Case Law Details
Bharat Heavy Electricals Ltd. Vs Commissioner of GST & Central Excise (CESTAT Chennai)
In this case here is no allegation raised by the department that the appellant is not eligible to avail credit of the duties / taxes paid on the inputs / input services. To put it more clearly, the appellant would be eligible to avail the credit but for the introduction of new GST law. It is also explained by the appellant that they are able to avail credit only after they make the full payment to the vendors. The appellants have cleared payments to vendors of the impugned invoices during the period from 5.7.2017 to 4.10.2017. The provisions of CENVAT Credit Rules, as it stood during the disputed period (March to June 2017), allowed the appellant to avail credit within a period of one year. They could not avail the credit only because of the introduction of GST law by which the CENVAT account has ceased to exist. There was also a cut-off date for filing TRAN-1 return for carry forward of eligible credit. As per the accounting system followed by the appellant, they were to take credit only after making payment to vendors which was completed in October 2017 (after introduction of GST). Thus, they could not avail the credit or reflect the same in their ER-1 returns for the month of June 2017.
In the case of Adfert Technologies Pvt. Ltd. Vs. Union of India – 2020 (32) GSTL 726 (P&H), it is held that transitional credit being vested right cannot be taken away on procedural or technical ground. This decision was upheld by the Hon’ble Supreme Court as reported in 2020 (34) GSTL J138 (SC). Again, the jurisdictional Hon’ble High Court in the case of Tara Exports Vs. Union of India reported in 2019 (20) GSTL 321 (Mad.) has held that GST law contemplates seamless flow of tax credit on all eligible inputs. It is settled legal position that substantive credit cannot be denied on procedural grounds.
In the present case, at the cost of repetition, the appellant would be eligible to avail credit but for the introduction of GST law. The said right cannot be frustrated by pressing on the procedural requirement of filing TRAN-1 before 27.12.2017. The accounting practice adopted by the appellant allows to avail credit only after making payments to the vendors which has made it impossible to carry forward the credit as set out in the GST law. When the credit is eligible, the same cannot be denied by stating procedural requirements. In Pujan Buliders, Engineers and Contractors Vs. CCE & ST, Vadodra – 2021-TIOL-101-CESTAT MUM, the Tribunal allowed the refund even though initially the credit was carried forward to TRAN-1 and later reversed, after which the claim for refund was filed.
From the foregoing decisions and applying the principles laid in the above decisions, I am of the view that the rejection of refund claim cannot be justified. The impugned order is set aside. The appeal is allowed with consequential relief, if any.
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