The case is for Cenvat Credit Rules, however, since the context of provisions in which the decisions is given is almost same, in the view of the author, the same would serve as a good precedent in GST era also. The ratio laid down is that GST paid on reverse charge basis under mistaken belief that same was payable and credit availed thereof would not cause any loss of Revenue. Also, GST paid at higher rate by the supplier will not be disallowed in the hands of the recipient. A tax paid cannot be considered as ‘duty deposit’ for the purpose of denying Input Tax Credit.
CCE Vs Hindalco Industries Ltd. (Download here)
Tax paid by supplier or under reverse charge (whether excess or incorrect) cannot be denied to recipient. The trite principle is upheld in CCE Vs Hindalco Industries Ltd. (CESTAT Ahmedabad). This one case has discussed various cases where excess tax can be paid inadvertently by the payer (under bill of entry, on tax invoice and under reveres charge) and availability of credit to the recepient under such sitiuations. The present case relates particularly to Cenvat Credit on bill of entry paid in excess.
In the captioned decision of CCE Vs Hindalco Industries Ltd. (CESTAT Ahmedabad), Hon’ble Tribunal held that an amount paid provisionally under Bill of Entry by the Assessee of which he has taken the Cenvat Credit is not recoverable from him on the ground that the Assessee cannot take credit of a tax which was not payable and such tax should have been claimed as refund by the Assessee. Hon’ble Tribunal dismissed the appeal of department as such ITC cannot be denied to assessee.
Reliance on this issue can also be made on following judgements:
- MDS Switchgear Ltd [2001 (132) ELT 405 (Tri.-Mumbai)] – A quantum of duty already determined by the jurisdictional officers of the supplier unit cannot be contested or challenged by the officers in charge of the recipient unit [2000 (120) E.L.T. 379(T)]
- Sterlite Industries (I) Ltd. 2011-TIOL-1463-CESTAT-MAD – In this case, tax was paid under bona fide belief under reverse charge on rail transport services and credit of such paid tax was taken. Hon’ble Tribunal held that considering the fact that the appellants have taken only credit of tax paid by them which in the first instance was not payable, there can be no demand against them as no revenue has been lost to the exchequer by merely taking credit of the amount which in the first place was not recoverable from them.
Full text of the order:
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