTURI SETHI]

2019 (8) TMI 485 - CESTAT BANGALORE RMC READY MIX (INDIA) VERSUS COMMISSIONER OF CENTRAL TAX

 

AI Summary

Transitional credit entitlement survives procedural invoice receipt delays, though show cause notices and litigation may follow. Transitional entitlement to input tax credit exists where tax was paid and inputs were used pre GST; a delay in receipt or accounting of the supplier invoice after physical receipt and consumption is a procedural timing difference that does not automatically defeat the substantive right to claim credit, though the revenue may issue show cause notices and litigation may be necessary to obtain relief when documentary evidence supports the genuine transaction.