IMPORTANT POINT
The eligibility to obtain cenvat credit is based on whether the matter is reflected in the return filed as per the existing law in the prescribed manner, and not on when the return was filed or whether the duty or tax for which cenvat credit is claimed had been deposited prior to the appointed date.

JUDGMENT

Sanjib Banerjee, CJ. - Revenue questions the propriety of an order passed by the Commissioner of Appeals to the extent that the appellate authority has declined the Revenue's demand pertaining to a sum of Rs. 2,18,75,232/- for which undue credit, according to the Revenue, was obtained by the respondent assessee.

2. The matter pertains to the period of transition in 2017 to the goods and services tax regime. The substance of the dispute relates to the payment by the assessee of the service tax component pertaining to manpower and the like services received by the assessee partly for the quarter ending March 31, 2017 and partly for the quarter ending June 30, 2017 long after the appointed date of July 1, 2017 and claiming cenvat credit therefor.

3. For possible financial constraints on the part of the assessee - and it is unnecessary to go into the reason for the delay - the service tax payment on account of the relevant manpower and like services obtained by the assessee during the aforesaid periods was made on or about October 23, 2017. The service tax due was tendered by the assessee under the applicable reverse charge mechanism, whereunder it is the service recipient, rather than the service provider, which is obliged to deposit the tax directly. There is no dispute as to the receipt of such payment by the Revenue.

4. The issue that arose and which culminated in a later show-cause notice of July 31, 2019 issued by the Revenue was as to the entitlement of the assessee to claim cenvat credit on the quantum of Rs. 2,18,75,232/- paid by way of service tax, but which was paid long after the appointed date of July 1, 2017 when the goods and services tax regime came to be embraced. The short ground raised by the Revenue in the show-cause notice in such regard was that since such payment of service tax was not made prior to the appointed date and could not have been reflected in the electronic ledger account maintained by the assessee as on the appointed date, in terms of Section 140 of the Central Goods and Services Tax Act, 2017, the assessee was not entitled to obtain any credit therefor.

5. There were other issues covered in the said show-cause notice of July 31, 2019 and these other aspects have been adjudicated upon, but they are not the subject-matter of the present proceedings. The assessee has accepted the adverse findings pertaining to such other aspects and there is no challenge thereto. The Revenue has only questioned the propriety of the assessee being allowed credit for the aforesaid sum of about Rs. 2.18 crores and Article 226 of the Constitution has been invoked in the absence of the Tribunal being constituted under the Act of 2017. To repeat, the challenge to the appellate order of January 8, 2021 which is assailed in the present proceedings is confined to the assessee availing cenvat credit to the extent of the aforesaid amount of Rs. 2,18,75,232/- and the appellate order permitting the same.

6. The Revenue first refers to Section 140 of the Act of 2017. Sub-section (1) from the relevant provision has been placed:

'140. Transitional arrangements for input tax credit. - (1) A registered person, other than a person opting to pay tax under section 10, shall be entitled to take, in his electronic credit ledger, the amount of CENVAT credit of eligible duties carried forward in the return relating to the period ending with the day immediately preceding the appointed day, furnished by him under the existing law in such manner as may be prescribed:

Provided that the registered person shall not be allowed to take credit in the following circumstances, namely:-

(i) where the said amount of credit is not admissible as input tax credit under this Act; or

(ii) where he has not furnished all the returns required under the existing law for the period of six months immediately preceding the appointed date; or

(iii) where the said amount of credit relates to goods manufactured and cleared under such exemption notifications as are not