2026-VIL-231-GSTAT-CHD
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SGST Tribunal

GST - Eligibility to transitional credit under Section 140(2) of CGST Act, 2017 on duty paid on capital goods imported before the appointed day and received in the factory after the appointed day - Appellant took transitional credit of CVD and additional duty of excise paid on capital goods imported vide Bill of Entry dated 27.06.2017 and received in the factory on 08.07.2017 through Table 6(a) of Form TRAN-1 - SCN under Section 73 was confirmed by the original adjudicating authority and the appeal was rejected by the Appellate Authority - Whether the credit of CVD and additional duty of excise on capital goods received after 01.07.2017 can be carried forward to the electronic credit ledger under Section 140 - HELD - Section 140(2) allows credit of unavailed CENVAT credit in respect of capital goods not carried forward in a return furnished under the existing law, subject to the conditions that the registered person is not opting to pay tax under Section 10, that the credit was not carried forward in a return under the existing law and that it is admissible as CENVAT credit under the existing law as also as ITC under the GST law - The sub-section does not bar unavailed CENVAT credit on capital goods received after 01.07.2017 and Rule 117(2)(a) of the CGST Rules does not provide that credit availed or utilised cannot be nil. The Section does not specify that only fifty per cent credit can be transitioned, so credit not carried forward in the Central Excise return can be transitioned through TRAN-1 whether it is fifty per cent or the full quantum. The Appellant fulfilled all the conditions and filed the necessary information in Form TRAN-1 - The credit in respect of capital goods under Section 140(2) is allowed - The appeal is allowed on this issue - Denial of transitional credit under Section 140 of CGST Act, 2017 of Central Excise duty paid on goods dispatched for export before the appointed day - Appellant took transitional credit through Table 7(a) of Form TRAN-1 of Central Excise duty paid on goods dispatched for export on 29.06.2017 under claim for rebate, on which IGST was again paid at the time of export after 01.07.2017 - Appellant contended that the same goods suffered tax twice, that Section 174(2) of the Act protects rights accrued under the repealed Act and that transitional credit is a vested right which cannot be taken away on procedural or technical grounds - Whether the credit of Central Excise duty paid on goods dispatched for export, which was not required to be paid under the GST law, can be taken as transitional credit in Form TRAN-1 under Section 140 - HELD - Table 7 of Form TRAN-1 relates to inputs held in stock and is not applicable to the Appellant. There is no provision under Section 140 for credit of Central Excise duty paid on goods cleared for export before 01.07.2017 but actually exported after the introduction of GST - The Appellant could perhaps have claimed refund of the Central Excise duty paid but cannot use Section 140 as a residuary provision to avail credit which is not admissible as per law. Recovery of the credit wrongly taken under Section 140 of the CGST Act is governed by the provisions of GST law. No right had accrued to the Appellant under the existing law, as the right to take transitional credit accrued only after GST came into effect and in accordance with its provisions, so Section 174(2)(c) is of no assistance - Transitional credit on Central Excise duty paid on goods exported cannot be allowed under Section 140 and the appeal is rejected on this issue - Liability to pay interest under Section 50 of CGST Act, 2017 on transitional credit held inadmissible - Whether interest is payable under Section 50 if the credit is not held to be admissible - HELD - The law is well settled that if the amount of tax or wrongly availed ITC is recoverable from a taxpayer, the demand of interest on the same is legally tenable. Since the credit relating to export is held inadmissible, interest is payable on that credit - Interest is upheld on the credit held inadmissible, to be calculated accordingly, and the appeal is rejected on this issue - Imposition of penalty under Section 73(9) and Section 122(2) of CGST Act on inadmissible transitional credit - Whether penalty is sustainable if the credit is not held to be admissible - HELD - If the amount is determined as payable under Section 73 of the CGST Act, penalty equivalent to ten per cent of the tax is payable under Section 73(9). Section 73 applies precisely where ITC has been wrongly availed or utilised for any reason other than fraud, wilful misstatement or suppression of facts, so the contention of no suppression is not tenable - Penalty is sustained on the credit held inadmissible and is reduced to ten per cent of the amount disallowed.
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