Deendayal Port Authority Through Secretary Vs Union of India & Ors. (Gujarat High Court)
Conclusion: Interest was leviable under section 50 on assessee for wrongly availing Cenvat credit. However, there was no conscious or deliberate wrong doing on part of assessee and as such, the order passed by the adjudicating authority confirming the disallowance of claim of assessee of transitional Cenvat Credit of Rs. 27,78,825/- out of transitional Cenvat credit of Rs.99,46,810/-could not be said to be claim made for a reason on account of fraud or any suppression of fact to evade tax. Therefore, no penalty was leviable under section 122 (2)(b).
Held: Assessee had filed its quarterly returns in Form ST-3 for the period between 01.04.2017 to 30.06.2017. Assessee realized that inadvertently certain invoices pertaining to the said period could not be accounted, therefore, it filed revised return in Form ST-3 on Automation of Central Excise and Service Tax (ACES) portal. Assessee realised that certain more invoices were still not accounted but the online portal did not allow assessee to file the revised return for the second time. Assessee intimated the department about the pending service tax credit. Upon introduction of the CGST Act in 2017, assessee filed Form GST TRAN-1 to avail the transitional Central Value Added Tax Credit of the erstwhile service tax regime in the GST regime including the additional amount of credit amounting to Rs.7,93,66,038/-. Respondent issued a show cause notice intimating assessee had wrongly carried forward ITC to the extent of Rs.99,46,810/- in Form GST TRAN-1. Assessee clarified that Form ST-3 was incorrect as some of the invoices inadvertently remained unaccounted for the said period and the correct amount of credit was carried forward in Form TRAN-1. Respondent issued show cause notice 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. It was the case of assessee that out of the amount of credit of Rs. 27,78,825/-, credit amounting to Rs.23,96,204/- pertained to the invoices which initially were supposed to be issued under the erstwhile service tax regime and therefore, assessee claimed the same by showing the entire amount in Form GST TRAN-1. However, subsequently invoices of Rs.23,96,204/-were raised by assessee charging GST under the GST regime and accordingly, as the credit was claimed twice, the same was rejected. The remaining credit amounting to Rs.3,19,148/-pertained to Krishi Kalyan Cess which could not have been carried forward into the GST regime and the balance credit of Rs. 63,473/- was rejected due to lack of supporting documentary evidence to substantiate the claim of credit. Assessee therefore, had not pressed the claim of Rs. 27,78,825/- before the appellate authority as well as before this Court as assessee was not aggrieved by the rejection of the credit of Rs. 27,78,825/- as the amount of the said credit was claimed twice. However, assessee was aggrieved by demand of interest of Rs. 24,72,165/- under section 50(3) of the CGST Act and penalty of Rs. 27,78,825/- under section 122(2)(b) of the CGST Act and hence challenge was restricted by assessee to levy of interest and penalty only. Assessee had also remitted the amount towards tax being Rs. 27,78,825/- by Form GST DRC-03 and further to avoid any dispute, assessee had also paid the amount of Rs.24,72,165/- towards interest on the same day. Assessee being aggrieved by the Order-in-original preferred an appeal under section 107 of the CGST Act challenging the levy of interest and penalty. It was held that as per the provisions of section 140 stipulated transitional arrangement for input tax credit, when the Cenvat credit which was carried forward as per the return relating to period ending with day immediately preceding the appointing day i.e. 01.07.2017 furnished by assessee under the existing law, assessee was entitled to take in his Electronic Credit Ledger amount of such Cenvat credit. 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, assessee was liable to pay interest as computed under the provisions of section 50(3) for wrongly availing Cenvat credit and assessee had rightly deposited such amount after the impugned order was passed. Assessee was therefore under bona fide belief that amount of Cenvat credit to the extent of Rs.99,46,810/- was available to be carried forward. Out of the said amount when verification was made by the respondent authority, assessee accepted that Cenvat credit to the extent of Rs.27,78,825/- could not have been carried forwarded and therefore, the provisions of section 122(1)(b) read with section 74(1) could not have been invoked by the adjudicating authority, more particularly, when assessee had not challenged the confirmation of demand of the excess ITC claimed in Form TRAN-I. There was no conscious or deliberate wrong doing on part of assessee and as such, the order passed by the adjudicating authority confirming the disallowance of claim of assessee of transitional Cenvat Credit of Rs. 27,78,825/- out of transitional Cenvat credit of Rs.99,46,810/-could not be said to be claim made for a reason on account of fraud or any suppression of fact to evade tax. Considering the facts of the case, the findings arrived at by both the authorities that assessee deliberately misstated the facts in TRAN-I so as to utilise Cenvat credit in its payment of output GST liability which was found during the verification of TRAN-I could not be the basis for imposition of penalty as it could not be said that there was any intention on part of assessee which was a Government company to evade tax.
