CENVAT Credit  can be availed on Service Tax Paid over Advances received: CESTAT [Read Order]

The Mumbai Bench of Customs, Excise and Service Tax Appellate Tribunal (CESTAT) has confirmed the utilization of the cenvat credit for service tax paid on advances received in cases where services were not rendered before June 30, 2017, in order to transition to the GST system after noticing errors in the GST Portal.

Steel Scrap or Tax Trap? ITAT Slams PCIT’s Overreach in Ahmedabad Bizman’s Case [Read Order]

Clear all Your Doubts on RCM, TCS, GTA, OIDAR, SEZ, ISD Etc... Click Here

The appellant/assessee, Pride Ventures (I) Pvt. Ltd, is a service provider. The appellant has to pay service tax on the advances received for future services rendered in accordance with Rule 3(b) of the Point of Taxation Rules, 2011. As of June 30, 2017, the appellant has paid Rs. 6,15,409 in service tax for future services for which advances were received.

Chapter V of the Finance Act of 1994 ceased operations on July 1, 2017, and the CGST Act of 2017 took effect. According to clause (c) of sub-section (11) of Section 142 of the CGST Act, 2017, if service tax was paid on the service and the service was rendered after July 1, 2017, GST was due on the service, which became a part of the supply, and the service provider was permitted to claim a credit for service tax paid prior to July 1, 2017, if the service was not rendered prior to July 1, 2017. According to Rule 118 of the CGST Rules, this credit must be claimed as a declaration on Form GST TRAN-1.

ITAT Sets Aside CIT(A) Direction on TDS Recalculation, Says Original Demand Already Nullified [Read Order]

Online filing was required for GST TRAN-1. Sr. No.11 of Form GST TRAN-1 contained the instructions for claiming this credit under sub-section (11). There was a technical issue that prevented the appellant from entering the details of the Rs. 6,15,409/-service tax paid before June 30, 2017, at Sr. No. 11 of GST TRAN-1 on August 20, 2017, and again on December 25, 2017. Instead, the appellant entered the same amount at Sr. No. 5 of the same TRAN-1, creating the impression that the appellant had unutilized transitional cenvat credit that was transferred to TRAN-1.

The appellant received a show-cause letter rejecting the Rs. 6,15,409/-cenvat credit, citing the lack of a separate document required by Rule 9 of the Cenvat Credit Rules, 2004 to obtain the credit. The initial authority assessed an equivalent penalty and refused credit for Rs. 6,15,409. The appellant, who was offended by the aforementioned ruling, filed an appeal with the Commissioner (Appeals), who denied it via the order.

GST Payment for Defect Liability Period in Public Works Contract : Allahabad HC Directs Dept to Consider Claim of Contractor [Read Order]

Complete GST Act & Rules with amendments made by financial bill, 2025 CLICK HERE

According to the findings of Rule 118 of the CGST Rules and clause (c) of sub-section (11) of Section 142 of the CGST Act, 2017, the appellant was entitled to a transitional credit of Rs. 6,15,409/-by submitting it at Sr.No.11 of Form TRAN-1, according to the single bench of Anil G. Shakkarwar (Technical Member). The appellant had to put the same at Sr.No.5 of the form TRAN-1 due to a technical issue. The infraction of not inputting the necessary data at Senior No. 11 but doing so at Senior No. 5 is only procedural, and the appellant's substantial entitlement cannot be denied due to procedural infirmity.

Tax Planning For NRIs - CLICK HERE

The tribunal ruled that the infraction of failing to submit the necessary data at Senior No. 11 but doing so at Senior No. 5 is merely procedural, and the appellant's substantial right cannot be denied due to procedural infirmity The tribunal ordered the department to assume that the Rs. 6,15,409 data submitted at Sr. No. 5 of form TRAN-1 is the same as the data put at Sr. No. 11 of the same proforma.

To Read the full text of the Order CLICK HERE

Support our journalism by subscribing to Taxscan premium. Follow us on Telegram for quick updates