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2025 (1) TMI 773

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...., order or direction to quash and set aside the Impugned Order-in-Appeal No. KCH-EXCUS-000-APP-061-2021-22-GST-ADC dated 14.02.2022 passed by Ld. Commissioner (Appeals), CGST & CE, Rajkot and consequently sanction the refund claim filed by the Petitioner seeking refund of the interest. b. Issue directions to the Respondents to refund the amount paid by the Petitioner towards the interest (Rs. 24,72,165/-) under Section 50 (3) of CGST Act and pre-deposit of Rs. 2,08,412/- mistakenly paid by them towards penalty under Section 122 (2) (b) of CGST Act: c. Issue a Writ of Certiorari or a Writ in the nature of Mandamus or any other writ, order or direction under Article 226 of the Constitution of India staying the operation and effect of the Impugned Order-in-Appeal No. AHM-EXCUS-002-APP-186 to 188-18-19 dated 19.02.2019 KCH-EXCUS-000-APP-061-2021-22-GST-ADC dated 14.02.2022 passed by Ld. Commissioner (Appeals), CGST & CE, Rajkot, pending the disposal of the present petition;......." 5. Brief facts of the case are that the petitioner was registered under section 69 of the Finance Act, 1994 having service tax no. AAALK0046NST001 under the category "Port Services". The petitioner file....

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....redit declared in Form GST TRAN-1 is required to be carried forward as alleged excess credit pertained to the invoices which could not be declared due to restrictions over second revision of the Form ST-3 for the last quarter of FY 2017-2018. 12. It appears that thereafter show cause notice dated 25.04.2019 was issued to recover the alleged excess credit of Rs. 99,46,810/- under section 74 (1) read with section 122 (2) (b) of the CGST Act. 13. Being aggrieved, the petitioner preferred Special Civil Application No.6418/2019 challenging the validity of the show cause notice dated 25.04.2019. The petitioner also prayed to revise its Form ST-3 return so that invoices which were missed during the filing of the second revised Form ST-3 return, can be included for the purpose of transition of credit to GST regime. 14. This Court by order dated 12.02.2020 directed the respondents to consider the claim of the petitioner for Rs. 99,46,810/- manually as per Rule 7B of the Service Tax Rules, 1994. 15. Pursuant to the aforesaid order dated 12.02.2020, the respondents by letters dated 10.06.2020, 16.06.2020, 20.07.2020 and 06.08.2020 sought certain documents pertaining to CENVAT credit from ....

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.... of section 107 of the CGST Act to prefer an appeal, the petitioner is required to deposit an amount equal to 10% of the amount of tax in dispute as pre-deposit. 21. According to the petitioner, as the petitioner was not disputing the tax amount and he discharged the same in its entirety, no pre-deposit was required to be made while preferring the appeal as the appeal was restricted to challenge the levy of interest and imposition of penalty. However, the petitioner while preferring the appeal made a deposit of Rs. 2,08,412/- on 27.10.2021 under a mistaken belief. 22. The petitioner has also filed an application for refund of Rs. 24,72,165/- paid towards interest on the ground that the interest under section 50 of the Act can be charged only if the ITC has been availed in excess. 23. The Appellate Authority after providing personal hearing to the petitioner by order dated 14.02.2022 rejected the appeal by upholding the order-in-original on the ground that interest was rightly charged under section 50, as ITC was availed in excess by the petitioner and further regarding imposition of penalty, it was observed that fact of excess availment of ITC came to the knowledge of the respon....

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.... CGST Act, cannot be attracted in case of Cenvat Credit carried forward under section 140 of the CGST Act and therefore, interest and penalty could not have been levied by the respondent authority. 27. It was further submitted that the petitioner has deposited the amount of Rs. 27,78,825/- on 02.09.2021 and therefore, no interest or penalty could have been levied. 28. Learned advocate Mr. Gupta referred to and relied upon the provisions of section 50 (3) of the CGST Act to submit that no interest can be charged as the credit amount availed does not satisfy the definition of "input tax credit" for the purpose of CGST Act. 29. In support of his submission, reliance was placed on the decision of Hon'ble Calcutta High Court in case of Ruchi Soya Industries Ltd. reported in 2016 (336) ELT 463 (Cal) as well as decision of Hon'ble Supreme Court in case of Sales Tax Commissioner v. Modi Sugar Mills reported in AIR 1961 SC 1047 wherein it is held that taxing statute is to be strictly construed. It was therefore, submitted that no interest could have been levied on the petitioner for carry forward of Cenvat Credit under section 140 of the CGST Act. 30. It was further submitted that the r....

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....pta appearing for the respondents submitted that the petitioner has admitted excess carry forward of Cenvat Credit and has already deposited the amount of interest and hence, the interest and penalty was rightly levied under the provisions of the CGST Act. 35. It was submitted that the contention raised on behalf of the petitioner that Cenvat credit cannot be part of input tax credit is not tenable as definition of "input tax" as per section 2 (62) of the CGST Act is an inclusive definition. It was therefore, submitted that whenever inclusive definition is given in a statute, it is always intended to enlarge the meaning of words or phrases used in the definition. 36. In support of his submission, reliance was placed on the decision of Hon'ble Supreme Court in case of Reserve Bank of India v. Peerless General Finance and Investment Co. Ltd and others reported in 1987(1) SCC 424. It was submitted that transitional Cenvat credit is covered under the definition of "input tax credit" under the GST regime once such Cenvat Credit is credited in the Electronic Credit Ledger. 37. It was submitted that the petitioner has utilised such credit for payment of GST by debiting Electronic Credi....

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.... tax payable under the provisions of sub-sections (3) and (4) of section 7 of the Union Territory Goods and Services Tax Act, but does not include the tax paid under the composition levy; (63) "input tax credit" means the credit of input tax; "50. Interest on delayed payment of tax (1) Every person who is liable to pay tax in accordance with the provisions of this Act or the rules made thereunder, but fails to pay the tax or any part thereof to the Government within the period prescribed, shall for the period for which the tax or any part thereof remains unpaid, pay, on his own, interest at such rate, not exceeding eighteen percent., as may be notified by the Government on the recommendations of the Council: [PROVIDED that the interest on tax payable in respect of supplies made during a tax period and declared in the return for the said period furnished after the due date in accordance with the provisions of section 39, except where such return is furnished after commencement of any proceedings under section 73 or section 74 in respect of the said period, shall be payable on that portion of the tax which is paid by debiting the electronic cash ledger.] (2) The interest ....

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....tax or Union territory tax charged on any supply of goods or services or both made to him and includes the tax payable under the provisions of sub-sections (3) and (4) of section 9 of the CGST Act and SGST Act and sub-sections (3) and (4) of section 7 of the Union Territory Goods and Services Tax Act. Thus, on a first blush, it appears it is not an input tax and therefore, not an input tax credit. However, the provisions of section 140 of the CGST Act, stipulates transitional arrangement for input tax credit. When the Cenvat credit which is carried forward as per the return relating to period ending with day immediately preceding the appointing day i.e. 01.07.2017 furnished by the assessee under the existing law, then the assessee is entitled to take in his Electronic Credit Ledger amount of such Cenvat credit meaning thereby the petitioner who carried forward Cenvat credit as per TRAN-I, same was credited in the Electronic Credit Ledger. Therefore, the credit available as per the existing law in form of Cenvat credit or any other input tax credit, would fall within the scope of "input tax credit" under the CGST Act also. Therefore, we are of the opinion that the petitioner was lia....

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....ed the facts in its Trans-1, so as to utilize this Cenvat credit in its payment of out GST liability and this facts was unearthed only during the verification of Tran-1. I find that the Noticee did not intimate, on its own, to the department about this availment of ineligible Cenvat Credit in its Tran-1 and thereby his intention to evade taxi. Therefore, the Noticee is liable for penalty u/s 74 (1) of the CGST Act, 2017 read with section 122 (2) (b) of the CGST Act, 2017. I find that adjudicating authority is right in observing that above ineligible availment of ITC would have remained concealed if the department had not initiated the verification of the Trans-1 filed by the Appellant. I further find that provisions of section 74 (1) and section 122 (b) of the Act are pari materia with provisions of section 11A and 11AC of the Central Excise Act, 1944. The Hon'ble Supreme Court in the case of Union of India Vs. Rajasthan Spinning & Weaving Mills 2009 (238) E.LT. 3 (S.C.) discussing the imposition of penalty under section 11AC of the Central Excise Act, 1944, the have held that "One cannot fail to notice that both the proviso to sub-section 1 of Section 11A and Section 11AC ....