Cenvat Credit on Transitional period Under GST Not Allowable on Capital Goods Received After July 1, 2017: Patna HC [Read Order]
The court pointed out that whereas previous legislation explicitly permitted credit on capital goods, the GST regime does not formally recognize transitional credit on capital goods received after July 1, 2017.
![Cenvat Credit on Transitional period Under GST Not Allowable on Capital Goods Received After July 1, 2017: Patna HC [Read Order]](https://www.taxscan.in/wp-content/uploads/2025/04/CENVAT-Credit-TAXSCAN.jpg "Cenvat Credit on Transitional period Under GST Not Allowable on Capital Goods Received After July 1, 2017: Patna HC [Read Order]")
While upholding the recovery of ineligible CENVAT credit, the Patna High Court has held that transitional credit under the Goods and Services Tax (GST) regime cannot be availed for capital goods received after 1st July 2017. Read More: Personal Gold Jewellery Worn at Family Event Abroad Seized at Airport: Delhi HC Orders Immediate Release The High Court's Division Bench, comprised...
While upholding the recovery of ineligible CENVAT credit, the Patna High Court has held that transitional credit under the Goods and Services Tax (GST) regime cannot be availed for capital goods received after 1st July 2017.
The High Court's Division Bench, comprised of Justices Rajeev Ranjan Prasad and Rameesh Chand Malviya, ruled that Section 140 of the CGST Act makes a distinction in the case of providing capital goods with the advantage of CENVAT credit during the transitional period. Subsection (5) of Section 140 distinguishes between capital goods and inputs, even though this provision allows an assessee to carry forward and take credit of unutilized CENVAT credit paid on both capital goods and inputs, in the manner that may be prescribed and subject to the conditions contained in the provisions.
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The petitioner company, M/s JMD Alloys Ltd, had filed a writ petition to have the Additional Commissioner (Appeal) of CGST and Central Excise, Patna, revoke the Order-in-Appeal dated May 22, 2023. After the GST system was implemented, the petitioner claimed a smooth transfer of ₹8,62,566 in transitional CENVAT credit for capital items that were invoiced in June 2017 but arrived at the factory in July 2017.
In June 2017, the MS Bars factory placed orders for capital items. The items arrived at the petitioner's factory in July 2017 after being shipped under 11 excise bills. The petitioner submitted Form TRAN-1 to claim credit for the duty paid under the previous system under the CGST Act's transitional provisions. However, because the credit applied to capital items acquired beyond the designated date, the jurisdictional Superintendent of CGST rejected it.
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The petitioner contended that there was no legal prohibition against denying transitional credit in these circumstances and that the phrase "inputs" should be used broadly to encompass capital items under the 2017 CENVAT Credit Rules.
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Rejecting the interpretation, the High Court ruled that the Act makes a clear distinction between capital goods and inputs. In tracing the legal framework of the CGST Act and its transitional provisions, the Court pointed out that whereas previous legislation explicitly permitted credit on capital goods, the GST regime does not formally recognize transitional credit on capital goods received after July 1, 2017.
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The Court held that there was no infirmity in the impugned orders passed by the adjudicating and appellate authorities, and proceeded to dismiss the writ petition.
To Read the full text of the Order CLICK HERE
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