Telangana High Court
M/S. Standard Chartered Bank vs The Principal Commissioner Of Central ... on 11 July, 2024
*THE HON'BLE SRI JUSTICE SUJOY PAUL
AND
*THE HON'BLE SRI JUSTICE NAMAVARAPU RAJESHWAR RAO
+WRIT PETITION No.648 of 2024
% 11-07-2024
#M/s. Standard Chartered Bank.
...Petitioner
vs.
$The Principal Commissioner of Central Tax & others.
... Respondents
!Counsel for the Petitioner : Sri Lakshmi Kumaran Sridharan.
^Counsel for Respondent Nos.1 to 4 : Sri B.Narayan Reddy,
Senior Counsel representing
Sri Uday Kumar Bhagwath.
<Gist :
>Head Note :
? Cases referred
1. 2023(2) TMI 64 - SC
2. 1996(81) E.L.T.3 (S.C.)
3. 2013 (9) SCC 363
2
IN THE HIGH COURT FOR THE STATE OF TELANGANA AT
HYDERABAD
****
WRIT PETITION No.648 OF 2024
(Per Hon'ble Sri Justice Sujoy Paul)
Between:
M/s. Standard Chartered Bank.
...Petitioner
vs.
The Principal Commissioner of Central Tax and others.
... Respondents
JUDGMENT PRONOUNCED ON: 11.07.2024
THE HON'BLE SRI JUSTICE SUJOY PAUL
THE HON'BLE SRI JUSTICE NAMAVARAPU RAJESHWAR RAO
1. Whether Reporters of Local newspapers
may be allowed to see the Judgments? :
2. Whether the copies of judgment may be
Marked to Law Reporters/Journals? :
3. Whether His Lordship wishes to
see the fair copy of the Judgment? :
_________________
SUJOY PAUL, J
_____________________________________
NAMAVARAPU RAJESHWAR RAO, J
3
THE HONOURABLE SRI JUSTICE SUJOY PAUL
AND
THE HONOURABLE SRI JUSTICE NAMAVARAPU RAJESHWAR RAO
WRIT PETITION No.648 of 2024
ORDER:
(per Hon'ble Justice Sujoy Paul)
This petition filed under Article 226 of the Constitution
contains an interesting conundrum whether the petitioner Bank
which is Registered under Sales Tax and GST regime in
Maharashtra, but could not file its return in GST portal of that
State because of technical glitch and filed it in the GST portal of
Telangana can be saddled with demand, penalty and interest
despite the fact that Bank's branch, exists in the State of
Telangana. Moreso, when credit taken by petitioner was
transferred to Maharashtra portal on the same day. The quagmire
is about the scope and ambit of Section 140 of GST Act, 2017.
FACTS:-
2. The facts are in narrow compass and are not in dispute. The
Headquarter of the petitioner's bank is in Mumbai, Maharashtra
and the centralized Registration of petitioner's bank is also at
Maharashtra under the Service Tax as well as under the Goods and
Services Tax, 2017 (for short, the Act).
3. The Act came into being with effect from 01.07.2017 and the
petitioner was entitled to enjoy the credit of Rs.1,41,26,69,646/-.
The petitioner made efforts to file the Return in the official GST
portal of Maharashtra, but because of technical glitch in the
Maharashtra portal, his efforts went in vain. Petitioner admittedly,
has a branch in Telangana and accordingly, on 18.10.2017, he filed
the Returns in the portal of Telangana and took credit on the same
day and transferred it on the same day to the portal of
Maharashtra.
4. The petitioner was served with a pre-show cause notice on
03.09.2021 (Annexure P-16) wherein it was alleged that the credit
availed by the petitioner through TRAN-I return filed by the
Telangana registration is ineligible and requires to be reversed
along with applicable interest and penalty. The petitioner promptly
filed reply on 09.09.2021 (Annexure-P-17) and made it clear that
total transitional credit of Rs.1,41,26,69,646/- was transferred to
Maharashtra GST registration on the same day of filing the TRAN-1
and only the differential balance of ITC amounting Rs.2,00,000/-
was available in the State of Telangana. To support the aforesaid
submission, the Electronic Credit Ledger for the period July, 2017
to March, 2018 was annexed with the reply.
5. The respondents issued a show-cause notice dated
29.12.2021 and in turn the petitioner filed his detailed reply on
27.01.2022 (Annexure P-20). The respondents were not satisfied
with the reply to the show-cause notice and passed the impugned
Order-in-Original dated 31.10.2023, which is subject matter of
challenge in this petition. By this order respondent No.2 ordered
as under:
"ORDER
a) I confirm the demand of Rs.1,41,26,69,646/- (Rupees One
hundred and forty one crores twenty six Lakhs sixty nine
thousand six hundred and forty six only), being the irregularly
availed transitioned credit through TRAN-1 in the State of
Telangana under Section 140 of the CGST Act, 2017 read with
Section 74 of the CTGST Act, 2017 and Rule 121 at CGST
Rules, 2017.
(b) I confirm the demand of Interest on the amount mentioned
at (a) above under Section 50 read with Section 74(9) of the
CGST Act, 2017.
(c) I impose penalty equivalent to the amount mentioned at (a)
above under Section 122(2)(b) read with Section 74(9) of CGST
Act, 2017 for contravening the provisions of Section 140 of the
CGST Act, 2017."
Contention of the petitioner:-
6. Learned Senior Counsel for the petitioner submits that the
show-cause notice shows that there were technical glitches in the
Maharashtra GST portal and the petitioner admittedly filed its
return before due date in Telangana GST portal and transferred the
credit amounting to Rs. 1,41,26,69,646/- to Maharashtra portal on
the same date. Thus, the petitioner did it under compelling
circumstances and there is no prohibition under the Act for filing
such return electronically in another State where branch of
petitioner exists. More so, when the petitioner has not derived any
undue benefit from the said act nor revenue suffered any loss. In
these circumstances, the impugned order is bad in law.
7. By placing heavy reliance on Section 140(1) and (8) of the Act,
learned Senior Counsel submits that a combined reading of both
the provisions makes it clear like cloudless sky that there is no bar
in the Act which prohibits the petitioner to submit the return in the
GST portal of Telangana where the petitioner's branch admittedly
exists. The learned Additional Commissioner has erred in not
examining aforesaid relevant aspect and misread Section 140(1)
and 140(4) of the Act. He further submits that in the instant case,
there exists no disputed question of fact and only a question of law
deserves to be answered. In this background, it will not be proper
to relegate the petitioner to avail the Statutory remedy of appeal.
Instead, this Court may decide the matter on merits. In support of
his submission, he placed reliance on the judgment of the Supreme
Court in M/s. Godrej Sara Lee Ltd. Vs. The Excise and Taxation
Officer-cum-Assessing Authority & Others 1.
2023(2) TMI 64 - SC
8. Lastly, the learned Senior Counsel placed reliance on the
judgment of the Supreme Court in Chandrapur Magnet Wires (P)
Ltd. Vs. Collector of C. Excise, Nagpur 2 and urged that the
analogy which can be drawn from this judgment is that when the
return is filed in the Telangana Portal and credit got transferred on
the same day to Maharashtra portal, the department has no
justifiable reason to deny the same or take action against the
petitioner. By no stretch of imagination, the petitioner can be
saddled to deposit the same amount with penalty and interest.
Stand of Revenue:
9. Sounding a contra note, learned counsel for the Revenue
raised preliminary objection regarding maintainability of this Writ
Petition and urged that Section 107 of the Act provides an
efficacious statutory alternative remedy. The petitioner should
have availed the same. However, during the course of argument,
he fairly admitted that the singular question involved in this case
is, indeed, a pure question of law.
10. Learned counsel for the Revenue submits that admittedly, the
petitioner's centralised registration is in the State of Maharashtra.
Thus, the petitioner should have filed the return on the GST portal
of Maharashtra and not in Telangana. Even assuming that the
1996(81)E.L.T.3 (S.C.)
portal of Maharashtra had any technical glitch, the petitioner was
not remediless and he should have approached the higher
authorities of GST Regime of Maharashtra for redressal of his
grievance. The petitioner should not have filed the return on the
GST portal of Telangana, and for this reason alone, no fault can be
found in the action of the respondents. Furthermore, it is
submitted that a plain reading of Section 140(1)(4)(8) of the Act, it
is clear that the intention of law makers is that the return should
be filed in the same State where the registration exists. Thus, the
petition is meritless and may be dismissed. It is further submitted
that the purpose of centralise registration is to ensure that the
facility is not mis-utilised by the parties.
11. Parties confined their arguments to the extent indicated
above. We have bestowed our anxious consideration on rival
contentions and perused the record.
FINDINGS:
Alternative Remedy:
12. In this case, the facts are not in dispute. It is admitted that
the petitioner's centralised registration is in the State of
Maharashtra and the petitioner is having branch in the State of
Telangana. The petitioner filed return before due date in the GST
portal of Telangana and credit was transferred on the same day to
the State of Maharashtra with the same Permanent Account
Number.
13. The pivotal question is whether in the teeth of Section 140 of
the GST Act, was there any bar or prohibition for filing return in
the GST portal of Telangana where the petitioner's branch
admittedly exists? Since it is a pure question of law, in view of
judgment of the Supreme Court in M/s. Godrej Sara Lee Ltd.
(supra), we are not inclined to relegate the petitioner to avail the
statutory alternative remedy. Justice Dipankar Datta in M/s.
Godrej Sara Lee Ltd. (supra), speaking for the Bench, poignantly
held as under:
"8. That apart, we may also usefully refer to the decisions of
this Court reported in (1977) 2 SCC 724 (State of Uttar
Pradesh v. Indian Hume Pipe Co. Ltd.) and (2000) 10 SCC
482 (Union of India v. State of Haryana). What appears on a
plain reading of the former decision is that whether a certain
item falls within an entry in a sales tax statute, raises a pure
question of law and if investigation into facts is unnecessary,
the high court could entertain a writ petition in its discretion
even though the alternative remedy was not availed of; and,
unless exercise of discretion is shown to be unreasonable or
perverse, this Court would not interfere. In the latter decision,
this Court found the issue raised by the appellant to be
pristinely legal requiring determination by the high court
without putting the appellant through the mill of statutory
appeals in the hierarchy. What follows from the said
decisions is that where the controversy is a purely legal
one and it does not involve disputed questions of fact but
only questions of law, then it should be decided by the high
court instead of dismissing the writ petition on the ground
of an alternative remedy being available."
(Emphasis Supplied)
14. Thus, we deem it proper to entertain this petition and not
throw the petition overboard for availing the alternative remedy.
Show Cause Notice:
15. The relevant portion of show cause notice dated 29.12.2021
reads as under:
"2. M/s. Standard Chartered Bank, Hyderabad availed input
tax credit of Rs.141,26,69,646/- through Table 5 (a) of TRAN-1
return filed by them on 18.10.2017. On being pointed out
during the course of preliminary scrutiny of said TRAN-1 return
by the officers of Hyderabad Audit-I Commissionerate, the tax
payers vide their letter dated 19.07.2018, have submitted that
they were not registered in the State of Telangana under
Service tax regime as they have centrally registered in
Maharastra. It was further informed that as they could not
file TRAN-1 return in Maharashtra due to technical glitch
faced on GST portal, they have filed the same in Telangana
and availed the closing balance of Cenvat credit amounting
to Rs.141,26,69,646/- which was appearing in their Service
Tax return for the period ending 30.06.2017. It may be
noted that post availment of said credit at Hyderabad, M/s
Standard Chartered have transferred an amount of
Rs.141,24,69,646/- on the same day through Table 8 of Tran-1
to their Mumbai Branch having GSTIN 27AABCS4681D1ZE
keeping Rs.2,00,000/- with Telangana Unit. However, in terms
of the provisions of Section 140 of CGST Act, 2017 and rules
made there under, tax payers who are registered under existing
law are only eligible to avail the carry forward amount of
CENVAT credit of eligible duties available in the return relating
to the period ending the day immediately preceding the
appointed day. As M/s Standard Chartered were not
registered in the State of Telangana under the existing law,
it appears they are not eligible to avail any carry forward
credit of eligible duties. In this regard, provisions of Section
140 of CGST Act, 2017 enabling the transitional arrangements
for input tax credits from existing law to Goods and Service Tax
are re-produced as under."
(Emphasis Supplied)
16. A microscopic reading of this para makes it clear that it was
an admitted fact in the show cause notice itself that the petitioner
faced problem in filing return electronically because of technical
glitch in the GST portal of Maharashtra. For this reason and
considering the last date of filing return, the petitioner filed the
return in the Telangana GST portal.
17. In the impugned order, respondent No.2 reduced in writing
the basic stand of the petitioner in the shape of bullet points. The
relevant portion reads as under:
"Reply to show cause notice:
13. M/s Standard Chartered Bank had submitted their reply to
the show cause notice vide their letter dated 27th January 2022
which was received in this office on 22nd February 2022
submitted inter alia that:
That the premises on which the SCN issued is incorrect
as it is based on the assumption that M/s SC India's Telangana
branches were not registered under Service Tax and hence,
transfer of transitional credit to Telangana GST Registration is
in contravention with the GST Law.
That they have contested the allegation of avilment of
Tran-1 of Telangana which is in contravention of Section 140 of
CGST Act, 2017 on the grounds that they were not registered
under service tax law and they did not file any return for the
period July 2017 in the State of Telangana.
That they held Centralised Service Tax Registration and
branches located in Telangana were part of the centralised
registration which is appearing as additional places of
business.
That they have enclosed the Service Tax Registration
Certificate in Form ST-2 evidencing that their branches are
registered.
That they have enclosed PAN India List of GST
Registrations.
That the GST Registration Certificate of Maharashtra
and Telangana PAN number is same and covered under the
Centralized Registration.
That they have not contravened the provisions of
Section 140(8) of the CGST Act, 2017.
That they have availed the transitional credit in the
State of Telangana due to technical glitches faced by them
while filing Tran-1 in Maharashtra.
That they had no option in circumstances of technical
glitches faced by them at Maharashtra but to avail the credit in
another state and then transfer the same to Maharashtra
again.
That it is evident from the Electronic Credit Ledger that
M/s SCB India has not utilized the credit in Telangana State
and in fact the credit was debited from ECL on the very same
day and hence, they had not availed credit irregularly in the
State of Telangana.
That there was no irregular availment of credit, interest
under Section 50 read with Section 74(1) of CGST Act 2017
can't be recovered and contest that the demand is not tenable;
imposition of penalty does not arise at all.
That the SCN has erred on facts and liable to be set
aside.
That they wish to be heard in person and requested to
drop the proceedings."
(Emphasis Supplied)
18. The highlighted bullet points show that it was pointed out
that electronic credit ledger establishes that M/s.SCB India has not
utilised the credit in Telangana State and in fact, the credit was
debited from ECL on the very same day and hence, as per the stand
of the petitioner, they have not availed credit in the State of
Telangana.
19. Respondent No.2 rejected the stand of the petitioner mainly
on the ground that the petitioner's centralised registration is in the
State of Maharashtra and that nothing prevented the petitioner to
file the return electronically in the portal of the same State.
20. It is apposite to refer to the relevant sub-sections of Section
140 of the Act on which learned counsel for the parties placed
reliance during the course of argument:
"Section 140: Transitional arrangements for input tax credit-
(1) A registered person, other than a person opting to pay tax
under section 10, shall be entitled to take, in his electronic
credit ledger, the amount of CENVAT credit of eligible duties
carried forward in the return relating to the period ending with
the day immediately preceding the appointed day, furnished by
him under the existing law in such manner as may be
prescribed:
Provided that the registered person shall not be allowed to take
credit in the following circumstances, namely:--
(i) where the said amount of credit is not admissible as
input tax credit under this Act; or
(ii) where he has not furnished all the returns required
under the existing law for the period of six months
immediately preceding the appointed date; or
(iii) here the said amount of credit relates to goods
manufactured and cleared under such exemption
notifications as are notified by the Government.
(2) and (3) ...
(4) A registered person, who was engaged in the manufacture of
taxable as well as exempted goods under the Central Excise Act,
1944 (1 of 1944) or provision of taxable as well as exempted
services under Chapter V of the Finance Act, 1994 (32 of 1994),
but which are liable to tax under this Act, shall be entitled to
take, in his electronic credit ledger,--
(a) the amount of CENVAT credit carried forward in a
return furnished under the existing law by him in
accordance with the provisions of sub-section (1); and
(b) the amount of CENVAT credit of eligible duties in
respect of inputs held in stock and inputs contained in
semi-finished or finished goods held in stock on the
appointed day, relating to such exempted goods or
services, in accordance with the provisions of sub-section
(3).
(5) to (7) ...
(8) Where a registered person having centralised registration
under the existing law has obtained a registration under this
Act, such person shall be allowed to take, in his electronic credit
ledger, credit of the amount of CENVAT credit carried forward in
a return, furnished under the existing law by him, in respect of
the period ending with the day immediately preceding the
appointed day in such manner as may be prescribed:
Provided that if the registered person furnishes his return for
the period ending with the day immediately preceding the
appointed day within three months of the appointed day, such
credit shall be allowed subject to the condition that the said
return is either an original return or a revised return where the
credit has been reduced from that claimed earlier:
Provided further that the registered person shall not be allowed
to take credit unless the said amount is admissible as input tax
credit under this Act:
Provided also that such credit may be transferred to any of the
registered persons having the same Permanent Account Number
for which the centralised registration was obtained under the
existing law."
(Emphasis Supplied)
21. Section 140 (1) of the Act envisages that a registered person
other than a person opting to pay taxes under Section 10 shall be
entitled to take, in his electronic credit ledger, the amount of
CENVAT credit. Undisputedly, the registration number/Permanent
Account Number of the petitioner is same nationwide. Thus,
sub-section (1) of Section 140 does not permit the respondents to
arrive at a conclusion that the petitioner was obliged to file return
electronically only in the GST portal of Maharashtra.
22. Sub-section (4) of Section 140 of the Act is relied upon by the
learned counsel for the respondents, but we do not see any
relevance of this provision for deciding the present issue.
23. So far as sub-section (8) of Section 140 of the Act is
concerned, it is apposite to mention that a registered person having
centralised registration under the existing law (Service Tax Law)
has obtained a registration under the Act, such person shall be
allowed to take in his electronic credit ledger, credit of the amount
of CENVAT credit carried forward in a return, furnished under the
existing law by him, in respect of the period ending with the day
immediately preceding the appointed day i.e., 01.07.2017.
24. Admittedly, the petitioner had registration under the existing
law i.e., Service Tax Law and also got himself registered under the
Act. The last proviso to sub-section (8) of Section 140 of the Act
leaves no room for any doubt that the credit may be transferred to
any of the registered person having same Permanent Account
Number for which the centralised registration was obtained under
the existing law. The filing of return in the GST portal of Telangana
and transfer of credit is squarely covered and permissible under the
last proviso to sub-section (8) of Section 140.
25. During the course of hearing, learned counsel for the Revenue
could not establish that there exists any prohibition/bar in filing
the return through electronic mode in GST portal of Telangana
where petitioner's branch admittedly exists. The petitioner derived
any undue benefit by filing return in the GST portal of Telangana
and transferring the credit on the same day and the Revenue
suffered any loss because of aforesaid action of the petitioner.
26. Pertinently, the respondents did not dispute the stand of the
petitioner that because of technical glitch in the GST portal of
Maharashtra, the petitioner was constrained to file return in the
GST portal of Telangana. This is also not the stand of the Revenue
that during the relevant time, GST portal of Maharashtra was
functional and yet, the petitioner had chosen to file return in the
GST portal of Telangana.
27. Needless to emphasise that it was the duty of the Department
to keep their portal functional. If the portal was not functional or
having technical glitch and because of that the petitioner was
compelled to file return in the portal of Telangana, the petitioner
cannot be saddled with demand, interest and penalty. In other
words, the Department cannot take benefit of its own wrong. In
Devendra Kumar v. State of Uttaranchal 3, the Supreme Court
held that a person having done wrong cannot take advantage of his
own wrong. In such a case, the legal maxim 'Nullus Commodum
Capere Potest De Injuria Sua Propria' applies.
28. In view of foregoing discussion, we are of the opinion that the
very foundation of show cause notice itself is bad in law and the
assumption of respondent No.2 that return could not have been
filed in the GST portal of Telangana is not flowing from Section 140
of the Act. Therefore, the impugned action founded upon such
notion is bad in law and deserves interference.
29. Resultantly, the Writ Petition is allowed by setting aside the
impugned show cause notice dated 03.09.2021 and Order-in-
Original dated 31.10.2023 issued by respondent No.2. There shall
be no order as to costs. Miscellaneous applications pending, if any,
shall stand closed.
________________
SUJOY PAUL, J
_____________________________________
NAMAVARAPU RAJESHWAR RAO, J
Date: 11.07.2024
Note:
L.R. is marked.
B/o. TJMR
2013 (9) SCC 363
