Case Summary
Case Title: M/s. Steel Authority of India Limited, Bokaro Steel Plant v. State of Jharkhand & Ors.
Court: High Court of Jharkhand at Ranchi
Petition No.: W.P. (T) No. 220 of 2021
Judgment Date: 30 January 2025
Category: Transitional Credit – Input Tax Credit under Section 140 JGST Act
Relevant Sections:
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Section 140, 73, 74, 50, 73(9) JGST Act, 2017
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Section 18 of JVAT Act, 2005
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Section 174 CGST Act, 2017
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Rule 121 CGST Rules, 2017
Facts (Paras 2–6)
Steel Authority of India Limited (SAIL), Bokaro, a PSU, transitioned un-availed VAT credit under Section 140 of JGST Act after GST implementation. The Department issued SCN alleging ineligible ITC of ₹31.90 crore on consumables and ₹6.79 crore on capital goods under JVAT Act. The Deputy Commissioner (2018) denied transitional credit and raised demand of ₹37.03 crore along with interest and penalty. The Appellate Authority (2019) confirmed the demand. Subsequently, SGST credit of ₹30.29 crore was blocked and adjusted from SAIL’s electronic credit ledger.
Questions in Dispute (Paras 3, 7–8)
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Whether ITC ineligible under the repealed VAT Act could be denied at the stage of transition under Section 140 of JGST Act?
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Whether proceedings under Section 73 JGST Act could adjudicate past ITC eligibility of the repealed regime?
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Whether adjustment of blocked transitional credit was lawful?
Observations (Paras 8–10)
The Court noted that in Usha Martin Limited v. Additional Commissioner, CGST & Excise (2022 SCC OnLine Jhar 1764), it was held that:
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Eligibility of ITC under erstwhile laws must be tested only under those laws.
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Section 73 CGST Act empowers action for wrongful ITC “under GST Act” and not for adjudicating CENVAT/VAT credit under repealed laws.
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Section 174 CGST Act (repeal and saving) allows proceedings under repealed laws to continue.
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Hence, denial of transition under GST by invoking Section 73 is jurisdictionally improper.
The State conceded that the issue was covered by Usha Martin Limited.
Judgment (Paras 11–13)
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The Court quashed the adjudication order (08.01.2018) and appellate order (13.12.2019).
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Directed restoration of ₹30,29,99,999/- with statutory interest to SAIL’s electronic credit ledger within four weeks.
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Clarified that the Department may initiate proceedings under the JVAT Act, 2005 (repealed law) if they seek to challenge ITC eligibility.
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No costs awarded.
Table of Cases Referred
| Case | Court | Issue | Verdict |
|---|---|---|---|
| Usha Martin Limited v. Addl. Commissioner, CGST & Excise, Jamshedpur (2022 SCC OnLine Jhar 1764) | Jharkhand HC | Denial of transitional CENVAT credit under GST on ground of ineligibility under earlier laws | Held that GST authorities cannot adjudicate past ITC eligibility under Section 73 CGST Act; such disputes must be under repealed laws; denial of transition quashed |
Between Fine Lines
For businesses, this ruling affirms that transitional ITC cannot be denied by GST authorities on the ground that such credit was allegedly ineligible under VAT/Excise laws. Any dispute about pre-GST credits must be pursued under repealed statutes, not under Section 73 of CGST Act. The judgment ensures certainty in transition provisions and protects businesses from arbitrary adjustment of credit balances.
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