2024(08)LCX0235

Cholayil Pvt. Ltd.

Versus

State Of AP

WRIT PETITION NO: 17837/2023 decided on 21-08-2024

3
IN THE HIGH COURT OF ANDHRA PRADESH
AT AMARAVATI
(Special Original Jurisdiction)

WEDNESDAY ,THE TWENTY FIRST DAY OF AUGUST
TWO THOUSAND AND TWENTY FOUR

PRESENT

THE HONOURABLE SRI JUSTICE R RAGHUNANDAN RAO

THE HONOURABLE SRI JUSTICE HARINATH.N

WRIT PETITION NO: 17837/2023

Between:

Cholayil Private Limited                 ...PETITIONER

            AND

The State Of Ap and Others           ...RESPONDENT(S)

Counsel for the Petitioner:

1. MADHAVA RAO NALLURI
2. JOSEPH PRABHAKAR

Counsel for the Respondent(S):

    1.GP FOR COMMERCIAL TAX

The Court made the following Order:

    The petitioner is a manufacturer of medicinal soaps which are sold in India and outside India. The petitioner states that it was entitled to refund of certain unutilized CENVAT credit and two applications for such purposes were made in the year 2016 and 2017. The petitioner had made an application for refund of an amount of Rs.64,88,803/- and another application for refund of an amount of Rs.48,44,124. Both these applications were disposed of by the Assistant Commissioner, Central Excise, Nellore Division by two separate orders dated 19.06.2017. In the first order, the Assistant Commissioner rejected the refund claim of Rs.60,53,365/- and held that ineligible amount of Rs.4,35,438/- is allowed to be taken back as credit in the CENVAT credit account of the petitioner. Similarly, in the second order, the Assistant Commissioner rejected eligible refund claim of Rs.35,57,702/- while allowing ineligible amount of Rs.12,86,422/- to be taken back as credit in the CENVAT credit account of the petitioner.

    2. Aggrieved by these two orders, the petitioner had approached the Commissioner, Central Tax and Customs (Appeals), Guntur. Both these appeals were rejected by the Commissioner, by way of two orders dated 16.04.2019. The petitioner states that these appeals had been rejected on grounds of delay in filing the appeals.

    3. In a parallel development, the GST regime was introduced on 01.07.2017. As part of the transitional provisions, manufacturers/dealers having CENVAT credit were permitted to transition the said credit to the GST regime by filing a form known as Form TRAN-I. The petitioner herein had utilized that benefit and had transitioned the CENVAT credit available in the account of the petitioner to the GST regime, except to the extent of the disputed refund amounts mentioned above.

    4. Various manufactures and dealers who had CENVAT credit in their account were unable to transition to the GST regime due to various technical clichés and problems. These manufacturers/dealers had approached the Courts resulting in a Judgment of the Hon’ble Supreme Court in the case of Union of India vs. Filco Trade Center Private Limited. The Hon’ble Supreme Court in this Judgment, dated 22.07.2022, had issued certain directions to the tax authorities to permit further transition of CENVAT credit to the GST regime by permitting filing of TRAN-1 and TRAN-2 forms for the period 01.10.2022 to 30.11.2022. This period was consequently extended. In compliance of the directions of the Hon’ble Supreme Court, Government issued circular bearing No.180/12/2022-GST dated 09.09.2022 setting out the conditions under which the manufacturers/ dealers were given a second chance to transition from CENVAT credit to the GST regime.

    5. The petitioner, opted to try his luck by filing a fresh TRAN-1 form seeking transition of CENVAT credit which had not been refunded on account of the above orders. This application of the petitioner was rejected by the Deputy Commissioner on 27.02.2023. The application of the petitioner was rejected on the ground that the said application is covered by instruction No.4.7 of the aforesaid circular and as such the request of the petitioner for transitioning further credit is not permissible.

    6. The said para 4.7 of the circular instructions reads as follows:

4.7. It is clarified that those registered persons, who had successfully filed TRAN-1/TRAN-2 earlier, and who do not require to make any revision in the same, are not required to file/revise TRAN-1/TRAN-2 during this period from 01.10.2022 to 30.11.2022. In this context, it may further be noted that in such cases where the credit availed by the registered person on the basis of FORM GST TRAN1/TRAN-2 filed earlier, has either wholly or partly been rejected by the proper officer, the appropriate remedy in such cases is to prefer an appeal against the said order or to pursue alternative remedies available as per law. Where the adjudication/appeal proceeding in such cases is pending, the appropriate course would be to pursue the said adjudication/appeal. In such cases, filing a fresh declaration in FORM GST TRAN-1/TRAN-2, pursuant to the special dispensation being provided vide this circular, is not the appropriate course of action.

    7. The Deputy Commissioner took the view that this provision meant that any transition of disputed tax is barred by this provision.

    8. A reading of this provision would make it clear that this provision stipulates that if a request made, under TRAN-I/TRAN-2, in the earlier period had been rejected, the same cannot be reiterated under the second chance given by the Hon’ble Supreme Court. In such circumstances the only option available to the person making such an application is to file an appeal against the earlier order of rejection of transition. In the present case, the rejection order was passed under the CENVAT regime itself and it is not an order of rejection of TRAN-1/TRAN-2.

    9. The learned Government Pleader for Commercial Taxes, would submit that in any event, the application would have to be rejected in as much as the order of rejection of refund effectively bars any usage of the said credit and consequently there cannot be any transition of that credit from the CENVAT regime to the GST regime.

    10. This contention raised by the learned Government Pleader is not available in the order impugned before us and as such cannot be looked into in view of the judgment of the Hon’ble Supreme Court in Mohinder Singh Gill & Another Vs. The Chief Election Commissioner.

    11. In the event, the impugned order dated 27.02.2023 in DIN3718012392140 and DIN3718012314992 is set aside, remanding the matter back to the Deputy Commissioner to consider the matter afresh. Needless to say, the Deputy Commissioner shall give adequate opportunity to the petitioner to set out its case and also to reply to any issues raised by the Deputy Commissioner. The exercise of considering and passing orders on the TRAN-1 and TRAN-2 Form filed by the petitioner shall be completed expeditiously and at any rate within four (4) months from the date of receipt of this order.

    12. Accordingly, this Writ Petition is allowed. There shall be no order as to costs.

    As a sequel, pending miscellaneous petitions, if any, shall stand closed.

________________________
R. RAGHUNANDAN RAO, J
_____________
HARINATH.N,J

HON’BLE SRI JUSTICE R. RAGHUNANDAN RAO
&
HON’BLE SRI JUSTICE HARINATH N.

WRIT PETITION NO: 17837 of 2023

Dt: 21.08.2024