Case Note & Summary
The petitioner, a public limited company engaged in the manufacture of Ethyl Acetate, sought to quash an order dated 24/02/2022 issued by the Commissioner of Central Tax (Appeals) denying input tax credit of Rs. 6,29,02,146/- under the Central Goods and Services Tax Act, 2017. The petitioner had transitioned this credit from the erstwhile CENVAT regime to GST by filing a TRAN-1 form, which was accepted. However, a show-cause notice was issued alleging wrongful transition of credit, leading to the impugned order. The petitioner contended that the eligibility of the credit was never in dispute, and the denial was based on an inadvertent error in the form. The court noted that the Revenue's argument was that the credit was taken under the wrong section of the Act. The court emphasized that the right to input credit is an indefeasible right and cannot be denied on technical grounds. Citing precedents, the court found that the denial of credit was unjustified as the petitioner was otherwise eligible. Ultimately, the court allowed the writ petition, quashing the impugned order and directing that no coercive action be taken against the petitioner regarding the credit during the pendency of the case.
Headnote
A) Taxation - Input Tax Credit - Denial on Technical Grounds - Central Goods and Services Tax Act, 2017, Sections 140(1), 140(5) - The court held that the petitioner was entitled to input tax credit as there was no dispute regarding eligibility, and denial based on technical grounds was unjustified. The impugned order was quashed as it lacked jurisdiction. (Paras 19-21)
Issue of Consideration
Whether the denial of input tax credit based on technical grounds was justified.
Final Decision
Writ Petition No. 5508 of 2024 is allowed in terms of prayer clauses (a) to (e) which includes quashing the impugned order dated 24/02/2022 and directing that no coercive action be taken against the petitioner regarding the credit during the pendency of the case.
Law Points
- input tax credit
- transitional credit
- GST
- CENVAT credit
- jurisdictional authority
- technical grounds
