Apar Industries Ltd vs The Union Of India And Ors
2022 Latest Caselaw 8229 Bom

                                                                      911-aswp-11539-2019.doc

varsha
                  IN THE HIGH COURT OF JUDICATURE AT BOMBAY
                          CIVIL APPELLATE JURISDICTION

                                  WRIT PETITION NO. 11539 of 2019
         Apar Industries Limited                             .....Petitioner
                V/s.
         Union of India & Ors.                               .....Respondents
                                        -----------
         Mr. Prakash Shah, Mr. Mihir Mehta and Mohite Raval i/b PDS Legal,
         Advocate for the Petitioner.
         Mr. Pradeep S. Jetly, Senior Advocate, a/w Mr. Jitendra Mishra, Mr D.B.
         Deshmukh, Ms Sangeeta Yadav, Mr Sham Walve, Advocate for the
         Respondents.
         Smt S.D. Vyas, B-Panel Counsel for the Respondent-State.
                                       -------------
                                  CORAM : K.R.SHRIRAM &
                                               GAURI GODSE, JJ.

DATE : 23rd AUGUST, 2022.

P.C.

1. The Petition is filed in relation to the objections raised with regard to

transition and distribution of CENVAT Credit by Input Service

Distributor (ISD) of the balance of Service Tax/ Excise Duty as on

30.06.2017.

2. Since filing declaration in Form GST TRAN-1 was the only route for

transitioning of the accumulated CENVAT credit balance in the ISD

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registration under the erstwhile service tax regime, Petitioner had filed

the declaration in Form GST TRAN-1 for transitioning the credit of

Rs.2,12,20,870 under Section 140 of the CGST Act within the

prescribed time and in the prescribed manner.

3. The transition of the aforesaid CENVAT credit was permitted and the

said balance of Rs.2,12,20,871 got credited to the Electronic Credit

Ledger ("ECL") of the ISD registration on the GST common portal.

Vide Letter F.no.V/CGST/NM/Dn.-1/R-1/TRAN-1/APAR/226/18-

19 dated 13.02.2019, the Ld. Joint Commissioner, CGST & Cx, Div - I,

GST Commissionerate, Navi Mumbai has confirmed as follows:

"Please refer to your request letter no. AIL:BZ/ISD/TRAN-1/2018-19 dated 07.02.2019 on the above subject.

As per your request it is informed that, TRAN-1 verification in respect of GSTIN - 27AAACG1840M2ZK for allowing transitional Credit of Rs. 2,12,20,871 (Rs. 1,81,36,198 under Table 5(a) and Rs. 30,84,673 under Table 7(b)) has been completed by this office and found in Order."

4. Petitioner issued the invoices to transfer the transitional credit from its

ISD registration to its other units. Basis the said invoices, the

respective units availed the input tax credit in its Electronic Credit

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Ledger by disclosing the said amounts transferred by the ISD

registration in its return filed in Form GSTR - 3B.

5. Majority of the recipient units of Petitioner (13 out of 18) to whom the

said credit was transitioned, have been issued identical Show Cause

Notices inter-alia alleging that (i) the ISD unit of Petitioner has

erroneously transitioned the credit from the erstwhile regime to the

GST regime; and (ii) the credit distributed by the ISD unit of Petitioner

has been wrongly availed and utilized by the recipient units for payment

of output GST liability of the recipient unit.

6. The case of Respondents is that (i) Petitioner has wrongly migrated the

erstwhile ISD registration to the GST regime and transitioned the

credit which is prohibited as per CGST Act, 2017; (ii) ISD registration

under the GST regime does not enjoy the status of an assessee

obtaining registration under GST for carrying out his business, and (iii)

ISD registered under GST is not eligible for ITC under Section 16 as he

is not using the inputs in the course of or furtherance of his business for

making taxable supplies as ISD.

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7. It is Petitioner's case that there is no dispute with regard to eligibility of

Petitioner to the claim and/or transition the aforesaid Credit. The

entire dispute only pertains to the procedure for transition of the said

CENVAT credit by the ISD unit and its distribution to the other units

of Petitioner. It is not the case of the department, that Petitioner has

transitioned/ distributed ineligible credit, i.e., there is no loss to revenue

on account of the said transition/ distribution of the credit.

8. In the present case, the Joint Commissioner has, post detailed

verification, confirmed in writing that Petitioner has correctly

transitioned the credit in its ISD registration.

9. It appears that most of the procedural issues have arisen due to the fact

that the GST was at the nascent stage of its implementation and there

was a prevalent ambiguity with regard to the transitional provisions.

10. The Hon'ble Apex Court to aid the assessees to overcome the

procedural/ technical hurdles, in the case of Union of India & Another

Vs Filco Trade Centre Pvt. Ltd. & Another1 and other similar batch of

Petitions in relation to the transition of credit from the erstwhile regime

1 2022 (7) TMI 1232

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to the GST regime by an Order dated 22 nd July 2022, has, inter-alia,

observed as follows:

"Having heard learned Additional Solicitor General, learned counsel appearing for different States and learned counsel appearing for different private parties and having perused the record, we are of the view that it is just and proper to issue the following directions in these cases:

1. Goods and Service Tax Network (GSTN) is directed to open common portal for filing concerned forms for availing Transitional Credit through TRAN-1 and TRAN-2 for two months i.e. w.e.f. 01.09.2022 to 31.10.2022.

2. Considering the judgments of the High Courts on the then prevailing peculiar circumstances, any aggrieved registered assessee is directed to file the relevant form or revise the already filed form irrespective of whether the taxpayer has filed writ petition before the High Court or whether the case of the taxpayer has been decided by Information Technology Grievance Redressal Committee (ITGRC).

3. GSTN has to ensure that there are no technical glitch during the said time.

4. The concerned officers are given 90 days thereafter to verify the veracity of the claim/transitional credit and pass appropriate orders thereon on merits after granting appropriate reasonable opportunity to the parties concerned.

5. Thereafter, the allowed Transitional credit is to be reflected in the Electronic Credit Ledger.

6. If required GST Council may also issue appropriate guidelines to the field

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formations in scrutinizing the claims."

11. We also intend to adopt the same approach. Therefore, we hereby direct

Respondents to open the common portal for filing concerned forms for

availing Transitional Credit through TRAN-1 and TRAN-2 for two

months, i.e., w.e.f. 01.09.2022 to 31.10.2022 in compliance with the

Order of the Hon'ble Supreme Court of India in Filco Trade (supra).

12. Accordingly, Petitioner's recipient units can file revised declaration in

Form GST TRAN 1, either electronically or manually (where

electronically is not possible), for taking the credit already distributed to

them by the ISD unit of Petitioner by issuing invoices.

13. Once, such a revised declaration is filed by the concerned recipient

units of Petitioner, the credit already taken by the said units shall be

treated to have been taken validly on the date on which it was originally

taken. However, no further credit based on revised declaration in Form

TRAN-1 shall be claimed by Petitioner, as the said filing is purely for

regularizing the earlier action of transition and distribution of Cenvat

credit by the ISD registration of Petitioner.

14. In case the said credit is once again reflected in the Electronic Credit

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Ledger of the recipient units, Petitioner undertakes that its recipient

units shall make a debit entry in the Electronic Credit Ledger to the

extent such credit has already been claimed earlier.

15. Once, the credit taken by the respective units is regularized by filing

revised electronic or manual declaration (as the case maybe) in Form

GST TRAN - 1, the credit balance shown in Electronic Credit Ledger

of the ISD unit of Petitioner shall be deemed to have lapsed/ deleted.

16. Respondents and the authorities concerned shall not proceed to

adjudicate the above and other Show Cause Notices issued to Petitioner

and their units for transition of credit in the Petitioner's ISD

registration and its subsequent distribution.

17. Liberty to Petitioner to raise all other issues/contentions/reliefs raised

in this Writ Petition in the appropriate proceedings at appropriate time,

if need arises.

18. With the consent of the Counsels, Petition is accordingly disposed.

[GAURI GODSE, J.]                                      [K.R.SHRIRAM, J.]