2025-VIL-106-PAT
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SGST High Court Cases

GST – Section 140 of the CGST Act, 2017 and Rule 117 of the CGST Rules, 2017 - Transitional Credit, CENVAT Credit, Capital Goods, Input Tax Credit - Petitioner placed orders for certain cenvatable/excisable goods of capital nature and received these goods in July 2017 - Petitioner claimed the CENVAT credit on goods of capital nature in the TRAN-1 form – Disallowance of Transitional credit on the ground that under the Transitional provisions, credit is not available for capital goods received after the appointed date of 1st July 2017, even though the duty was paid prior to that date - Whether the petitioner is entitled to claim the CENVAT credit for the capital goods received after 1st July 2017 under the transitional provisions of the CGST Act, 2017 - HELD - While the Transitional provisions of the CGST Act enables an assessee to carry forward and take credit of unutilised CENVAT credit paid on inputs as well as on capital goods, in the manner as may be prescribed and subject to the conditions contained in the provisions, sub-section (5) of Section 140 makes a distinction between the capital goods and inputs - the CGST Act has made a clear and conscious distinction between capital goods and inputs in the transitional provisions under Section 140. While Section 140(5) allows the credit of eligible duties and taxes paid on inputs or input services received after the appointed date, there is no such provision for capital goods. This distinction is not artificial or discriminatory, as the legislature has the authority to provide differential treatment to capital goods and inputs for valid reasons during the transitional phase of GST implementation – the CENVAT Credit Rules, 2017 has superseded CENVAT Credit Rules, 2004 and conjoint reading of the provisions of GST Act and CENVAT Rules, 2017 leaves no room for taking any different view from that of the Hon’ble Gujarat High Court in the case of RSPL Limited – the petitioner is not entitled to the transitional credit for the capital goods received after the appointed date of 1st July 2017, even though the duty was paid prior to that date - The demand for recovery of the ineligible CENVAT credit is upheld and the writ petition is dismissed
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