Jharkhand High Court
M/S. Steel Authority Of India Limited vs The State Of Jharkhand on 30 January, 2025
Author: Deepak Roshan
Bench: Deepak Roshan
IN THE HIGH COURT OF JHARKHAND AT RANCHI
W.P. (T) No. 220 of 2021
......
M/s. Steel Authority of India Limited, Bokaro Steel Plant, a company within
the meaning of the Companies Act, 1956 and having its registered office at
Ispat Bhawan, Bokaro Steel Plant, P.O. & P.S. B.S. City, District Bokaro
(Jharkhand), represented through its Authorized Signatory/DGM (F&A),
Rajeev Gupta, aged about 46 years, S/o Shri Ramjee Prasad, R/o Qr. No.
7302, Sector - 4F, P.O. & P.S. Sector-4, District Bokaro.
...... Petitioner
Versus
1. The State of Jharkhand.
2. Joint Commissioner of State Tax (Appeal), Dhanbad Division,
Dhanbad, having its office at Court Compound, P.O. & P.S. Dhanbad,
District Dhanbad.
3. Commissioner of the State Tax of Jharkhand, having its office at
Project Building, Dhurwa, P.O. & P.S. Dhurwa, District Ranchi-834001.
4. Deputy Commissioner of State Tax, Bokaro Circle, P.O. & P.S. B.S.
City, District Bokaro ...... Respondents
......
CORAM: Hon'ble the Chief Justice
Hon'ble Mr. Justice Deepak Roshan
......
For the Petitioner : Mr. Sumeet Kumar Gadodia, Advocate
Mr. Ranjeet Kushwaha, Advocate
Ms. Shruti Shekhar, Advocate
For the Respondents: Mr. Sachin Kumar, AAG-II
Mr. Gaurav Raj, A.C. to AAG-II
C.A.V. ON 16/12/2024 PRONOUNCED ON:30 /01/2025
Per Deepak Roshan, J.
The petitioner has filed the instant writ application for following
reliefs:-
(a) A writ of and/or order and/or direction in the nature of writ
of mandamus, or a writ of certiorari or any other appropriate writ,
order or direction to quash the impugned Order No. 1826 datedPage 1 of 8
13.12.2019 passed by Joint Commissioner of State Tax (Appeals),
Dhanbad Division, Dhanbad;
(b) For a declaration that the impugned order No. 1826 dated
13.12.2019 passed by Joint Commissioner of State Tax (Appeals)
has been passed in gross violation of principles of natural justice.
(c) For a declaration that the impugned Order No. 1826 dated
13.12.2019 passed by Joint Commissioner of State Tax (Appeals)
denying the carry forward of disputed credit of Rs. 30,28,48,166/- in
Form GST TRAN-1 has been passed in clear violation of the legal
provisions on account of non-application of mind to confirm a non-
existent demand showing the sole intention of the department to
harass and confirm a demand which has no legs to stand;
(d) For a declaration that action of Respondent No.4 in blocking
the SGST amounting to Rs. 30,29,99,999/- and Cess amounting to
Rs. 13,76,62,229/- in February, 2020 in the Credit Ledger against
the demand of Rs. 37,03,90,184/- along with interest amounting to
Rs. 4,18,89,607.65 and penalty amounting to Rs. 3,70,39,018.40, as
confirmed by learned Joint Commissioner of State Tax (Appeals)and
subsequently unblocking and adjusting the credit of SGST
amounting to Rs. 30,29,99,999/- on 25.11.2020 against the above-
stated demand is arbitrary, illegal and bad in law.
(e) Upon such declaration, the DCST or any other competent
authority be directed to reverse the credit on consumables
amounting to Rs. 30,29,99,999/- in the Credit Ledger of Petitioner.
(f) For a declaration that in terms of Circular No. 33/07/2018-
GST F. No. 267/67/2017-CX.8 dated 23.02.2018 issued by Ministry
of Finance, Department of Revenue, CBEC, there is no restriction in
carrying forward the balance outstanding in the VAT Return to the
GST Regime under Section 140(1) of the Jharkhand Goods and
Services Tax Act, 2017, subject to the condition that said credit is
not utilized;
(g) For a declaration that the un-availed input tax credit of Rs.
6,75,42,018/-, being the VAT amount paid on capital goods received
by the Petitioner under the erstwhile VAT Regime, is validly earned
and is eligible for carry forward under the GST Regime in view of
Section 140(2) of the Jharkhand Goods and Services Tax Act, 2017;
Page 2 of 8
(h) For a declaration that no show cause notice under Section 73
of the Jharkhand Goods and Services Tax Act, 2017 can be issued
for demanding transitional credit availed under Section 140 of the
Jharkhand Goods and Services Tax Act, 2017;
(i) For a declaration that Rule 121 of the Central Goods and
Services Tax Rules, 2017 is ultra vires Section 140 read with Section
164 of the Central Goods and Services Tax Act, 2017;
(j) For a declaration that no interest is chargeable and no
penalty is imposable in the facts and circumstances of the case;
(k) Ad-interim order in terms of all the prayers above;
(l) Costs of and incidental to this application be paid by the
respondents;
(m) Such further or other order or orders be made and/or
directions be given as would afford complete relief to your
petitioner.
2. The brief facts of the case are that Petitioner, being a Public Sector
Undertaking (PSU), is engaged in manufacture of various steel products and
was registered under the provisions of the Jharkhand Value Added Tax Act,
2005 (for short ‘JVAT Act‘) and with the implementation of GST regime,
petitioner has also obtained registration under the provisions of ‘Jharkhand
Goods and Services Tax Act, 2017 (for short ‘JGST Act’) bearing
Registration No. 20AAACS7062FAZJ.
3. Under the VAT regime, as on 30th June, 2017, Petitioner Company
was having an un-availed input tax credit which was transitioned by it under
GST regime in terms of Section 140(1) of JGST Act. However, vide Show
Cause Notice dated 21.12.2023, proceeding under Sections 73,74, 122,
132(1)(d) of JGST Act was initiated against the petitioner on following
grounds, namely;
(i) Petitioner availed input tax credit of Rs. 31,90,42,496/- on
purchase of consumables which it was not entitled to avail in terms
of Section 18(8)(viii) of JVAT Act and, accordingly, transition of
said credit under the GST Act was impermissible.
Page 3 of 8
(ii) Petitioner availed input tax credit on capital goods
amounting to Rs. 6,79,42,018/- which was also not available to
Petitioner in terms of provisions of Section 18(5) of JVAT Act and,
thus, transitioning of the same under the GST Act was illegal.
4. Against the aforesaid show cause notice, petitioner filed a detailed
reply and rebutted all the allegations made in the show cause notice.
However, Assessing Officer i.e. Deputy Commissioner of State Tax, Bokaro,
vide its order dated 08.01.2018, denied transitioning of the aforesaid credit
under GST regime and, accordingly, raised a demand of Rs. 37,03,90,184/-
upon the petitioner company along with interest amounting to Rs.
4,18,89,607.65/- under Section 50 of JGST Act and even imposed penalty
amounting to Rs. 3,70,39,018.40/- under Section 73(9) of JGST Act on the
ground that transitioning of inadmissible input tax credit under the GST Act
was illegal.
5. Against the aforesaid order, the petitioner preferred an appeal before
the Appellate Authority, but, the Appellate Authority, vide impugned
Judgment and order dated 13.12.2019, rejected the appeal filed by the
petitioner and confirmed the adjudication order dated 08.01.2018.
6. Consequent upon confirmation of demand by Appellate Authority,
Respondent No.4 blocked credit of SGST amounting to Rs. 30,29,99,999/-
and credit of Cess amounting to Rs. 13,76,62,229/- in the month of February,
2020 in electronic Credit Ledger of the petitioner. Thereafter, Respondent
No.4, on 25.11.2020, unblocked the aforesaid amount from electronic Credit
Ledger of the petitioner, but, adjusted the credit of SGST lying in electronic
Credit Ledger of the petitioner amounting to Rs.30,29,99,999/- against the
demand raised in the adjudication order.
Page 4 of 8
Thus, an amount of Rs. 30,29,99,999/- was appropriated from
electronic Credit Ledger of the petitioner towards adjustment against the
impugned demand dated 08.01.2018.
7. Mr. Sumeet Kumar Gadodia, counsel appearing for petitioner
submitted that the issue involved in the instant writ application is squarely
covered by a judgment delivered by a Bench of this Hon’ble Court in the
case of ‘Usha Martin Limited Vs. Additional Commissioner, Central GST
& Excise, Jamshedpur & Ors.‘, reported in (2022) SCC OnLineJhar 1764.
8. It was submitted, inter alia, that exactly similar issue came up for
consideration before this Court in the aforesaid case, wherein similar
adjudication order denying the benefit of migration of CENVAT credit under
GST regime was passed by adjudicating authority under the provisions of
GST Act on the ground that availment of CENVAT credit under Central
Excise Act, 1944 and Finance Act, 1994 was inadmissible.
It has been submitted that this Hon’ble Court, after taking into
consideration detailed provisions of GST Act, in substance, held that
eligibility or ineligibility of CENVAT credit/Input Tax Credit under the
erstwhile Act is to be adjudicated in terms of the provisions of erstwhile Act
and migration of the credit under GST Act cannot be denied merely because
certain credit of ITC, which has been migrated, was ineligible under the
repealed Act.
9. Mr. Sa chin Kumar, learned AAG-II appearing for the State,
admitted at Bar that the issue involved in the instant writ petition is covered
by a coordinate Bench of this Court in the case of Usha Martin Limited
(supra).
Page 5 of 8
10. In view of aforesaid admission by the parties at Bar, this court deems
it fit to extract the relevant paragraphs of the aforesaid Judgment for ready
reference, as under:-
“(2) By the impugned adjudication proceedings initiated under section 73 of the C.G.S.T.
Act, 2017, respondent No.1-Additional Commissioner, C.G.S.T. and Excise, Jamshedpur
has disallowed the Cenvat credit amounting to Rs. 10,21,05,096/- carried forward by the
petitioner by filing TRAN-1, in terms of Section 140 of the C.G.S.T. Act, 2017 by the
impugned order-in-original dated March 30, 2022 (annexure-1).”
“18. The enumerated conditions under which the registered person shall not be
entitled to avail of the credit of input tax are not one which are applicable to the case of
the present petitioner. The show-cause notice under which the instant adjudication
proceedings were initiated is worded allege similar contraventions under the CEA,
Finance Act, 1994 and the CCR as the previous show-cause notices issued under the
existing law against the petitioner relating to contravention of the C.E.A., Finance Act
and C.C.R. The adjudicating authority does not hold that the transition of Cenvat credit
under section 140 of the C.G.S.T. Act by the petitioner and relating to the period just
before the appointed date, i.e., July 1, 2017 are not one which are inadmissible to be
credited in terms of section 16(2) of the C.G.S.T. Act. The show-cause notice itself alleges
contravention of the C.E.A., Finance Act, 1994, read with C.C.R., 2004. As such, sub
clause (i) of proviso to section 140 does not apply to the case of the petitioner at hand. It
is neither the allegation against the petitioner that he had not furnished his returns
required under the existing law for the period of six months immediately preceding the
appointed date as per clause (ii) to the proviso to section 140. In substance, the
contraventions which have been alleged and the proceedings which have been initiated
under section 73(1) of the C.G.S.T. Act are in relation to violation of the C.E.A. and
Finance Act read with the C.C.R. The gist of the imputation is that the petitioner could
not claim the Cenvat credit in lieu of invoices raised by its Bokna mines as both of them
were independent entities. Similar was the imputation in respect of the previous show-
cause notices issued under the existing law which are pending adjudication before the
learned CESTAT or the Commissioner (Appeals) for different periods and in some of
which the petitioner has already got a stay by the learned CESTAT. Whether the Cenvat
credit under the existing law were admissible to be availed and transitioned by the
petitioner was not an issue lying within the jurisdiction of the C.G.S.T. authorities to be
proceeded against and determined under the relevant provisions of section 73 of the
C.G.S.T. Act which provides as under:
“Under section 73 of the C.G.S.T. Act a proper officer may require a registered
person to show cause in case it is found that he has not paid any tax or short
paid or erroneously refunded or where input-tax credit has been wrongly
availed or utilized for any reason, other than the reason of fraud or any willful
misstatement or suppression of fact to evade tax (such contraventions are
covered by section 74 of the C.G.S.T. Act) asking him to explain as to why he
should not pay the amount specified in the notice along with interest and under
section 50 and penalty thereupon”.
A perusal of the provisions of section 73 of the CGST Act makes it clear that such a
proceeding can be initiated for non-payment of any tax or short payment of such tax or
Page 6 of 8
for erroneous refund of such tax or for wrongly availing or utilizing the input-tax credit
which are available under the C.G.S.T. Act. Section 73 does not speak of Cenvat credit as
the C.G.S.T. 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 goods or services. The
assumption of jurisdiction by respondent No.1 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.
19. This leads us to the next question whether a registered person could transition
inadmissible Cenvat credit of the existing regime to the G.S.T. regime under section 140
of the C.G.S.T. Act without any check or proceeding against him. We have to then advert
to section 174 of the C.G.S.T. Act to find the answer. Section 174 relates to repeal and
saving and has been engrafted under the chapter XXIs relating to miscellaneous
provisions. Pursuant to the 101 Constitutional amendment, articles 246A, 269A and 279A
were inserted and certain articles like section 268A were repealed. …….
22. Therefore, it is clear that the repeal of the existing laws upon coming of the
G.S.T. law regime did not leave a vacuum as to past transactions which were not closed.
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. The 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. It is also not in
dispute that in respect of previous proceedings for such contravention the cases have
been kept in call book and in some of them the learned CESTAT has stayed the recovery
of the tax. The duty of the Constitutional courts is to interpret the law and also to ensure
that there is certainty about the law not only in the minds of the law enforcement
agencies but also in the common person as to where he stands in the eye of law. If
proceedings for transition of Cenvat credit alleged to be inadmissible is permitted to be
carried under the C.G.S.T. Act, it may lead to uncertainty not only in the minds of the
ordinary citizens but also in the minds of the tax authorities. In some cases a
jurisdictional proper officer under the C.G.S.T. Act may initiate proceedings under the
provisions of the C.G.S.T. Act for such contravention. In other cases the competent
jurisdictional officer may initiate proceedings under the existing law that is the C.E.A.
and Finance Act for the same contravention in view of the repeal and saving provisions
under Section 174 of the C.G.S.T. Act. Such a course cannot be countenanced in law. As
such, we are of the considered view that the initiation of proceedings by respondent No.1
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 March
30, 2022 passed by respondent No.1 being without jurisdiction cannot be sustained in the
eye of law. The impugned adjudication proceedings and the order-in-original dated
March 30, 2022 are accordingly quashed.
23. 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.”
(Emphasis supplied)
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11. In view of the settled proposition of law, the instant writ petition is
disposed of in terms of the order dated 10th November, 2022 passed in the
case of Usha Martin Limited (supra) and the impugned adjudication Order
dated 08.01.2018 (Annexure-9) and the Appellate Order dated 13.12.2019
(Annexure-15) are, hereby, quashed and set aside. Since Respondents have
already recovered an amount of Rs.30,29,99,999/- against the impugned
demand by reversing the credit available in electronic Credit Ledger of the
petitioner company, we further direct the Respondents to restore the amount
of Rs. 30,29,99,999/- along with statutory interest in electronic Credit
Ledger of the petitioner within a period of four weeks from the date of the
order.
12. However, the Respondent-authorities are at liberty to initiate
proceeding under the provisions of the repealed Act i.e. VAT Act, 2005
against the petitioner for relevant tax periods for availment of alleged
inadmissible input tax credit in accordance with law, if so advised.
13. With the above observations, the instant writ application stands
disposed of. However, there shall be no order as to costs.
(M.S. Ramachandra Rao, C.J.)
(Deepak Roshan, J.)
Amardeep/
A.F.R
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