Order date – 10 November 2022

Facts –

• The Petitioner, M/s Usha Martin Limited, operates in two divisions, Wire Rope Division and Steel Division. Steel Division is engaged in the manufacture of iron and steel products at its factory situated at Adityapur Industrial Area, Gamharia duly registered under the erstwhile Central Excise Act, 1944 and Finance Act, 1994.
• On implementation of GST w.e.f 1st July, 2017 petitioner was allotted GST registration for all business places under Steel Division. The petitioner filed TRAN-1 form to carry forward the amount of CENVAT credit from the return relating to the period ending with the day immediately preceding the appointed date, i.e. 1st July, 2017 under the pre-GST regime.
• A show cause notice dated 13th September, 2021 was issued proposing recovery of transitioned CENVAT credit in terms of Section 73(1) of the C.G.S.T. Act along with interest and penalty.

Issue –

• Whether in view of Section 174 of the C.G.S.T. Act, proceeding for availment of alleged inadmissible CENVAT Credit could have been initiated under C.E.A. and Finance Act read with C.C.R. or not?

Order –

• The Hon’ble High Court on perusal of the provisions of Section 73 of the CGST Act finds that it does not speak of CENVAT Credit as CGST. CGST Act does not provide for CENVAT Credit rather the term has been subsumed in the expression input tax credit both relating to the supply of good or services.
• The assumption of jurisdiction by Respondent to determine whether the CENVAT Credit was admissible under the existing law by invoking provisions of Section 73 of the C.G.S.T. Act was therefore not proper in the eye of law.
• The repeal and saving clause (e) under Section 174(1) of the C.G.S.T. Act allowed such legal proceedings to be instituted in respect of inchoate rights except rights under transactions which were past and closed. Petitioners also admit that proceedings for availing CENVAT Credit which were allegedly inadmissible under the C.E.A., Finance Act, read with C.C.R., 2004 could have been initiated under the existing laws.
• Hence held that the initiation of proceedings by respondent under section 73 (1) of the C.G.S.T. Act, 2017 for alleged contravention of the C.E.A. and Finance Act, read with C.C.R. against the petitioner by filing TRAN 1 in terms of Section 140 of the C.G.S.T. Act for transition of CENVET Credit as being inadmissible under the existing law was beyond his jurisdiction. Consequently the Order in Original dated 30th March, 2022 passed by the respondent being without jurisdiction cannot be sustained in the eye of law. 
• However, respondent authorities are at liberty to initiate proceedings under the provisions of the existing law, i.e. C.E.A, 1944, Finance Act, 1994 read with C.C.R, 2004 against the petitioner for the relevant tax period in accordance with law.