The Kerala High Court directed to file a statutory appeal in a case where the TRAN Credit was not allowed as the assessee registered under Kerala Value Added Tax (KVAT) cannot avail of Input Tax Credit (ITC) under CGST Central Goods and Services Tax Act/State Goods and Services Tax Act, 2017.
Goodyear India Limited, the petitioner is engaged in the trading of tyres and tubes falling under the Tariff Heading 4011. The petitioner was issued a show cause notice under Section 73(1) of the CGST/SGST Act stating that the petitioner had wrongly availed input tax credit under the CGST for Rs.2,61,335/-, which would attract interest and penalty, and the total demand was worked out to be Rs.5,18,317/-, including tax and interest.
The petitioner was also asked to show cause as to why the said tax along with penalty equivalent to 10% or Rs.10,000/should not be realised from him, in case of failure to make payment of the entire amount of tax as above. The petitioner filed a reply to the said show cause notice and submitted that the petitioner had a closing stock report as of 30.6.2017, as per which the quantity claimed as per the transitional credit of input tax credit in TRAN-I-(A) was 5966, besides the quantity disclosed in TRAN-2 for the goods sold was 628.
The petitioner had appropriately transitioned the credit amounting of Rs.2,61,335/in GST as per the provisions of Section 140(3) of the CGST Act. Hence, the petitioner requested to drop the said show cause notice.
The assessing authority, however, did not agree with a reply to the show cause notice and held that the petitioner had registration under the provisions of the Kerala Value Added Tax regime (Central Excise and Service Tax) and availing of ITC under Rule 117(4)(a)(1) of the CGST Rules, 2017 on goods held in stock on the appointed day in violation of the Act and the Rules. Therefore, the petitioner could not have availed of TRAN-II credit under the CGST and the said availment of the TRAN-II credit under the CGST was irregular, and the matter should be remitted back to the Government.
The petitioner has the remedy of statutory appeal under the provisions of the CGST/SGST Act. Considering the availability of an alternate remedy of statutory appeal, the single bench of Justice Dinesh Kumar Singh disposed of the writ petition with liberty to the petitioner to file an appeal under Section 107 of the CGST/SGST Act before the appellate authority.
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