2026-VIL-316-GSTAT-KOL
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SGST Tribunal

GST - Transitional credit under Section 140 of the CGST Act, 2017 - Jurisdiction of CGST authorities to initiate proceedings under Section 73 for recovery of allegedly inadmissible CENVAT credit carried forward through Form GST TRAN-1 - Appellant carried forward CENVAT credit and claimed unavailed credit on capital goods, and on scrutiny the Revenue alleged excess transitional credit, the revised return filed manually under the earlier law not having been reflected in the system - Demand was confirmed under Section 73 with interest and penalty, and FAA gave partial relief on the capital goods credit but upheld the rest - Appellant contended that eligibility to avail CENVAT credit of the earlier regime cannot be disputed in proceedings under Section 73, while Revenue relied on Rule 121 which provides for verification of transitional credit and initiation of proceedings under Section 73 or 74 - Whether the CGST authorities have jurisdiction to proceed under Section 73 to recover such credit - HELD - A jurisdictional issue must be decided first, as an order passed without jurisdiction over the subject matter is a nullity and the defect cannot be cured by consent. The Jharkhand High Court in Usha Martin Limited case held that Section 73 does not speak of CENVAT credit, that whether credit was admissible under the existing law was not an issue within the jurisdiction of the CGST authorities, and that under the savings clause in Section 174 proceedings for such contravention must be initiated under the existing law, since parallel proceedings under two laws cannot be countenanced - The Calcutta High Court in a similar situation quashed a notice under Section 73 for want of jurisdiction while granting liberty to proceed under the existing law. The Revenue made only a bald assertion that the earlier decision was distinguishable without showing how the legal issue differed - The legal issues are squarely covered by these decisions, proceedings under the CGST Act for recovery of allegedly inadmissible CENVAT credit are not legally sustainable for inherent lack of jurisdiction - The order of the FAA is set aside and the appeal is allowed.
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