Case Law Details
Ganges International Private Ltd. Vs Assistant Commissioner of GST & Central Excise (Madras High Court)
The Honorable Madras High Court allowed Credit of Service Tax Paid under RCM which could not be availed as Transitional Credit under GST following the Principle of Doctrine of Necessity.
In a very important and path-breaking judgment, on the matter relating to Refund of taxes paid, the Honorable Madras High Court has allowed the Credit of Service Tax Paid under Reverse Charge Mechanism which could not be availed as Transitional Credit under the GST regime in the case of Ganges International Private Ltd & others* vs Asst Commissioner of GST & C.Ex., Puducherry under Writ Petition No: W.P.Nos.528, 1092 & 1160 of 2019.
The brief litigation involved in this case is that the petitioners (1) Ganges International Private Ltd, (2) SRC Projects Private Ltd and (3) Supreme Petrochemicals Ltd, (“The Petitioners”) were engaged in providing various construction services to Government/Private parties and were registered under the erstwhile Service Tax Provisions with the Department and were holding Service tax Registration. From 01.07.2017 as the GST regime has come into effect, “The Petitioners” were migrated into the GST regime from that date. They had filed the last service tax return (Form ST3) in the erstwhile regime for the quarter from April to June 2017 on 15.08.2017. However, they had paid the due service tax in one case only on 30.12.2017 as it had attracted levy under Reverse Charge Mechanism, belatedly though, after the due date for filing GST-Tran-1 application had lapsed on 27-12-2017. Having paid the tax under the GST regime, the Service tax paid could not be taken as CENVAT Credit at the material time as the said provisions were rescinded.
In order to get the benefit of the said amount, as, service tax paid, on Reverse Charge Mechanism (RCM) which, is purely an input tax, credit could not be taken by the petitioner under erstwhile Cenvat Credit Rules, 2004 nor under GST regime directly. Therefore, they had made an application for a refund of the tax so paid, of course within the time limit prescribed by the existing law with the Department. The said application seeking a refund was rejected on the ground that though “The Petitioners” are eligible for taking Cenvat credit of the amount so paid under CENVAT Credit Rules 2004, there was no provision in the new regime (GST) to allow as an input tax credit (ITC) in Electronic cash ledger. The eligibility of the petitioners otherwise to claim the Cenvat Credit under normal circumstances under the erstwhile law prior to 30.06.2017 is not in much dispute. However, it is the vehement contention on the part of the Department was that what are all the eligible Taxes for which, credit can be taken by the petitioners during the transitional period was to be taken by the petitioners as on 30.06.2017 and thereafter the ensuing payments made shall not form part of the credit accrued on 30.06.2017. Therefore, the subsequent amount paid cannot be treated as an input tax credit for the purpose of making the claim in the transitional period even for carrying forward the same to the electronic credit ledger under the GST regime, leave alone Cash refunds.
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Author Bio
Nice Article, whether the department accepted the order or filed any appeal.
Many such issues needs decision. This particular issue is waiting for a legal conclusion since the customs duty and CVD were paid on account non fulfilment of Export obligation for Advance authorization where the importers were paid duties but could not avail as credit under the current regime. This will be useful for such registrants
Succinct explanation of the gist of case. Well done.