ORDER

The petitioner is a dealer under The Central Goods and Services Act, 2017 (CGST Act) and assessee on the file of the respondent officer. It challenges an order in original dated 18.11.2020 that has been passed contrary to the settled judicial principles and the law laid down by the Hon'ble Supreme Court in several matters including in the case of Commissioner of Central Excise v. Bombay Dyeing Manufacturing Company1.

2. The petitioner had been an assessee under the erstwhile Central Excise regime as well as Finance Act, 1994 under which service tax is levied and migrated into the regime of GST on and from 01.07.2017. Tran-1 had been filed on 10.07.2017 and 11.08.2017 bringing forward the unutilized credit as transitional credit. Admittedly and the counter filed by the respondent does not dispute this position, though the credit had been transitioned, it had not found place in the Electronic Credit Ledger (ECL). 1 (2007) 215 ELT3

3. The ECL is an electronic document which reflects the credit available to a particular assessee and this document falls within the domain of the GST department. There is no explanation for why the transitioned credit did not find place in the ECL. Be that as it may and seeing as the credit was unavailable in the ECL, the petitioner reflected the same as available ITC in its retention and in Form GSTR-3B return.

4. In my view, the petitioner cannot be faulted for the same, since transition has been sought in line with the procedures set out under the Act and Rules. The flaw had been occasioned in the maintenance of the ECL by the revenue. Thus, it was quite justified for the petitioner to ensure, by all legitimate methods possible, that the credit available was presumed for utilization, as and when required. After having reflected the credit in the GSTR-3B, the petitioner realized that it had, without explanation, come to be reflected in the ECL. Thus, the credit had been reversed on 20.07.2018 without set off / utilization against out put tax liability at any point of time. These are the admitted facts.

5. In the mean while, the audit wing of the GST department upon noticing that there had been credit in the GST 3B that had been later reversed, adopted the view that the petitioner would be liable for interest at 24%, irrespective of fact that such credit had not been utilized. The same position obtained in regard to Education Cess and Higher Education Cess as well in respect of which the facts are identical. Based on the audit objection, a show cause notice was issued on 26.07.2019 proposing to recover the interest invoking section 50(3) of the CGST Act and to deny the CENVAT credit on inputs lying in stock.

6. As far as the second limb of the disallowance relating to slow moving stock, the petitioner does not pursue the challenge in this writ petition and seeks liberty to challenge the same by way of statutory appeal. Seeing as this writ petition has been instituted on 11.12.2020 within 30 days from the date of receipt of the impugned order, there is no bar qua limitation and hence, the petitioner is permitted to challenge that portion of the impugned order within a period of 30 days from today without reference to the limitation, but subject to compliance with all other statutory conditions.

7. As regards invocation of Section 50(3) with regard to ITC, Education Cess and Higher Educational Cess, I am of the view that the impugned order is liable to be reversed. Section 50 (3) of CGST Act reads thus:

50. Interest on delayed payment of tax (1) Every person who is liable to pay tax in accordance with the provisions of this Act or the rules made thereunder, but fails to pay the tax or any part thereof to the Government within the period prescribed, shall for the period for which the tax or any part thereof remains unpaid, pay, on his own, interest at such rate, not exceeding eighteen per cent, as may be notified by the Government on the recommendations of the Council:

(2) The interest under sub-section (