This appeal has been filed under Section 107 of the Central Goods and Services Tax Act, 2017 (hereinafter also referred to as ‘the Act’) by M/s. Bhagwandas Purshotamdas, Dr. Nandlal Marg, Churi Bazar, Ajmer (hereinafter also referred to as “the appellant” or “the supplier”) against Order-in-Original No. 01/HPK/GST/R-XLVI/2018-Supdt., dated 17-12-2018 (hereinafter referred to as “the impugned order” also), passed by Superintendent, CGST Range-XLVI, Ajmer (hereinafter referred to as “the adjudicating authority” also.

2. The relevant facts for the purpose are that the appellant, holder of GSTIN 08AABFB0140K1ZW, have filed TRAN-1 and availed input tax credit of  ₹ 9,41,909/- in respect of the various inputs lying in their stock on 30-6-2017 under Section 140(3) of the Act read with Rule 117 of CGST Rules, 2017. During scrutiny of documents and TRAN-1, submitted by the supplier for verification of input tax credit availed, it was noticed by the department (the respondent) that the supplier was not in possession of invoices or other documents as prescribed under Rule 9(1) of the Cenvat Credit Rules, 2004 evidencing payment of duty amounting to ₹ 90,639/- out of total input tax credit of ₹ 9,41,909/- under the existing law as required under Section 140(3)(iii) of the CGST Act, 2017. Hence, the department was of the view that the supplier has wrongly availed input tax credit of ₹ 90,639/- under the CGST head (eligible duties paid on such inputs) in contravention of the provisions of Section 140(3) of the Act read with Rule 117 of CGST Rules, 2017 which is recoverable under Section 73(1) of the Act.

3. Accordingly, a show cause notice dated 3-7-2018 was served on the appellant calling him upon to explain as to why input tax credit of ₹ 90,639/- wrongly availed by them should not be disallowed and recovered from them with applicable interest under Section 73(1) of the CGST Act, 2017 read with Section 50 ibid. Penalty under Section 73(1) read with Section 122(2) of the Act was also proposed. The said show cause notice culminated into the impugned order vide which input tax credit amounting to ₹ 90,639/- was disallowed and ordered to be recovered with interest on the same as applicable rate under Section 73(9) and Sec. 50(3) of the Act respectively. Penalty of ₹ 10,000/- was also imposed upon the appellant under Section 73(9) read with Section 122(2)(a) ibid.

4. Being aggrieved with the impugned order, the appellant has filed this appeal on the following grounds amongst others :

4.1 That the disallowances of ITC ₹ 90639/- by the Superintendent is without appreciating the full facts & circumstances of the case by him. There was stock of excise duty paid invoices as on 30-6-2017 for which ITC of ₹ 90639/- was claimed by them. M/s. Taxmo Industries are the manufacturer of TAXMO Agricultural Centrifugal Pump Set who made payment of Excise Duty as cleared from the face of VAT invoices, that we are in possession of such VAT invoices in which such excise duty separately shown to be recovered from us and it was sufficient evidence of payment of duty by them.

4.2 That we also obtained certificate of payment of such duty recovered from us by their principal manufacturer H.O. on behalf of this depot in Rajasthan, there was no need to issue excisable invoices to claim credit till GST introduced i.e. up to 30-6-2017.

4.3 That no such disallowances can be made only on the basis of non-registration of Depot with Excise Deptt. for which no such condition is there for allowing ITC. The presented condition is only to show duty payment of face of invoice.

4.4 That as per intention of law, no such disallowance can be made on such technical ground specially when the payment of collected duty confirmed by their head office by issuance of Certificates in proof of deposit of duty. That the imposition of penalty is quite wrong and illegal.

5. Personal hearing in the matter was fixed for 24-1-2020, 11-2-2020 & 25-2-2020 but no one appeared for the purpose. However, M/s. O.P. Maheshwari & Co., CA vide their letters dated 21-1-2020 & 20-2-2020 submitted that :

• Copy of challan dated 12-3-2019 for pre-deposit of ₹ 10,000/- (i.e. 10% of demand) is enclosed with letter.
• Allegation regarding non-possession of invoice/prescribed document for Cenvat credit with the appellant is wrong as TEXMO Industries have charged Excise duty @ 6% and VAT @ 5.5% on the invoice issued by 1st stage dealer i.e. Depot of TEXMO Industries who are manufacturer & for such payment of Excise duty, evidencing by face of VAT invoices, we are fully entitled for ITC. Detail of such ITC and all the relevant VAT invoices are submitted again.
• He paid reliance on the decision of Hon’ble Gujarat High Court in the case of Down Town Auto Pvt. Ltd. v. UOI in R/Special Civil Appeal No. 2409 of 2019 vide order dated 6-2-2019 [2020 (32) G.S.T.L. J152 (Guj.)].
• Their appeal may please be finalized on the basis of their written submission.

6. I have carefully gone through the facts of the case, appeal memo and submissions made vide letters dated 21-1-2020 & 20-2-2020. The issue involved in the present case for consideration is : whether the appellant have wrongly availed ITC of ₹ 90,639/- in respect of the inputs lying in their stock as on 30-6-2017, without having proper documents or not?

7. I find that the transitional arrangements for input tax credit has been provided under the provisions of Section 140 of the CGST Act, 2017. For better appreciation the provisions of transitional credit, the relevant portion of the said Section is reproduced as under :

SECTION 140. Transitional arrangements for input tax credit. –

(3) A registered person, who was not liable to be registered under the existing law, or who was engaged in the manufacture of exempted goods or provision of exempted services, or who was providing works contract service and was availing of the benefit of notification No. 26/2012-Service Tax, dated the 20th June, 2012 or a first stage dealer or a second stage dealer or a registered importer or a depot of a manufacturer, shall be entitled to take, in his electronic credit ledger, credit of eligible duties in respect of inputs held in stock and inputs contained in semi-finished or finished goods held in stock on the appointed day subject to the following conditions, namely :-

(i)      such inputs or goods are used or intended to be used for making taxable supplies under this Act;

(ii)    the said registered person is eligible for input tax credit on such inputs under this Act;

(iii)   the said registered person is in possession of invoice or other prescribed documents evidencing payment of duty under the existing law in respect of such inputs;

(iv)   such invoices or other prescribed documents were issued not earlier than twelve months immediately preceding the appointed day; and

(v)     the supplier of services is not eligible for any abatement under this Act :

7.1 I find that the appellant has submitted copy of 58 VAT-invoices of M/s. TEXMO Industries in respect of ITC of ₹ 90,639/- availed by the appellant along with a certificate dated 17-1-2019 of excise duty paid by the principal manufacturer i.e. M/s. TEXMO Industries, Coimbatore. Whereas, Section 140(3)(iii) of the Act stipulates that the supplier should have in possession of prescribed documents evidencing payment of duty under the existing law (Central Excise Law) in respect of such inputs. I observe that the VAT invoices, submitted by the appellant, do not fulfil the conditions for being a valid document under Rule 9 of the Cenvat Credit Rules, 2004 or Rule 11 of the Central Excise Rules, 2002 (i.e. the existing law).

7.2 The appellant has also paid reliance upon the decision of Hon’ble Gujarat High Court in the case of Down Town Auto Pvt. Ltd. v. UOI [2020 (32) G.S.T.L. J152 (Guj.)]. I find that the above decision is an interim judgment not a final decision. Hence it will not be justified to use the same as in favor/against of any party.

8. In view of the above discussions, I find that the appellant was not in possession of prescribed documents evidencing payment of duty under the existing law for availing input tax credit of ₹ 90,639/-, as required under Section 140(3)(iii) of the Act. Hence, I do not find any reason to interfere with the impugned order. Accordingly, the same is sustained and the appeal filed by the appellant is rejected.