The Hon’ble High Court of Madras vide its order dated 20.06.2022 in the matter of TVL. Rashtriya Ispat Nigam Limited Vs. The Deputy Commissioner (CT) III Chennai, The Assistant Commissioner of State Tax, Chennai in W.P.No.22241 of 2019 & W.M.P.No.21522 & 21524 of 2019, allowed the refund of unutilized credit pertaining to CST when there is a bar to carry forward the same in TRAN -1 during transition to GST regime.

Facts: –

• The petitioner was registered as a dealer under the provisions of the Tamil Nadu Value Added Tax Act, 2006 (in short ‘TNVAT Act’) and Central Sales Tax Act, 1956 (‘CST Act’) and was being regularly assessed under both TNVAT & CST Act
• That in August 2016, an audit was conducted by the audit wing of Enforcement Wing of the Commercial Tax Department, and when the petitioner was unable to substantiate its claim of concessional levy, as claimed, it deposited an amount of Rs. 40,00,000/- towards non-availability of portion of C- Forms as on date of audit.
• However, when the order of assessment was passed on 30.12.2016, there was an excess of Rs. 38,91,410/- as the petitioner was in position to provide the necessary statutory declaration Forms.
• That on 30.06.2017 an amount of Rs.11,94,312/- was lying as a credit balance and rest of the amount of excess was adjusted.  Thereafter on introduction of Tamil Nadu Goods and Service Tax Act, 2017, the petitioner became eligible to the credit of the said amount of Rs. 11,94,312/-.
• Further Section 140 of the TNGST Act, provides for refund of any credit pertaining to CST, however places a restriction for availment of such credit. Therefore, the petitioner made request for the refund of the said amount of Rs. 11,94,312/- before the Deputy Commissioner, however the same was not acted upon by the respondents.
• The petitioner being aware that it could not claim transition of the said amount under Section 140(1), therefore initially did not seek transition in TRAN -1. However, later on apprehending that it would be denied the refund claim, filed a TRAN – 1 claiming the amount of refund as credit carried forward within the extended time granted for filing TRAN – 1 till 27.12.2017.
• Thereafter, the impugned order came to be passed by the respondents, which was initiated through an issuance of Show cause notice proposing to reject the transition of ITC, confirming the proposal and holding that the petitioner is liable to penalty for wrongful transition of the ineligible credit, and the interest was also levied from 27.12.2017 till the date of order. The petitioner being aggrieved filing the present Writ Petition. 

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