TaxTMI 
TaxTMI 
2022 (11) TMI 1266
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....ch, 2022 (Annexure1). 3. Petitioner company operates in two divisions, Wire Rope Division and Steel Division. Steel Division is engaged in the manufacture of iron and steel products at its factory situated at Adityapur Industrial Area, Gamharia duly registered under the erstwhile Central Excise Act, 1944 (Hereinafter referred to as the C.E.A.) and Finance Act, 1994 (Hereinafter referred to as the Finance Act). The final products manufactured at the factory were dutiable under the Central Excise Act (C.E.A.) and are now taxable under Goods and Service Act. According to the petitioner, the iron ore required for manufacture of the final products were extracted from petitioner's captive iron ore mine situated at Bokna, Barajamda. Petitioner has got a site office at Bokna mines which receives the invoices issued under Rule 4 A of the Service Tax Rules, 1994 towards purchase of its input services received at the mines. For distributing credit of service tax on the said services to the Gamharia factory in accordance with Rule 7 read with Rule 2(m) of the CENVAT Credit Rules, 2004 (hereinafter referred to as "C.C.R. 2004"), the petitioner duly filed an application on 25th April, 2008 fo....
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.... service in respect of which was paid by the petitioner under the Finance Act. The present issue relates to disallowance of the CENVAT credits amounting to Rs. 8,55,50,111/- pertaining to Bokna mines and credit amounting to Rs.15,98,697/- pertaining to Brinda Sesai mines in respect of which proceedings were initiated by issuance of show cause notice dated 13^th September, 2021 by the Joint Commissioner in Form GST-DRC-01 proposing recovery of transitioned CENVAT credit in terms of Section 73(1) of the C.G.S.T. Act along with interest and penalty. Prior to issuance of the notice, petitioner was served with a letter by Assistance Commissioner (Prevention) bearing No. 1720 dated 18th February, 2019 asking him to pay back the total amount of CENVAT credit of Rs. 15,19,17,690/- as per the break up indicated above pertaining to Bokna mines and Brinda Sesai mines. Petitioner had replied thereto on 2nd March, 2019. Thereafter, a notice in Form GST-DRC-01A dated 23rd July, 2021 was issued to which petitioner submitted its reply in Part B vide letter dated 26th August, 2021. Petitioner participated in the proceedings initiated under Section 73(1) and duly responded to the SCN vide letter dat....
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.... 73 of the C.G.S.T. Act deals with cases where tax has been short paid or not paid or erroneously refunded or where input tax credit has been wrongly availed or utilized. The present dispute relates to alleged wrongful availment of CENVAT credit. It therefore becomes imperative to understand the ambit and scheme of input tax credit under the GST laws. 5. As per the scheme of the C.G.S.T. Act under Section 2 (62) input tax means Central Tax, State Tax, Integrated Tax or Union Territory Tax charged on supply of goods or services or both by registered persons. These expressions have been defined under Sections 2(21), 2(104) and 2(58) of the C.G.S.T. Act respectively to mean tax levied under the C.G.S.T. Act, State Goods and Service Tax Act and the Integrated Goods and Service Tax Act as the case may be. Similarly, Section 2(63) of the C.G.S.T. Act defines input tax credit to mean the credit of input tax. Therefore, input tax credit is not CENVAT credit, i.e. the credit that had accrued under the erstwhile regime. Section 16 of the C.G.S.T. Act provides that a registered person shall be entitled to take credit of input tax charged on supply of goods, services or on both, which are u....
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....he contrary shall result in illegal assumption of jurisdiction. In this context reliance is placed upon the case of Carona Ltd. vs. Parvathy Swaminathan & sons reported in (2007) 8 SCC 559 para 27 and 28 thereof. Petitioner has also relied upon Raza Textiles Ltd. vs. Income Tax Officer, Rampur reported in (1973) 1 SCC 633 Para 3 and Calcutta Discount Co. Ltd. vs. Income Tax Officer, Companies District I Calcutta & another reported in AIR 1961 SC 372 Para 26 to buttress his contention on lack of jurisdiction. 6. Learned counsel for the petitioner has also urged that respondent no. 1 is only vested with the power of verification of transitional credit and not determine its eligibility or availability. While Rule 117 of the C.G.S.T. Rules deals with procedural aspects of transitional provisions specified in Section 140 of the C.G.S.T. Act, Sub Rule 3 of Rule 117 states that amount of credit specified in the relevant form shall be credited to the E.C.L. of the applicant. Similarly, Rule 121 states that the amount credited under Rule 117 (3) shall be verified and if found improper, proceedings may be initiated under Section 73 or 74 of the C.G.S.T. Act as the case may be. It is submi....
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....t GST laws. Learned Counsel for the petitioner has in particular relied on the constitution Bench decision rendered in the case of Kedar Nath Singh v. State of Bihar reported in AIR 1962 Supreme Court 955, Para 27 in which the Apex Court has held that if the impugned provisions of a law come within the constitutional powers of the legislature by adopting one view of the words of the impugned Section or Act, the Court will take that view of the matter and limit its application accordingly in preference to the view which would make it unconstitutional or another view of the interpretation of the words in question. It is submitted that the legislature could not have conferred parallel jurisdiction under both the existing law i.e. C.E.A. or Finance Act and the present G.S.T. Act to enable the authorities to proceed on charges of irregular or improper availment of CENVAT Credit under the transitional provisions of Section 140. Learned counsel for the petitioner has provided a tabular chart of the total of nine show cause notices which were raised under the erstwhile laws which are pari materia to the impugned S.C.N. They are being furnished hereunder: Sl.No. SCN Period Deman....
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.... the Constitution of India by this Court as no determination on disputed questions of fact are required to be made to decide this legal issue. Learned counsel for the petitioner has relied upon the decision in Magadh Sugar & Energy Ltd. vs. State of Bihar & others reported in (2021) SCC online SC 801 para 25 to 27. Therefore, the impugned order in original may be quashed. Petitioner has no objection if such a proceeding can be initiated under the erstwhile C.E.A and the Finance Act for alleged contraventions. 9. Counter affidavit has been filed by the respondents inter alia taking the following stand: According to the respondents the appellant has an efficacious and alternative remedy against the order-in-original before the appellate authority under Section 107 of the CGST Act, 2017. On the question of jurisdiction it has been stated that the circular dated 9th February, 2018 permits the proper officer to adjudge disputes under Section 73/74 of the CGST Act in respect of central tax not paid or short paid or input tax credit or central tax wrongly availed or utilized. Therefore, he has not exceeded his jurisdiction. The plea of the petitioner that the instant show caus....
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....ribute CENVAT Credit or service tax paid by them for such services. Learned counsel for the respondents has relied upon the provisions of Rule 142 (1) of the C.G.S.T. Rules, 2017, which provides that a proper officer shall serve, along with the notice issued under the relevant Sections indicated therein a summary thereof electronically in form GST DRC 01. Such notice was properly served on the petitioner on 22nd September, 2021 with an acknowledgement. Section 169 of the C.G.S.T. Act, 2017 relating to service of notice has also been referred to. According to the respondents, as per provisions of Rule 3 (1) of the CCR, 2004, a manufacturer can avail credit of any input service received by manufacturer or provider of output services. A manufacturer can take credit of input services received by them but the invoices having not been issued in the name of the petitioner noticee and the services having been rendered by another independent entity it did not qualify input service for the petitioner noticee unit. Therefore, the credit availed by them was irregular and has rightly been held so by the impugned order-in-original. It is submitted that provision for transition of pre GS....
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....tion 140 of the C.G.S.T. Act or non utilization thereof in certain cases. Para 2 of the instant circular provides that where in relation to a certain CENVAT Credit pertaining to which a show cause notice was issued under Rule 14 of the CENVAT Credit rules, 2004, which has been adjudicated and where in the last adjudication order or the last order in appeal as it existed on 1st July, 2017, it was held that such CENVAT Credit is not admissible, then such CENVAT Credit or "disputed Credit" credited to ECL in terms of Section 140 of the Act shall not be utilized by a registered taxable person to discharge his tax liability till the order in original or the order in appeal is in existence. 11. However, we may observe at this stage that in the first place the CENVAT Credit sought to be transitioned under Section 140 of the C.G.S.T. Act was never subjected to any adjudication order under the existing law that is the C.E.A. or the Finance Act. Secondly, the guidance note or the circular dated 23rd February, 2018 does not throw light on whether a proceeding under Section 73 of the C.G.S.T. Act can be initiated for transition of CENVAT Credit which is alleged to be inadmissible under the ....
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....acious alternate remedy is available, the existence of an alternate remedy does not by itself bar the High Court from exercising its jurisdiction in certain contingencies. This principle has been crystallized by this Court in Whirpool Corporation v. Registrar of Trademarks, Mumbai and Harbanslal Sahni v. Indian Oil Corporation Ltd. Recently, in Radha Krishan Industries v. State of Himachal Pradesh a two judge Bench of this Court of which one of us was a part of (Justice DY Chandrachud) has summarized the principles governing the exercise of writ jurisdiction by the High Court in the presence of an alternate remedy. This Court has observed: "28. The principles of law which emerge are that: (i) The power under Article 226 of the Constitution to issue writs can be exercised not only for the enforcement of fundamental rights, but for any other purpose as well; (ii) The High Court has the discretion not to entertain a writ petition. One of the restrictions placed on the power of the High Court is where an effective alternate remedy is available to the aggrieved person; (iii) Exceptions to the rule of alternate remedy arise where (a) the writ petition ....
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....ourt had entertained a petition despite availability of alternative remedy and heard the parties on merits it would be ordinarily unjustifiable for the High Court to dismiss the same on the ground of non-exhaustion of statutory remedies; unless the High Court finds that factual disputes are involved and it would not be desirable to deal with them in a writ petition." 27. The above principle was reiterated by a three-judge Bench of this Court in Executive Engineer v. Seetaram Rice Mill. In that case, a show cause notice/provisional assessment order was issued to the assessee on the ground of an unauthorized use of electricity under Section 126(1) of the Electricity Act 2003 and a demand for payment of electricity charges was raised. The assessee contended that Section 126 was not applicable to it and challenged the jurisdiction of the taxing authorities to issue such a notice, before the High Court in its writ jurisdiction. The High Court entertained the writ petition. When the judgment of the High Court was appealed before this Court, it held that the High Court did not commit any error in exercising its jurisdiction in respect of the challenge raised on the jurisdiction of the ....
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....e. There is also no dispute on the nature of the transaction involved. 32. The issues raised by the appellant are questions of law which require, upon a comprehensive reading of the Bihar Electricity Act, a determination of whether tax can be levied on the supply of electricity by a power generator (which also manufactures sugar) supplying electricity to a distributor; and whether the first respondent has the legislative competence to levy duty on the sale of electricity to an intermediary distributor in view of the decision of this Court in State of AP (supra). The question of whether the appellant is liable to file returns under Sections 6B(1) and 5A of the Act is directly related to the issue of whether the sale of electricity by the appellant to BSEB falls under the charging provisions of Section 3(1). The questions raised by the appellant can be adjudicated without delving into any factual dispute. Thus, the present matter is amenable to the writ jurisdiction of the High Court." 14. The Apex Court has laid down that the test that is to be applied for the determination of a question of law is whether the rights of the parties before the court can be determined witho....
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.... this Act, on and from the date of commencement of this Act, the Central Excise Act, 1944 (1 of 1944) (except as respects goods included in entry 84 of the Union List of the Seventh Schedule to the Constitution), the Medicinal and Toilet Preparations (Excise Duties) Act, 1955 (16 of 1995), the Additional Duties of Excise (Goods of Special Importance) Act, 1957 (58 of 1957), the Additional Duties of Excise (Textiles and Textile Articles) Act, 1978 ( 40 of 1978), and the Central Excise Tariff Act, 1985 (5 of 1986) (hereafter referred to as the repealed Acts) are hereby repealed." (2) The repeal of the said Act and the amendment of the Finance Act 1994 (32 of 1994) (hereinafter referred to as "such amendment" or amended Act" as the case may be) to the extent mentioned in the sub-section (1) or section 173 shall not- (a) revive anything not in force or existing at the time of such amendment or repeal; or (b) affect the previous operation of the amended Act or repealed Acts and orders or anything duly done or suffered thereunder; or (c) affect any right, privilege, obligation, or liability acquired, accrued or incurred under the amended Act or repeale....
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.... day immediately preceding the appointed date, i.e. 1st July, 2017, furnished by him under the existing law in such manner as may be prescribed. Transitional provisions have a purpose. When one legislative system ends and another begins it is considered necessary by the legislature to enact special provisions for the circumstance which exists when that legislation came into force. As the learned author Craies has observed in his treaties 'On Legislation' legislation does not necessarily have effect as law immediately after being passed or made. It may take effect under these circumstances: (1) Immediately upon being passed or made; (2) At a point in the future that is specified upon the legislation being passed or made, or that can be determined under criteria specified upon the legislation being passed or made; (3) Only if some future event occurs (which may be a real-world event or an event such as making an order-designed to commence the legislation); (4) with retrospective effect from a past time; or (5) not at a particular point in time, but in relation to things done or events occurring during a period specified upon the legislatio....
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....h to him which are used or intended to be used in the course or furtherance of his business and the said amount shall be credited to the electronic credit ledger of such person. (2) Notwithstanding anything contained in this section, no registered person shall be entitled to the credit of any input tax in respect of any supply of goods or services or both to him unless,- (a) he is in possession of a tax invoice or debit note issued by a supplier registered under this Act, or such other tax paying documents as may be prescribed; [(aa) the details of the invoice or debit note referred to in clause (a) has been furnished by the supplier in the statement of outward supplies and such details have been communicated to the recipient of such invoice or debit note in the manner specified under Section 37;] (b) he has received the goods or services or both." [Explanation.- For the purposes of this clause, it shall be deemed that the registered person has received the goods or, as the case may be, services-- (i) where the goods are delivered by the supplier to a recipient or any other person on the direction of such registered person, whet....
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....018 till the due date of furnishing of the return under the said section for the month of March, 2019 in respect of any invoice or invoice relating to such debit note for supply of goods or services or both made during the financial year 2017-18, the details of which have been uploaded by the supplier under sub-section (1) of section 37 till the due date for furnishing the details under sub-section (1) of said section for the month of March, 2019.] 18. The enumerated conditions under which the registered person shall not be entitled to avail of the credit of input tax are not one which are applicable to the case of the present petitioner. The show cause notice under which the instant adjudication proceedings were initiated is worded allege similar contraventions under the CEA, Finance Act, 1994 and the CCR as the previous show cause notices issued under the existing law against the petitioner relating to contravention of the C.E.A., Finance Act and C.C.R.. The adjudicating authority does not hold that the transition of CENVAT Credit under Section 140 of the C.G.S.T. Act by the petitioner and relating to the period just before the appointed date i.e. 1st July, 2017 are not one wh....
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....ch are available under the C.G.S.T. Act. Section 73 does not speak of CENVAT Credit as C.G.S.T. Act does not provide for CENVAT Credit rather the term has been subsumed in the expression input tax credit both relating to the supply of good or services. The assumption of jurisdiction by Respondent No. 1 to determine whether the CENVAT Credit was admissible under the existing law by invoking provisions of Section 73 of the C.G.S.T. Act was therefore not proper in the eye of law. 19. This leads us to the next question whether a registered person could transition inadmissible CENVAT Credit of the existing regime to the G.S.T. regime under Section 140 of the C.G.S.T. Act without any check or proceeding against him. We have to then advert to Section 174 of the C.G.S.T. Act to find the answer. Section 174 relates to repeal and saving and has been engrafted under the chapter XXI relating to Miscellaneous Provisions. Pursuant to the 101 Constitutional amendment, Articles 246 A, 269 A and 279 A were inserted and certain Articles like section 268 A were repealed. The amendment act brought drastic changes in the taxing powers of the Centre and the State. Certain other articles such as Ar....
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.... Toilet Preparations (Excise Duties) Act, 1955, Additional Duties of Excise (Goods of Special Importance Act, 1957), The Additional Duties of Excise (Textile and Textile Articles Act, 1978 and the Central Excise Tariff Act, 1985 were repealed under Subsection (1) of Section 174. However, the legislature provided that the repeal of the said Acts and the amendment of the Finance Act, 1994 to the extent as mentioned in sub section (1) or section 173 shall not (a) revive anything not in force or existing at the time of such amendment or repeal; or (b) affect the previous operation of amended Act or repealed Acts or and orders or anything duly done or suffered thereunder; or (c) affect any right, privilege, obligation or liability acquired, accrued or incurred under the amended Act or repealed Acts or orders under such repealed or amended Acts. Sub clause (e) of subsection 2 of Section 174 is relevant for purposes of the present case which are again reproduced hereunder: "(e) affect any investigation, inquiry, verification (including scrutiny and audit), assessment proceedings, adjudication and any other legal proceedings or recovery of arrears or ....
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....tory provision consists of two steps; first, the old rule is made to cease to exist and, next, the new rule is brought into existence in its place. (See: Koteswar Vittal Kamath v. K. Rangappa Baliga & Co. [(1969) 1 SCC 255 : (1969) 3 SCR 40] , SCR at p. 48.) In other words, the substitution of a provision results in repeal of the earlier provision and its replacement by the new provision. As regards repeal of a statute the law is thus stated in Sutherland on Statutory Construction: "The effect of the repeal of a statute where neither a saving clause nor a general saving statute exists to prescribe the governing rule for the effect of the repeal, is to destroy the effectiveness of the repealed act in futuro and to divest the right to proceed under the statute, which, except as to proceedings past and closed, is considered as if it had never existed." (Vol. I, para 2042, pp. 522-523) 10. Similarly in Crawford's Interpretation of Laws it has been said: "Effect of Repeal, Generally.- In the first place, an outright repeal will destroy the effectiveness of the repealed act in future and operate to destroy inchoate rights dependent on it, as a general rule.....