Madras High Court
The Assistant Commissioner Of Gst ... vs M/S.Ganges International ... on 17 August, 2022
WA.No.1648 of 2022
IN THE HIGH COURT OF JUDICATURE AT MADRAS
DATED : 17.08.2022
CORAM
THE HONOURABLE MR.JUSTICE R.MAHADEVAN
&
THE HONOURABLE MR.JUSTICE MOHAMMED SHAFFIQ
W.A.No.1648 of 2022
&
CMP.No.11262 of 2022
The Assistant Commissioner of GST &
Central Excise,
Puducherry-II Division,
No.14 Municipal Street,
Azeez Nagar,
Reddiarpalayam,
Puducherry 605 010 .. Appellant
Vs.
M/s.Ganges International Private Limited,
5-A, Karasur Road, Sedarapet,
Puducherry 605 111. .. Respondent
Writ Appeal filed under Clause 15 of the Letters Patent against the
order passed by the learned Single Judge in W.P.No.528 of 2019, dated
22.02.2022.
For Appellant : M/s. Hema Muralikrishnan
Standing counsel
For Respondents : M/s. Arthy
for Mr.G.Natarajan
1/10
https://www.mhc.tn.gov.in/judis
WA.No.1648 of 2022
JUDGMENT
(Judgment of the court was made by R.Mahadevan, J.)
This appeal is filed by the appellant / Revenue, assailing the order of
the learned Judge dated 22.02.2022 passed in WP.No.528 of 2019.
2.Briefly stated facts are as follows:
2.1. The respondent / assessee is engaged in the manufacture of GI
Tower Parts, ERW Black and GI Pipes falling under Chapter 73 of the
Central Excise Tariff Act, 1985. In the course of such business, they had
received technical know-how / intellectual property right from foreign
persons and paid royalty to them during the period from April 2016 to June
2017. For the said services received by them, they were liable to pay service
tax under reverse charge basis, which was not paid by them originally. After
pointing out the same in the departmental audit, they had paid the service
tax liability of Rs.24,20,684/- along with interest at Rs.3,82,139/- on
02.05.2018.
2.2. The appellant further stated that though the assessee is entitled
to avail cenvat credit, as per the Cenvat Credit Rules, 2004, consequent to
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WA.No.1648 of 2022
the introduction of GST with effect from 01.07.2017, the relevant
enactments pertaining to Central Excise and Service Tax have been repealed
vide sections 173 and 174 of the CGST Act, 2017; and the Cenvat Credit
Rules, 2004 has also been superseded by new Cenvat Credit Rules, 2017
vide Notification No.20/2017 CE NT dated 30.06.2017. However, various
transitional provisions were enacted under the CGST Act, 2017 to avail
input tax credit on transitional basis vide sections 140 to 142 of the CGST
Act, 2017 and Rule 117 of the CGST Rules, 2017. For claiming transitional
credit, a return in form GST-TRAN 1 has to be filed within a period of 90
days. The said provision was not applicable to the case of the assessee, as
they had paid the service tax for the period from April 2016 to June 2017
only on 02.05.2018 and hence, they were unable to avail credit of the
service tax already paid by them. Thus, the assessee preferred a claim before
the appellant for refund of Rs.24,20,684/- in cash, relying on sections 140
and 142(9) (b) of the CGST Act, 2017.
2.3. By order-in-original No.67/2018 (Refunds) dated 29.08.2018,
the aforesaid claim of refund was rejected by the appellant on the premise
that the same is not relatable to section 11B of CEA, 1994 which made
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WA.No.1648 of 2022
applicable to service tax matters by virtue of section 83 of the Finance Act,
1994; and the assessee did not fall under any situation enumerated under
section 54(8) of the CGST Act, 2017.
2.4. Challenging the aforesaid order passed by the appellant, the
assessee filed WP.No.528 of 2019, which was ordered by the learned Judge
on 22.02.2022, by setting aside the rejection order and remanding the matter
to the respondents for fresh consideration. Therefore, this writ appeal by the
appellant / Revenue.
3.The learned standing counsel appearing for the appellant submitted
that the assessee had not paid the appropriate service tax within the
stipulated time and paid only in May 2018 after having noticed through
departmental audit, thereby lost the opportunity of taking cenvat credit of
the amount to be paid under reverse charge. Elaborating further, the learned
counsel submitted that as the payment had been made belatedly, the
assessee could not take the cenvat credit in the ST-3 returns within the
stipulated period viz., 15.08.2017 and hence, they resorted to refund of the
service tax by filing refund claim under the transitional provisions under
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WA.No.1648 of 2022
section 142 of the CGST Act, 2017. As the claim did not fit into any of the
provisions of section 142 of the CGST Act, 2017, the same was rejected by
the jurisdictional Assistant Commissioner. However, the learned Judge,
instead of directing the assessee to avail the alternative remedy provided in
the statute, has ordered the writ petition, by remitting the matter to the
respondents for fresh consideration in the light of applicability of section
142(3) of the CGST Act 2017, by the order impugned herein, which is
contrary to law and opposed to the facts and circumstances of the case. The
learned counsel also submitted that the doctrine of necessity cannot be
invoked merely because the assessee pleaded that they had no remedy, and
that, the taxing statutes are to be interpreted strictly and there is no equity in
fiscal matters so as to invoke the doctrine of necessity for the purpose of
providing a remedy just for asking, when the assessee has not complied with
the statutory provisions. Therefore, the learned counsel sought to allow this
appeal by setting aside the order of the learned judge.
4.On the other hand, the learned counsel for the respondent / assessee
submitted that taking note of the entitlement of the assessee with respect to
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WA.No.1648 of 2022
cenvat credit and there is no eligible provision available, the learned Judge
rightly set aside the order passed by the appellant rejecting the claim of the
assessee, and directed the authority to reconsider the matter under section
142(3) of the Act. Thus, according to the learned counsel, there is no
requirement to quash the same.
5.Heard both sides and perused the materials available on record.
6.It is an admitted fact that the assessee is eligible to claim cenvat
credit under the erstwhile Central Excise Act, prior to 30.06.2017, but they
were unable to claim, due to transitional provision has come into effect from
01.07.2017. It is also not in dispute that they had paid the service tax for
the period from April 2017 to June 2017 belatedly i.e., on 02.05.2018, after
pointing out the same through departmental audit. Thereafter, the assessee
filed an application for refund. The appellant rejected the claim of refund
made by the assessee on the premise that there is no provision in the new
regime to allow such refund as input tax credit in GST/credit in Electronic
cash ledger/ payment in cash. The said order was put to challenge by the
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WA.No.1648 of 2022
assessee by filing WP.No.528 of 2019. After considering the case of the
asseesee, the learned Judge was of the view that merely because the
transitional provision has come into effect from 01.07.2017, the chance of
making an application under section 140(1) to seek the refund or otherwise
of the credit, which was subsequently accrued in the account of the
assessee, cannot be denied. Observing so, the learned Judge ordered the said
writ petition, by setting aside the order rejecting the claim of refund made
by the assessee and remanding the matter to the appellant for fresh
consideration. The operative portion of the said order is extracted below for
ready reference:
“48. For all these reasons, this Court, having considered the peculiar
facts and circumstances of the case, is inclined to dispose of these writ
petitions with the following orders:
“(i) That the impugned orders in these writ petitions are liable
to be set aside, accordingly are set aside. As a sequel, the matters are
remitted back to the respondents for reconsideration. While
reconsidering the same, the authority concerned, who has to deal with
the applications of the petitioners, shall consider and dispose of these
applications under section 142(3) of the CGST Act, 2017.
(ii) While reconsidering the said applications, the claim made by
the petitioners need not be considered for the purpose of refund of the
claim made by them. However, the said claim made by the petitioners
can very well be considered for the purpose of permitting the petitioners
to carry forward the accrued credit to the electronic credit ledger of the
GST regime.
(iii) After considering the said applications, as indicated above,
the necessary order shall be passed by the respondents within a period
of six weeks from the date of receipt of a copy of this order. It is made
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WA.No.1648 of 2022
clear that, before passing the orders as indicated above, an opportunity
of being heard shall be given to the petitioners, so that the petitioners
can put forth their case by providing all necessary inputs to the
satisfaction of the authorities to take a decision thereon."
7.It is evident from the aforesaid order that the learned Judge,
considering the peculiar circumstances of the case, viz., the assessee is
entitled to avail cenvat credit of the service tax already paid, which fact was
also admitted by the Revenue, but they were unable to claim, due to
transitional provision has come into effect from 01.07.2017, ordered the
writ petition by setting aside the rejection order of the appellant and
remanding back the matter to the appellant for fresh consideration, with
certain directions, which are aggrieved by the appellant / Revenue.
8.This court is of the view that what was impugned herein is only the
order of remand passed by the learned Judge and hence, there is no
requirement to set aside the same in entirety. However, this court is inclined
to modify the order of the learned Judge to some extent. Accordingly, the
same is modified by directing the appellant to consider the application of
the assessee under section 142(3) of the CGST Act, 2017, based on the
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available materials and dispose the same, on merits and after affording an
opportunity of hearing to the assessee, within a period of six weeks from the
date of receipt of a copy of this judgment.
9.With the aforesaid modification, this writ appeal stands disposed of.
No costs. Consequently, connected miscellaneous petition is closed.
[R.M.D.,J.] [M.S.Q.,J.]
17.08.2022
msr
Index: Yes/no
Internet:Yes/no
To
The Assistant Commissioner of GST & Central Excise,
Puducherry-II Division,
No.14 Municipal Street,
Azeez Nagar,
Reddiarpalayam,
Puducherry 605 010
https://www.mhc.tn.gov.in/judis
WA.No.1648 of 2022
R.MAHADEVAN, J.
&
MOHAMMED SHAFFIQ, J.
msr
W.A.No.1648 of 2022
&
CMP.No.11262 of 2022
17.08.2022
https://www.mhc.tn.gov.in/judis
