Adjustment of Tax demand from Unutilized Cenvat Credit not carried forward to GST regime can be claimed by Assessee without any Bar

Last updated: 28 November 2021

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The Customs Excise and Service Tax Appellate Tribunal (CESTAT) has ruled that businesses can use unutilised CENVAT credit held as of June 30, 2017, to offset tax demands under the GST regime. The tribunal overturned a previous order that disallowed this adjustment, stating that Section 140 of the CGST Act permits such carry-forward. The ruling allows the Uttaranchal Cable Network to adjust over £14,000 in credit against their service tax demand.

Court :
CESTAT, Uttaranchal

Brief :
In Uttaranchal Cable Network v. Commissioner, Customs, Central Excise & Service Tax [Order No. 51902/2021 dated October 13, 2021] Hon'ble Customs Excise and Service Tax Appellate Tribunal ("CESTAT") held that the adjustment of the tax demand from the unutilized cenvat credit lying as on June 30, 2017 can be carried forward to the GST regime by the Assessee.

Citation :
Order No. 51902/2021 dated October 13, 2021

In Uttaranchal Cable Network v. Commissioner, Customs, Central Excise & Service Tax [Order No. 51902/2021 dated October 13, 2021] Hon'ble Customs Excise and Service Tax Appellate Tribunal ("CESTAT") held that the adjustment of the tax demand from the unutilized cenvat credit lying as on June 30, 2017 can be carried forward to the GST regime by the Assessee.

Uttaranchal Cable Network ("the Appellant") aggrieved by the order ("Impugned Order") passed by the commissioner, disallowing the adjustment of demand for service tax for the period prior to June 30, 2017 out of the cenvat credit lying of Rs. 14,31,166 as of June 30, 2017, has preferred this appeal.

The Appellant submitted that as per the conditions under Section 140 of the Central Goods and Services Act, 2017 ("CGST Act") the appellant is entitled to take, in his electronic cash ledger ("ECL") the amount of cenvat credit relating to period ending June 30, 2017, to the GST regime.

Hon'ble CESTAT, Delhi held that as per Section 140(1) read with Section 142 of the CGST Act, the Appellant is entitled to claim adjustment of the tax demand from the unutilized cenvat credit, lying to the credit as on June 30, 2017, which has not been carried forward to the GST regime.

Observed that, the commissioner has committed mistake of law while passing the Impugned Order and accordingly is liable to be set aside and allowed the present appeal.

Directed that, the adjudicating Authority to grant adjustment of the unutilized amount of Rs.14,31,166/- against the demand payable by the assessee. Further directed that, the appellant shall be entitled to consequential benefits in accordance with law.

FAQ :

Yes, the CESTAT has ruled that unutilised CENVAT credit lying as of June 30, 2017, can be carried forward and used for adjustments under the GST regime.

The ruling pertains to CENVAT credit that was unutilised and held as of June 30, 2017, which had not been carried forward to the GST regime.

Section 140 read with Section 142 of the Central Goods and Services Act (CGST Act), 2017, allows for the claim of adjustment of tax demand from unutilised CENVAT credit.

The CESTAT allowed their appeal, directing the adjustment of their unutilised CENVAT credit of Rs. 14,31,166/- against the tax demand payable by them.