For Full Access To All Latest Judgments on GST
Click Here To Subscribe Now
Take a tour of our GST Library

Merely because, the transitional provision has come into effect from 01.07.2017 and under Section 140(1) of the Act, the persons like the petitioners can make a claim only in respect of the credit which is already accrued as on 30.06.2017 and these credit had come into the account of the petitioners only subsequently, for which, claim under Section 140(1) could not have been made, the chance of making such an application to seek the refund or otherwise of such a credit which has subsequently accrued in the account of the petitioners, cannot be denied. There can be no impediment for invoking Section 142(3) of the CGST Act by invoking the “Doctrine of Necessity”.

Section 140/142 of the CGST Act, 2017 – Transitional Credit – Credit of Service Tax paid after June, 2017- The petitioner was pointed out by Audit to pay service tax along with applicable interest on royalty paid to the Govt. The petitioner was entitled for credit of service tax paid under RCM but since the petitioner made payment of service tax in December, 2017, they could not make any application under GST TRAN-1 for transfer of credit to the electronic credit ledger. They made application seeking refund under section 142 of the Act, which was rejected through the Order-in-Original No.19/2018 dated 24.09.2018, wherein, the respondent has observed that the petitioner is eligible for taking Cenvat credit of the amount so paid under Service Tax Rules, but there was no provision in the new regime to allow as input tax credit in GST. The court observed that in these kind of special situations, for which, the provision if not Section 142(3), no other eligible provision is available. The language used in Section 142(3) of the Act is refund claim, for which, the petitioner has made application. However, under the erstwhile law, the petitioners were not entitled to get any refund claim and their eligibility is confined only by taking the credit under Cenvat Credit Rules, beyond which, the relief cannot be stretched upon. Therefore, the question of making any refund as provided under Section 142(3) does not arise. But the petitioners application atleast could have been considered by the respondents under Section 142(3) of the Act for the purpose of taking the credit and such credit could have been considered and allowed for carrying forward in the electronic credit ledger, which is nothing but a different route than Section 140.

Held that:- The Hon’ble High Court set aside the impugned orders and remitted the matters back to the respondents for reconsideration. The respondent shall consider and dispose of these applications under Section 142(3). The claim made by the petitioners need not be considered for the purpose of refund of the claim. However, the said claim made by the petitioners can be considered for the purpose of permitting the petitioners to carry forward the accrued credit to the electronic credit ledger. The necessary order shall be passed by the respondents within a period of six weeks.