TRAN 1 Capital goods received after the appointed date but invoice in june -2017

[Yellapu SivaPrasad]

Sir,

my client has received the capital goods on 7.07.2017 but the invoiced raised ON 24.06.2017 the in the month of June-2017. he claimed the credit 100 % in TRAN-1 .Now , the departmental officer has gave notice for reversal of the credit as you did not claimed the 50% credit on ER1 Returns i.e you did not claimed in earlier tax regime.Hence, you are not eligible claim 100% and reverse the same along with interest Please provide any clarifications issued by the CBIC or case laws for my case to substantiate .Please guide me

[KASTURI SETHI]

Sh.Yellapu SivaPrasad Ji,

The department's view is not correct at all. You have complied with Central Excise law. In case you could not take 50 % credit in the current financial year due to any reason, you could take credit 100 % credit on capital goods in the next year. Here your client is very much within the same financial year. No interest is recoverable from your client. There are case laws to this effect. You can easily trace out.

Pl. note that all facts and circumstances are in your client's favour de jure.

[KASTURI SETHI]

Otherwise also you have received the capital goods in after implementation of GST i.e.after 30.6.17 and in GST regime 100% credit on capital goods is allowed at one go.

[KASTURI SETHI]

No question of payment of interest arises inasmuch as in this scenario credit has been used in GST regime and entire credit on capital goods is allowed in the first year.

The assessee should not suffer loss of credit because of procedural requirement, if transaction is genuine and tax/duty is paid on capital goods and goods physically received and used in the course of business or furtherance of business.

This case law dated 27.5.21 can help you (Read thoroughly)

Article 226 of Constitution of India. - Non-filing of Part 7B of Table 7(a) and Table 7(d) of TRAN-1 Form cannot impair the rights of the petitioner to claim transitional ITC, if he is otherwise eligible-----held by High Court Delhi in the case of R.K.Distributors (P) Ltd. reported as.2021 (6) TMI 10 - DELHI HIGH COURT

 

[Ganeshan Kalyani]

As per transition provision given under Sec.140(2) you are eligible to take credit.

[Shilpi Jain]

This is a case of capital goods in transit. As far as I remember the transitional provisions does not have provisions enabling the credit of capital goods in transit. however considering this to be ineligible credit there has to be a way in which this credit should be taken or otherwise refund should be available. there are a lot of cases in the recent past which have allowed this

AI Summary

Transitional input tax credit on capital goods: full credit may be claimed when goods are received in the GST period, subject to eligibility. Transitional input tax credit was claimed for capital goods invoiced before but received after the appointed GST date; statutory basis under Section 140(2) and procedural filing in TRAN-1 were central. The department sought reversal for not claiming prior-period credit, while respondents argued that receipt in the GST period permits claiming full credit, that procedural non-filing of TRAN-1 parts should not defeat entitlement, and that refund or case-law remedies exist for goods in transit.