Sowmiya Spinners (P) Limited Vs Deputy Commissioner of GST and Central Excise (Madras High Court)
In a recent judgment, the Madras High Court set aside an order that had denied Sowmiya Spinners (P) Limited the benefit of transitioned Input Tax Credit (ITC) under the Goods and Services Tax (GST) regime. The dispute centered on the company’s filing of excise returns.
Sowmiya Spinners had transitioned ITC on December 22, 2017, without an accompanying excise return for July 2017. Following a notice from the authorities in December 2018, demanding reversal of the transitioned credit, the company subsequently filed the related returns under the Central Excise Rules, 2001, on December 29, 2018.
The petitioner argued that any procedural default was rectified by the subsequent filing, and the substantive benefit of CENVAT credit, permitted under Section 140 of the CGST Act, should not be denied. They also raised a jurisdictional challenge, asserting that they were assigned to State Officers.
The respondent contended that the ITC was not reflected in returns filed prior to December 22, 2017, and thus could not be regularized by belated filings. They also noted that a related jurisdictional decision by the High Court was under appeal.
The High Court, in its ruling, emphasized that if a taxpayer was entitled to avail ITC under the CENVAT Credit Rules, 2004, it should not lapse unless explicitly provided for. The court cited the Supreme Court’s decision in Collector of Central Excise, Pune and others v. Dai Ichi Karkaria Limited and others (1999) 7 SCC 448, which stated that “credit in the instant cases having been taken validly, is, therefore, indefeasible.”
