MAITHAN STEEL AND POWER LIMITED vs Satyajit Singh, Sanjay Bangartale

IN THE GOODS AND SERVICES TAX APPELLATE TRIBUNAL
KOLKATA BENCH
COURT NO. 1
Appeal No. APL/82/KLK/2026

MAITHAN STEEL AND POWER LIMITED
…..Appellant
Versus
SATYAJIT SINGH, COMMISSIONER KOLKATA SOUTH,

….Respondent
In appearance:
For the Appellant : Mr. Rahul Tangri, Ld. Advocate
& Mr. Vasudev A. Ld. Advocate

For the Respondent : Shri Sanjay Kumar, Superintendent, CGST

CORAM :

Shri Satya Gopal Chattopadhyay : Hon’ble Judicial Member
Shri Anindya Mitra : Hon’ble Technical Member

FINAL ORDER
Date of Hearing : 08.10.2026
Date of Order : 06.11.2026

Per Anindya Mitra (TM):
[1] This appeal has been filed u/s 112(1) of CGST Act,2017 by Maithan steel
and Power Limited (GSTIN19AADCM1188M1Z0), 1, Chittaranjan Road,
Salanpur, Paschim Bardhaman, West Bengal, 713357, against the order (Order
No: 90/BOL -GST /2024-25 Dated: 12.06.2024) of the First Appellate Authority.
i.e. Additional Commissioner, Additional Commissioner of CGST & CX Siliguri
Appeals Commissionerate, Siliguri. in respect of the period 01/07/2017 -
31/03/2018.
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[2] FACTS IN BRIEF
[2.1] Cenvat credit which has been transitioned by the taxpayer to GST is the
subject matter of the instant appeal.
[2.2] It emerges from the Show cause -cum -Demand Notice (C. No.
V(44)06/Adj/GST/MSPL/R-III/ASN_11/21-22 dated 20/12/2021) issued by
the Assistant Commissioner, Asansol Division that during the scrutiny of FORM
GST TRAN-1 which contains a declaration of the taxpayer under Section 140(1)
and Section 140(2) of CGST Act,2017, it was noticed that
i) The taxpayer carried forward Cenvat credit to the tune of
Rs.4,26,573/- & Rs. 10,00,088/- respectively in Column 5(a) Sl.
No. 1 of the TRAN-1 against Registration No.
AADCM1188MXM001 (Unit-I) & AADCM1188MXM002 (Unit-II)
under existing law, and

ii) The taxpayer declared to have taken transitional input tax
credit of unavailed CENVAT credit in respect of capital goods
under the existing law, amounting to Rs.9,34,793/- in FORM GST
TRAN-1 [Column 11 of Table 6(a)] against Registration No.
AADCM1188MXM001 (Unit-I) & AADCN1188MXM002 (Unit-II)
under existing law .(2.1 of SCN cum Demand Notice)
[3] Regarding (i) above, the Revenue alleged that in the monthly return ER-1
of June, 2017 for Unit-I Cenvat credit lying in the account credit at the end of
June,2017 was NIL and for Unit-II, Cenvat credit lying in the account credit at the
end of June,2017 in ER-1 was Rs.4,61,533. But the taxpayer carried forward an
amount of Rs.14,26,661 (Rs.4,26,573+Rs.10,00,088) as transitional credit of
Cenvat credit of eligible duties. According to the Revenue, prima facie the
taxpayer availed excess transitional ITC of Rs.9,65,128 (14,26,661-461,533).
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[4] Regarding (ii) above, the Revenue took the view that as per Section 140(2)
of CGST Act,2017, column 11 of Table 6(a) was to be used by a taxpayer to take
in his electronic credit ledger, amount of the unavailed CENVAT credit in respect
of capital goods, not carried forward in a return, furnished under the existing law
by him, for the period ending with the day immediately preceding the appointed
day. In the column 11 of Table 6(a) of the TRAN -1, the taxpayer claimed
unavailed CENVAT credit of Rs. 9,34,793/- and also uploaded a list of invoices.
Invoices issued prior to April,2017 involved Cenvat credit of only Rs.3,52,678/-.
[5] Assistant Commissioner, Asansol Division issued a Show cause -cum -
Demand Notice on 20/12/2021 containing the above findings. Therein he
observed “It appears inexplicable that 50% Cenvat credit on capital goods,
relating to invoices issued prior to April’2017, are now being claimed as
unavailed cenvat credit, which had not been availed in full during pre-GST regime
by the said taxable person which is beyond the conventional practice of trade…”(
para 2.4). It was also alleged that despite asking the taxpayer to produce “all the
relevant documents” for verification of the claim, he did not submit relevant
documents for verification of the transitional input tax credit so availed/taken in
Form GST Tran-1. The Show cause -cum -Demand Notice dated 20/12/2021
asked the taxpayer to show cause as to why “total transitional credit of input tax
of Rs.13.17.806 [Rs.9,65,128 availed in Column 11 of Table 5(a) and Rs.3,52,678
Column 11 of Table 6(a) of FORM TRAN -1] and subsequently utilised for
payment of output tax, should not be .demanded from them in terms of Section
73(1) of CGST Act,2017………”
[6] The Appellant filed a reply to the SCN wherein he submitted that the
Appellant had filed a revised ER-1 return manually on 14.07.2017 submitted
before and acknowledged by the jurisdictional office of the Superintendent, i.e.,
within the same month of filing the original ER-1 returns, on the basis of which
the Appellant has correctly availed the transitional credit of Rs. 14,26,661/-. As
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regards the demand on credit availed on capital goods, the Appellant submitted
that such credit was not availed in the erstwhile regime and therefore, in
accordance with Section 140(2) of the CGST Act, 2017, the Appellant has
correctly availed such credit of Rs. 3,52,678/-
[8] In the O-I-O( No.02/MSPL/R-III/GST/ASN-II/23-24 dated. 12.10.2023,
the Assistant Commissioner, CGST & Excise, Asansol-II division rejected his
submission of having filed revised ER-1 manually with the observation “the same
should be filed through the system which they failed to file in proper time.
Ignorance of law and procedure cannot be taken into consideration in a quasi-
judicial procedure.”( para 6.6)
[9] The taxpayer’s claim of not having availed Cenvat credit against invoices
issued prior to April, 2017 was also rejected because “the list of invoices
uploaded …had not been reflected in ER-1 return for the concerned period.”
[10] The taxpayer had objected to the validity of SCN as DRC-01 and DRC-01A
was not issued. The Adjudicating Authority rejected the objection on the ground
that Rule 142 of the CGST Rules was inserted by Notification No. 16/2019 -CT
dated 29.03.2019 while the issues involved in the present case pertain to 2016-
17 and 2017-18. Moreover, the use of ‘may’ in Rule 142(1A) of CGST Rules, 2017
makes it clear that it is not mandatory to issue DRC-01 and DRC-01A before the
service of notice.
[11] So, the Assistant Commissioner, CGST & Excise, Asansol-II division
confirmed demand of tax to the tune of Rs. 13,17,806 alongwith interest and
penalty.
[12] Aggrieved by the O-I-O, an appeal was filed by the appellant on 02.02.2024 .
The Appellate Authority held as under :-
“ 5.5 I find that the appellant has submitted their revised returns ER-1
returns manually on14.07.2017 to the Superintendent, CGST,
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Raghunathpur Range, Purulia for Unit I and the Superintendent, CGST,
Range-III, Asansol-Il Division, Asansol for Unit II. The revised ER-1
return filed manually with the Department indicated eligible ITC of
Rs.1,4,26,661/-, cumulatively for both Units I & II.
5.6 I find that adjudicating authority has observed that eligible credit
balance as per ER-1 for June 2077 was Rs 451,533/ at the time of
initiation of scrutiny of TRAN-1 . I find that there is no dispute regarding
the above mentioned amount. I find that though the appellant filed
revised return manually but same was not getting reflected in the
system. I also observe that appellant has failed to indicate which of the
provisions enabled them to file revised return and procedure thereof. I
find that adjudicating authority has rightly rejected the excess
availment of transitional credit.
5.7 Further as far as credit of amount of Rs. 3,52,678/ - in table 6a of
TRAN-L is concerned ,I find that demand of same is based on suspicion
that the credit for the same has already been taken in the erstwhile
regime in the first quarter of the subsequent financial year, i.e., 2017-
18. However, there is no corroboration for the same in the SCN. I find
force in the arguments forwarded by appellant and also from the ER-1
reconciliation submitted by them that rest 50% of the credit was not
availed by them in first quarter of 2017-18.”
[13] So the First Appellate Authority gave the taxpayer partial relief by setting
aside the demand in respect of availment and utilisation of transitional input tax
credit in respect of capital goods and utilization of transitional input tax credit
in respect of capital goods amounting to Rs. 3,52,678 in Form GST TRAN-I
through Column 11 of table 6(a). Hence the taxpayer has filed this appeal u/s
112(3) of CGST Act,2017.
[14] GROUNDS OF APPEAL IN GSTAT
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SYNOPSIS OF PRELIMINARY GROUNDS
A. The Impugned Order is non-speaking and has been issued on the same lines
as the underlying SCN without considering the submission of the Appellant.
B. The entire proceedings should be dropped on the sole ground that the
underlying SCN has not been issued in accordance with the provisions of
Rule 142 of the CGST Rules and thus, the same is liable to be quashed.
SUBMISSIONS ON MERITS
C. Provisions of the CGST Act cannot be invoked to demand and recover
transitional credit.
D. The appellant has correctly taken transitional credit vide from GST Tran-1 in
accordance with the provisions of Section 140 of the CGST Act.
E. Procedural infirmities cannot be a ground to deny a substantial benefit.
F. Denial of credit to the appellant in the present case is violative of Article 265
and Article 300A of the Constitution of India.
G. Interest is not chargeable and penalty is not imposable.
The major grounds in the appeal have also been elaborated as follows
I) It is a settled position of law that transitional credit availed through
TRAN-1 cannot be denied solely for the reason that the assessees
have filed the returns in the erstwhile regime manually and not
electronically. Reliance is placed on the decision of the Hon'ble
Bombay High Court in the case of M/s. Johnson Matthey Chemicals
India Pvt. Ltd. v. Union of India -2025 (7) TMI 627 -- and of the
Hon’ble Gujarat High Court in Jekson Vision Private Limited v.
Union of India -- 2022 (9) TMI 1670 - and of the Hon’ble Calcutta
High Court in M/s. Paharpur Cooling Towers Ltd. v. Union of India &
Ors. - 2019 (12) TMI 462
II) Hon'ble High Court of Punjab & Haryana in the case of Adfert
Technologies Private Limited v. Union of India - 2020 (32)
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G.S.T.L 726 (P&H) held that transitional credit being a vested right
ought not to be denied merely due to procedural lapses.
III) Therefore, the Appellant has rightly availed the transitional credit on
the basis of revised ER-1 returns filed manually. Therefore, the
impugned Order is liable to be set aside .
IV) Without prejudice to the above submission, it is submitted that the
provisions of the GST law cannot be invoked to demand transitional
credit. This is because, as per Section 2(62) and 2(63) of the CGST
Act, 2017 "input tax credit" means credit of IGST, CGST, SGST, UTGST
only and does not include transitional credit within its ambit.
Reliance is placed on the decision of Mahindra & Mahindra, 2022
(10) TMI 212 - Bombay High Court . Such dispute ought to have
been raised in the erstwhile regime. Reliance is placed on the case of
Usha Martin Ltd. v. Additional Commissioner, CGST & Excise &
Ors. - 2022 (11) TМІ 1266 . This is also in light of the provisions of
Section 174(2)(e) of the CGST Act, 2017, which protect any
adjudication proceedings which can be initiated under the erstwhile
law for recovery of arrears under the erstwhile law.
V) Without prejudice, eligibility to avail Cenvat credit of the erstwhile
regime cannot be disputed by way of proceedings under Section 73
of the CGST Act, 2017. Section 174(2)(e) of the CGST Act, 2017
ensures that the repeal of erstwhile laws does not invalidate pending
or future legal action, and the same can be constituted as if such Acts
have not been amended or repealed. Therefore, the Department
ought to have issued a notice under Section 11A of the Central Excise
Act, 1944 for disputing the eligibility of erstwhile Cenvat credit.
Reliance is placed on the decision of Hon'ble Jharkhand High Court
in the case of M/s. Usha Martin Limited v. Additional
Commissioner, Central GST & Excise & Ors. – 2022 (11) TMI
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1266 – Jharkhand High Court, wherein it was held so. Recently, in an
analogous situation, the Hon'ble GSTAT Thane, in the case of Tata
Unistore v. Commissioner, CGST & Ex., Navi Mumbai
Commissionerate - 2026 (8) TMI 139 – GSTAT Thane, held that
CGST authorities does not have the power to reassess the
correctness of CENVAT credit availed under the erstwhile laws, and
the proceedings ought to be instituted under the erstwhile law as
per the savings clause. The said decision is squarely applicable to the
Appellant.

[15] CROSS OBJECTION FILED BY THE REVENUE
In its rebuttal of the challenge to the jurisdiction, the Revenue
contended as under :-

I) The Appellant's contention that Section 73 cannot be invoked for
recovery of wrongly availed transitional credit is legally untenable.
Rule 121 of the CGST Rules specifically provides that the amount
credited under the transitional-credit mechanism may be verified and
proceedings under Section 73 or Section 74 may be initiated in
respect of credit wrongly availed. Thus, the statutory scheme
expressly contemplates recovery of wrongly availed transitional
credit through proceedings under Section 73/74. The Appellant's
attempt to distinguish "transitional credit" from "input tax credit" for
the purpose of defeating Section 73 is overly technical and ignores the
specific transitional machinery created under Chapter XX of the CGST
Act read with the Rules. Section 140 creates the entitlement to
transitional credit subject to fulfilment of prescribed conditions. It
does not create an unconditional or indefeasible right to every
amount declared by a taxpayer in TRAN-1. The Appellant's reliance
upon Section 2(62) and Section 2(63) is misplaced because those
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definitions cannot be read so as to render Rule 121 completely
ineffective. The decision in Commercial Steel Engineering
Corporation relied upon by the Appellant is distinguishable on its
facts and cannot be treated as laying down a universal proposition
that no wrongly transitioned credit can ever be recovered under the
GST law. The CBIC Circular relied upon by the Appellant regarding
refund of transitional credit deals with the computation of "Net ITC"
for refund purposes and does not decide the question of recovery of
wrongly transitioned credit under Rule 121. The Appellant's
contention that the dispute exclusively pertains to the erstwhile
Central Excise regime is also incorrect. The present proceedings
concern the wrongful transition and availment of credit in the GST
regime, and therefore the GST authorities are competent to verify the
credit transitioned through TRAN-1. The decision in M/s Usha Martin
Ltd. relied upon by the Appellant is distinguishable because the facts
and legal issue involved therein were different from the present
dispute concerning the statutory verification of transitional credit.
The Appellant's challenge to the vires of Rule 121 is itself
misconceived. Rule 121 a machinery provision framed to give effect to
the transitional-credit provisions and cannot be declared inapplicable
merely because the Appellant disputes its operation. The power to
make rules under Section 164 is sufficiently wide to prescribe the
manner in which transitional credit is to be verified and consequential
proceedings are to be initiated. The Appellant's reliance on the
general principle that rules cannot override parent statute is not
disputed. However, Rule 121 does not override Section 140.

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[12] It has been held by the Hon’ble Supreme Court in the judgement
delivered on July, 20,2026 in THE DISTRICT COLLECTOR Vs P. GUNAVATHI
& ORS ( arising out of S.L.P( Civil) No. 4702/2024)
“13. It is well settled that in a legal proceeding whenever a
jurisdictional issue arises for consideration, the authorities cannot
proceed further without addressing and determining the same.”
Hence we shall first deal with the jurisdictional issue.
[17] JURISDICTION OF THE CGST AUTHORITIES
17.1 One of the grounds of the present appeal is that “eligibility to
avail Cenvat credit of the erstwhile regime cannot be disputed by
way of proceedings under Section 73 of the CGST Act, 2017.” So at
the outset, we shall deal with this challenge to the jurisdiction of the
CGST authorities. In Kiran Singh v. Chaman Paswan, (1955) 1 SCR
117 : AIR 1954 SC 340 , the Hon’ble Supreme Court declared;
"It is a fundamental principle well established that a decree
passed by a court without jurisdiction is a nullity and that its
invalidity could be set up whenever and it is sought to be enforced
or relied upon, even at the stage of execution and even in
collateral proceedings. A defect of jurisdiction strikes at the very
authority of the court to pass any decree, and such a defect
cannot be cured even by consent of parties ."
17.2 In Harshad Chiman Lal Modi vs DLF Universal (AIR 2005
SC 4446) , the Hon’ble Supreme Court observed :
“The jurisdiction of a court may be classified into several
categories. The important categories are (i) Territorial or local
jurisdiction; (ii) Pecuniary jurisdiction; and (iii) Jurisdiction over
the subject matter. So far as territorial and pecuniary
jurisdictions are concerned, objection to such jurisdiction has to
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be taken at the earliest possible opportunity and in any case at or
before settlement of issues. The law is well settled on the point
that if such objection is not taken at the earliest, it cannot be
allowed to be taken at a subsequent stage. Jurisdiction as to
subject matter, however, is totally distinct and stands on a
different footing. Where a court has no jurisdiction over the
subject matter of the suit by reason of any limitation imposed by
statute, charter or commission, it cannot take up the cause or
matter. An order passed by a court having no jurisdiction is a
nullity.” (italics added)
[18] Having discussed the critical importance of the issue of jurisdiction
over the subject matter , we now turn to the judgement of the Hon’ble
Jharkhand High Court in M/s Usha Martin Limited vs Additional
Commissioner, Central GST and Excise (2022) 145 taxmann.com224(
Jharkhand), which has been so strongly relied upon by the appellant. The
Hon’ble High Court dealt with the question of legality and jurisdiction of a
CGST officer to initiate a proceeding under Section 73 (1) of the C.G.S.T. Act
for transition of CENVAT Credit which was allegedly inadmissible under
Central Excise Act and Finance Act read with Cenvat Credit Rules.
[19] The Hon’ble Division Bench held :
“ 15. From the conspectus of facts borne from record two questions
emerge for answer in the present writ petition.
(i), whether the initiation of proceedings under Section 73 (1) of the
C.G.S.T. Act in the facts and circumstances of the case was within
jurisdiction of the Respondent No.1 or not;
(ii) whether in view of Section 174 of the C.G.S.T. Act, such a proceeding
for availment of alleged inadmissible CENVAT Credit could have been
initiated under C.E.A. and Finance Act read with C.C.R. or not. For
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proper appreciation the provision of Section 140 (1) and Section 174 of
the C.G.S.T. Act are quoted hereunder
………………………………………………………….

18. The enumerated conditions under which the registered person shall
not be entitled to avail of the credit of input tax are not one which are
applicable to the case of the present petitioner. The show cause notice
under which the instant adjudication proceedings were initiated is
worded allege similar contraventions under the CEA, Finance Act, 1994
and the CCR as the previous show cause notices issued under the existing
law against the petitioner relating to contravention of the C.E.A.,
Finance Act and C.C.R.. The adjudicating authority does not hold that
the transition of CENVAT Credit under Section 140 of the C.G.S.T. Act by
the petitioner and relating to the period just before the appointed date
i.e. 1st July, 2017 are not one which are inadmissible to be credited in
terms of section 16 (2) of the C.G.S.T. Act. The Show cause notice itself
alleges contravention of the C.E.A., Finance Act, 1994, read with C.C.R.,
2004. As such, sub clause (i) of proviso to section 140 does not apply to
the case of the petitioner at hand. It is neither the allegation against the
petitioner that he had not furnished his returns required under the
existing law for the period of six months immediately preceding the
appointed date as per clause (ii) to the proviso to Section 140. In
substance, the contraventions which have been alleged and the
proceedings which have been initiated under Section 73 (1) of the
C.G.S.T. Act are in relation to violation of the C.E.A. and Finance Act read
with C.C.R. The gist of the imputation is that the petitioner could not
claim the CENVAT credit in lieu of invoices raised by its Bokna mines as
both of them were independent entities. Similar was the imputation in
respect of the previous show cause notices issued under the existing law
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which are pending adjudication before the learned CESTAT or the
Commissioner (Appeals) for different periods and in some of which the
petitioner has already got a stay by the learned CESTAT. Whether the
CENVAT credit under the existing law were admissible to be availed and
transitioned by the petitioner was not an issue lying within the
jurisdiction of the C.G.S.T authorities to be proceeded against and
determined under the relevant provisions of Section 73 of the C.G.S.T.
Act which provides as under:
“Under Section 73 of the C.G.S.T. Act a proper Officer may require a
registered person to show cause in case it is found that he has not paid
any tax or short paid or erroneously refunded or where input tax credit
has been wrongly availed or utilized for any reason, other than the
reason of fraud or any willful misstatement or suppression of fact to
evade tax (such contraventions are covered by Section 74 of the C.G.S.T.
Act) asking him to explain as to why he should not pay the amount
specified in the notice along with interest and under Section 50 and
penalty thereupon”.
A perusal of the provisions of Section 73 of the CGST Act makes it clear
that such a proceeding can be initiated for non-payment of any tax or
short payment of such tax or for erroneous refund of such tax or for
wrongly availing or utilizing the input tax credit which are available
under the C.G.S.T. Act. Section 73 does not speak of CENVAT Credit as
C.G.S.T. Act does not provide for CENVAT Credit rather the term has been
subsumed in the expression input tax credit both relating to the supply
of good or services. The assumption of jurisdiction by Respondent No. 1
to determine whether the CENVAT Credit was admissible under the
existing law by invoking provisions of Section 73 of the C.G.S.T. Act was
therefore not proper in the eye of law.
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19. This leads us to the next question whether a registered person could
transition inadmissible CENVAT Credit of the existing regime to the
G.S.T. regime under Section 140 of the C.G.S.T. Act without any check or
proceeding against him. We have to then advert to Section 174 of the
C.G.S.T. Act to find the answer. Section 174 relates to repeal and saving
and has been engrafted under the chapter XXI relating to Miscellaneous
Provisions………..
20. ……….as is obvious, the new regime had to make provisions for the
transactions which remained inchoate under the existing law. It is also
a well settled legal position that on account of the new legislation the
implementation of the G.S.T. regime could not be left to a realm of
uncertainty. For a violation under the existing law, parallel proceedings
could not be conducted under the existing law at the behest of
jurisdictional officer and at the same time under the new law at the
instance of another jurisdictional officer of the G.S.T. Act. It is in this
conceptual background that the purport and construction of the repeal
and saving provisions under Section 174 of the C.G.S.T. Act is to be
understood. The existing Act, such as the Central Excise Act, 1944, the
Medicinal and Toilet Preparations (Excise Duties) Act, 1955, Additional
Duties of Excise (Goods of Special Importance Act, 1957), The Additional
Duties of Excise (Textile and Textile Articles Act, 1978 and the Central
Excise Tariff Act, 1985 were repealed under Subsection (1) of Section
174. However, the legislature provided that the repeal of the said Acts
and the amendment of the Finance Act, 1994 to the extent as mentioned
in sub section (1) or section 173 shall not
(a) revive anything not in force or existing at the time of such
amendment or repeal; or
(b) affect the previous operation of amended Act or repealed Acts
or and orders or anything duly done or suffered thereunder; or
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(c) affect any right, privilege, obligation or liability acquired,
accrued or incurred under the amended Act or repealed Acts or
orders under such repealed or amended Acts.

Sub clause (e) of subsection 2 of Section 174 is relevant for purposes of
the present case which are again reproduced hereunder:
“(e) affect any investigation, inquiry, verification (including scrutiny
and audit), assessment proceedings, adjudication and any other legal
proceedings or recovery of arrears or remedy in respect of any such
duty, tax, surcharge, penalty, fine, interest, right, privilege, obligation,
liability, forfeiture or punishment, as aforesaid, and any such
investigation, inquiry, verification (including scrutiny and audit),
assessment proceedings, adjudication and other legal proceedings or
recovery of arrears or remedy may be instituted, continued or enforced,
and any such tax, surcharge, penalty, fine, interest, forfeiture or
punishment may be levied or imposed as if these Acts had not been so
amended or repealed;”
21. It provides that the repeal of the existing laws shall not affect any
investigation, inquiry, verification (including Scrutiny and audit),
assessment proceedings, adjudication and any other legal proceedings
or recovery of arrears or remedy in respect of any such duty, tax,
surcharge, penalty, fine , interest, right, privilege, obligation, liability,
forfeiture or punishment as aforesaid and any such investigation,
inquiry, verification (including scrutiny and audit), assessment
proceedings, adjudication and other legal proceedings or recovery of
arrears or remedy may be instituted, continued or enforced, and any
such tax, surcharge, penalty, fine, interest, forfeiture or punishment may
be levied or imposed as if these Acts had not been so amended or
repealed.
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In substance, investigations, inquiry, verification, assessment
proceedings, adjudication proceedings, legal proceedings which were
for recovery of arrears or remedy in respect of any such duty or tax etc.,
which were pending or such other legal proceedings or inchoate rights
which were in existence on the appointed day, for them legal
proceedings may be instituted, continued or enforced as if these Acts
had not been so amended or repealed. To decide whether any particular
transaction is affected by the repeal of an Act, it is necessary to
ascertain whether the transaction in question was completed when the
Act was repealed. The present repeal and saving clause expressly
engrafts that notwithstanding the repealing Act the repeal shall not
affect any right or liability acquired accrued or incurred.
…………
22. Therefore, it is clear that the repeal of the existing laws upon coming
of the G.S.T. law regime did not leave a vacuum as to past transactions
which were not closed. The repeal and saving clause (e) under Section
174(1) of the C.G.S.T. Act allowed such legal proceedings to be instituted
in respect of inchoate rights except rights under transactions which
were past and closed.
Petitioners also admit that proceedings for availing CENVAT Credit
which were allegedly inadmissible under the C.E.A., Finance Act, read
with C.C.R., 2004 could have been initiated under the existing laws. It is
also not in dispute that in respect of previous proceedings for such
contravention the cases have been kept in call book and in some of them
the learned CESTAT has stayed the recovery of the tax. The duty of the
constitutional courts is to interpret the law and also to ensure that there
is certainty about the law not only in the minds of the law enforcement
agencies but also in the common person as to where he stands in the eye
of law. If proceedings for transition of CENVAT Credit alleged to be
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inadmissible is permitted to be carried under the C.G.S.T. Act, it may lead
to uncertainty not only in the minds of the ordinary citizen but also in
the minds of the Tax authorities. In some cases, a jurisdictional proper
officer under the C.G.S.T. Act may initiate proceedings under the
provisions of the C.G.S.T Act for such contravention. In other cases, the
competent jurisdictional officer may initiate proceedings under the
existing law that is the C.E.A. and Finance Act for the same
contravention in view of the repeal and saving provisions under Section
174 of the C.G.S.T. Act. Such a course cannot be countenanced in law. As
such, we are of the considered view that the initiation of proceedings by
respondent no. 1 under section 73 (1) of the C.G.S.T. Act, 2017 for alleged
contravention of the C.E.A. and Finance Act, read with C.C.R. against the
petitioner by filing TRAN 1 in terms of Section 140 of the C.G.S.T. Act for
transition of CENVET Credit as being inadmissible under the existing
law was beyond his jurisdiction. Consequently, the Order in Original
dated 30th March, 2022 passed by the respondent no. 1 being without
jurisdiction cannot be sustained in the eye of law. The impugned
adjudication proceedings and the order in original dated 30th March,
2022 are accordingly quashed.

23. However, respondent authorities are at liberty to initiate
proceedings under the provisions of the existing law, i.e. C.E.A, 1944,
Finance Act, 1994 read with C.C.R, 2004 against the petitioner for the
relevant tax period in accordance with law.”

[20] Next, we shall discuss the judgement of the Hon’ble Division Bench
of the Calcutta High Court in Kunjal Synergies Private Limited vs
Assistant Commissioner of CGST &CX (MAT 2333 of 2023 ). The
appellants were registered as an assessee under the earlier service tax
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regime as well as the Central Excise regime and they migrated to the GST
regime with effect from 1st July, 2017 and were allowed to file TRAN 1
Form for carrying forward of closing balance of unavailed CENVAT credit
of the erstwhile regime to the new GST regime and the same was filed by
the appellants on 9th November, 2017. A division bench of the Hon’ble
Calcutta High Court posed the question:
“ 8. the legal question to be answered in the instant case is whether the show-
cause notice dated 18th September, 2023 issued under Section 73 of the CGST
Act was within the jurisdiction of the authority alleging that there is an
irregularity in the transitional credit of CGST availed under TRAN 1.
“9. We need not labour much to find an answer to the above-mentioned query
as identical issue was decided by the Hon’ble Division Bench of the High
Court of Jharkhand in the case of Usha Martin Limited vs. Additional
Commissioner, Central GST and Excise, Jamshedpur and Ors. reported in
[2024] 124GSTR 396 (Jha.) : MANU/JH/1261/2022. In paragraph 9 of the
said judgment, the contention raised by the Department has been noted and
in fact, the learned Senior Standing Counsel appearing for the
respondents/Department has made identical submission before us to sustain
the impugned show-cause notice.’’
[21] After referring to the judgement of the Hon’ble Jharkhand High
Court ( supra ), the Division Bench of Calcutta High Court held:
“15. Thus, while answering the question, it has to be considered whether
the initiation of proceedings by the respondent no.1 therein under
Section 73 of the CGST Act for alleged contravention of the Central
Excise Act and Finance Act read with CENVAT Credit Rules against the
petitioners therein by filing TRAN 1 in terms of Section 140 of the CGST
Act for transition of CENVAT credit as being inadmissible under the
existing law or beyond his jurisdiction. Accordingly, the adjudication
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proceeding, which was impugned in the said writ petition, was quashed.
However, the respondent authorities were granted liberty to initiate
proceedings under the provisions of the existing law i.e. Central Excise
Act, 1944, Finance Act, 1944 read with CENVAT Credit Rules, 2004
against the petitioner therein for the relevant tax period in accordance
with law.
18. In the light of the above discussions, we have no hesitation to hold
that the impugned show-cause notice is without jurisdiction. In the
result, the appeal is allowed along with the connected application (IA
No. CAN 1 of 2023). The order passed by the learned Single Bench is set
aside. Consequently, the writ petition is allowed and the impugned
show-cause notice is quashed.
19. However, the respondent authorities are at liberty to initiate
proceeding under the provisions of the then existing law i.e. the Finance
Act, 1944 as amended from time to time read with CENVAT Credit Rules,
2004 against the appellants for the relevant tax period. However, such
proceedings should be in accordance with law.”
[22] DECISION
[22.1] The order impugned in the appeal before this Tribunal is in respect
of CENVAT credit which has been transitioned by the appellant in TRAN 1.
The proceedings for recovery of the allegedly inadmissible Cenvat credit
was initiated under section 73 of CGST Act,2017.
[22.2] Except a bald assertion in its cross objection “The decision in M/s
Usha Martin Ltd. relied upon by the Appellant is distinguishable because
the facts and legal issue involved therein were different from the present
dispute concerning the statutory verification of transitional credit” , the
Revenue has not demonstrated how the “legal issue involved therein were
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different from the present dispute concerning the statutory verification of
transitional credit”( Cross Objection B.9 )
[22.3] In our considered view, the legal issues involved in the instant
appeal are squarely covered by the judgement of the Hon’ble Jharkhand
High Court in M/s Usha Martin Limited vs Additional Commissioner,
Central GST and Excise( 2022) 145 taxmann.com224( Jharkhand) and
the binding decision of the Hon’ble Calcutta High Court in Kunjal
Synergies Private Limited vs Assistant Commissioner of CGST &CX(
MAT 2333 of 2023) . Hence, the proceedings under the C.G.S.T. Act for
recovery of allegedly inadmissible Cenvat credit are not legally sustainable
due to the inherent lack of jurisdiction of the CGST authorities.
[22.4] We therefore set aside the impugned Appellate order and allow the
appeal filed by the Appellant taxpayer. We make no order as to cost.
The Order is pronounced in the open court in presence of the parties. The
same shall be uploaded at once and certified copies of the order be given
to the parties.
Digitally signed by SATYA
GOPAL CHATTOPADHYAY
Date: 2026.11.06 13:13:01
+05'30'
SATYA GOPAL
CHATTOPADHYAY



S.G Chattopadhyay
Judicial Member

Digitally signed by ANINDYA
MITRA
Date: 2026.11.06 13:28:36 +05'30'
ANINDYA MITRA


Anindya Mitra
Technical Member



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