2017 Taxo.online 14

W.P.(C) 7737-7738/2017 & C.M. No. 31945-31946/2017 (stay) dated 01.09.2017





Central Goods & Services Tax Act, 2017

140 & 164

CGST Rules


S. Muralidhar, Justice & Prathiba M. Singh, Justice

Partly in favour of assessee

High Court


Challenge to notification seeking reversal of credit utilised – Credit of additional duty under section 3(1) of Customs Tariff Act, 1975 – Petitioner challenged Rule 44A inserted, requiring reversal of 5/6th of CENVAT credit already utilised, only on imported gold dore bars – Also contended Rule 44A is ultra vires, not in conformity of Section 140 & Section 164 of CGST – Held: – Respondent directed not to take any coercive steps to recover the credit already availed by the Petitioners – Notice issued and accepted.

Represented by: –  

Petitioner: – Mr. Tarun Gulati, Advocate with Mr. Kishore Kunal, Mr. Pranav Bansal, Mr. Shashi Mathews, Advocates.  

Respondent: – Mr. Sanjeev Narula, CGSC with Mr. Abhishek Ghai, Advocate, Mr. Harpreet Singh, Sr. Standing Counsel with Ms. Namrata Bharti, Advocate. 

Order: – 

  1. Notice. Mr. Sanjeev Narula, the learned CGSC accepts notice for Union of India/Respondent No. 1. Mr. Harpreet Singh, learned Senior Standing. Counsel accepts notice for Central Board of Excise and Customs/Respondent No. 2. 
  2. It is pointed out by Mr. Tarun Gulati, the learned counsel for the Petitioners that the challenge in these petitions is inter alia to the impugned Notification dated 17th August 2017, whereby the Respondents have inserted Rule 44 A in the Central Goods and Services Rules, 2017 (CGS Rules) requiring reversal of 5/6th of the CENVAT Credit which had already accrued to the Petitioner on account of payment of additional duty of customs levied under Section 3(1) of the Customs Tariff Act, 1975 (“Countervailing Duty”/“CVD”) paid at the time of importation of gold dore bar. The said CVD was allowed to be carried forward in full as a transitional measure under Section 140 of the Central Goods and Services Tax Act, 2017 (‘CGST Act’). It also provided credit of the entire CVD paid on inputs held in stock and inputs contained in semi-finished or finished goods held in stock on 1st July 2017 on complying with certain conditions. The Petitioners state that they fulfilled all the conditions and the credit of the CVD paid on imported gold dore bars accrued to them. 
  3. However, it is stated that in exercise of rule-making powers under Section 164, the Respondent issued the impugned Notification on 17th August 2017 which inserted Rule 44 A on the CGS Rules and has sought to deny the credit already accrued to the Petitioner. Rule 44 A is challenged as being ultra vires Section 140 of the CGST Act as well as the rule making powers under Section 164 thereof. It is contended that the impugned Notification is in grossly discriminatory and unreasonable and has imposed the restrictions which are applicable only to imported gold dore bars. The contention is that the impugned Notification has singled out only imported gold dore bars resulting in imposition of a higher burden of tax on these goods as compared to other imported goods as well as compared to any similar domestic goods. It is submitted out that if the interim orders are not granted then the credit of CVD already availed and utilized for payment of tax on finished goods by the Petitioners would be electronically reversed and they would have to deposit cash. This would be severely prejudicial to them. 
  4. The Court is of the view that the Petitioners have made out a prima facie case for grant of interim relief in their favour. Further, the balance of convenience is in their favour for grant of interim relief. Accordingly, it is directed that till the next date of hearing, no coercive steps shall be taken by the Respondents to recover the credit already availed by the Petitioners. 
  5. Reply, if any, be filed within three weeks. Rejoinder thereto, if any, be filed before the next date of hearing. 
  6. List on 25th September, 2017. 
  7. Dasti under the signatures of the Court Master.


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