Case Summary
Case Title: M/s Natraj Electro Casting Pvt. Ltd. v. Commissioner, CGST & Central Excise (Appeal), Siliguri Appeal Commissionerate & Ors.
Court: High Court at Calcutta (Constitutional Writ Jurisdiction, Appellate Side)
Petition No.: WPA 13767 of 2024
Date of Judgement: 10.07.2024
Category of Dispute: Transitional Input Tax Credit (Capital Goods)
Relevant Sections: Section 107, Section 112, Section 140(2), Section 73 of CGST Act, 2017
Facts (Paras 2–7)
The petitioner, M/s Natraj Electro Casting Pvt. Ltd., challenged the order dated 17.10.2023 passed by the appellate authority under Section 107 of the CGST Act, 2017. The dispute revolved around whether the petitioner was entitled to carry forward 100% Cenvat credit of capital goods as transitional ITC under Section 140(2) without availing any credit in the earlier Central Excise regime.
A show cause notice issued on 31.08.2022 proposed disallowance of the transitional credit claimed through declaration filed on 27.12.2017. The proper officer, by order dated 25.04.2023, confirmed recovery of ₹1,80,73,416/- under Section 73(1), holding that the petitioner had wrongly availed the credit. The petitioner contended that the order went beyond the scope of the show cause notice, but this was not properly addressed by the appellate authority.
Since the Appellate Tribunal under Section 112 is yet to be constituted, the petitioner approached the High Court seeking relief against recovery of demand.
Questions (Paras 3, 7)
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Can 100% Cenvat credit of capital goods be transitioned under Section 140(2) of the CGST Act without availing such credit under the earlier Central Excise law?
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Whether the demand confirmed under Section 73(1) is valid when it is based on grounds not contained in the original show cause notice?
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What interim protection can be granted in absence of the GST Appellate Tribunal?
Observations (Paras 8–11)
The Court noted that while the respondents defended the impugned order, they admitted that the Appellate Tribunal is not yet constituted, which deprives the petitioner of its statutory appellate remedy.
The Court also considered that the 53rd GST Council recommended reducing pre-deposit under Section 112 appeals from 20% to 10%, though not yet notified. In balancing equities, the Court observed that the petitioner had already deposited the mandatory pre-deposit under Section 107(6). Therefore, an additional deposit of ₹18 lakhs (approx. 10% of the disputed tax) would safeguard revenue interest pending adjudication.
Judgement (Paras 11–13)
The High Court directed the petitioner to deposit ₹18 lakhs within two weeks. Upon such deposit, recovery of the balance demand confirmed by order dated 25.04.2023 shall remain stayed until further orders. The matter was admitted, and affidavits were directed to be exchanged.
Cases Referred
| Case | Issue | Verdict |
|---|---|---|
| Recommendations of the 53rd GST Council (not a case but cited) | Reduction of pre-deposit for appeal under Section 112 from 20% to 10% | Court noted the recommendation while deciding on additional deposit requirement. |
Between Fine Lines
This judgment highlights the judicial balancing act in GST disputes where the appellate tribunal is yet to be constituted. Taxpayers are allowed interim relief against coercive recovery provided they show bona fide grounds and deposit a reasonable sum. For industry, the ruling reassures that higher courts will step in to protect rights when statutory appellate remedies are unavailable, but also signals the importance of making partial deposits to safeguard revenue.
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