The Mumbai Bench of Customs, Excise and Service Tax Appellate Tribunal (CESTAT) has upheld the cenvat credit availment of service tax paid on advances received, where services were not provided prior to 30.06.2017, for transition to GST regime after observing glitches in GST Portal.
The bench of Anil G. Shakkarwar (Technical Member) has observed that in accordance with the provisions of Rule 118 of CGST Rules and clause (c) of sub-section (11) of Section 142 of CGST Act, 2017, appellant was entitled to transitional credit of Rs.6,15,409/- by entering the same at Sr.No.11 of Form TRAN-1. Due to technical glitch, appellant had to enter the same at Sr.No.5 of the form TRAN-1. The violation of not entering the required data at Sr.No.11 but entering the same at Sr.No.5 is only procedural and for procedural infirmity, substantial right of the appellant cannot be denied.
The tribunal directed the department to treat the data entered at Sr.No.5 of form TRAN-1 of Rs.6,15,409 to be treated as the one that is entered at Sr.No.11 of the proforma.
The appellant/assessee is engaged in providing services. In terms of Rule 3(b) of Point of Taxation Rules, 2011, appellant was required to pay service tax on the advances received towards services to be provided in future. As on 30.06.2017, appellant had paid service tax amounting to Rs. 6,15,409/- for services to be provided in future for which advances were received.
As on 01.07.2017 the operation of Chapter V of Finance Act, 1994 came to an end and CGST Act, 2017 became operational. In terms of the provisions of clause (c) of sub-section (11) of Section 142 of CGST Act, 2017 where service tax was paid on the service and service was provided after 01.07.2017, then GST was to be paid on such service which became a component of supply and service provider was allowed to take credit of the service tax already paid before 01.07.2017 where service was not provided before 01.07.2017. Through Rule 118 of CGST Rules, it was provided that such credit shall be taken in the form of a declaration in Form GST TRAN-1.
GST TRAN-1 was to be filed online. The provisions for taking such credit under sub-section (11) was provided at Sr.No.11 of Form GST TRAN-1. When the appellant tried to fill in the details of service tax of Rs.6,15,409/- paid before 30.06.2017, at Sr.No.11 of GST TRAN- 1 on 20.08.2017 and again on 25.12.2017, there was technical glitch and the appellant could not fill in the said figure at Sr.No.11 of the said TRAN-1 but filled the same figure at Sr.No.5 of the said TRAN-1 which resulted that as if the appellant had transitional cenvat credit which was unutilized and transferred to TRAN-1.
Therefore, a show cause notice dated 26.06.2019 was issued to the appellant denying cenvat credit of Rs.6,15,409/- on the ground that there was no separate document as required under Rule 9 of Cenvat Credit Rules, 2004 to avail the said cenvat credit of Rs.6,15,409/-.
The original authority denied credit of Rs.6,15,409/- and imposed equal penalty. Aggrieved by the said order, appellant preferred appeal before Commissioner (Appeals) who rejected the appeal through the order.
The tribunal held that violation of not entering the required data at Sr.No.11 but entering the same at Sr.No.5 is only procedural and for procedural infirmity, substantial right of the appellant cannot be denied.
The tribunal directed the department to treat the data entered at Sr.No.5 of form TRAN-1 of Rs.6,15,409 to be treated as the one that is entered at Sr.No.11 of the said proforma.
Case Details
Case Title: Pride Ventures (I) Pvt. Ltd. Versus Commissioner of CE & GST, Aurangabad
Case No.: Service Tax Appeal No. 86801 of 2021
Date: 21.04.2025
Counsel For Appellant: Makarand P. Joshi
Counsel For Respondent: Dhananjay Dahiwale
