Laxmi Organic Industries Ltd. Thr. Its Authorized Representative vs The Union Of India And Ors

CNR No : HCBM010285592022

2026:BHC-AS:45063-DB
WP-5508-2024.doc

IN THE HIGH COURT OF JUDICATURE AT BOMBAY
CIVIL APPELLATE JURISDICTION
WRIT PETITION NO. 5508 OF 2024
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Laxmi Organic Industries Ltd.
A company incorporated under
the Companies Act, 1956
having its office at
A-22/2 & 3,
MIDC Industrial Area, Mahad,
MIDC Industrial Area, Mahad,
MIDC, Raigad, Mumbai – 402 309.
Through its
Authorized Representative
Versus
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1. The Union of India
Through the Revenue
Secretary
Ministry of Finance
Department of Revenue
North Block
New Delhi – 110 001.
2. Central Board
of Indirect Taxes and Customs
Ministry of Finance,
North Block
New Delhi – 110 001.
3. The State of Maharashtra
Through the Secretary
Ministry of Finance
Department of Revenue
Mantralaya,
Mumbai – 400 001.
4. Goods and Service Tax Council
GST Council Secretariat
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Digitally signed
by RUPALI
RAJESH
WAKODIKAR
Date:
2026.11.05
10:35:06 +0530
RUPALI
RAJESH
WAKODIKAR
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th
5 Floor, Tower II,
Jeevan Bharti Building,
Janpath Road, Connaught Place,
New Delhi – 110 001.
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).....Respondents
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Mr. Bharat Raichandani a/w Mr. Mahesh Raichandani, Mr. Bhagrati
Sahu i/b UBR Legal Advocates, for the Petitioners.
5. Asst./Dy. Commissioner
of Central Excise
Mahad Division,
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1 floor, C.G.O. Complex
CBD Belapur,
Navi Mumbai – 400 614.
6. Addl.Commissioner, C.G.S.T
Central Excise, Raigad,
Commissionerate,
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4 Floor, Kendriya Utpad
Shulk Bhawan, Plot No.1,
Sector – 17, Khandeshwar,
New Panvel, Raigad – 410 206.
7. Commissioner of Central
Tax (Appeals) Raigad,
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5 Floor, CGO Complex,
CBD Belapur,
Navi Mumbai – 400 614.
Ms. Juimala Ostwal a/w Ms. Sangeeta Yadav for the Respondent
Nos.1,2 & 4 to 7.
Ms.Shruti D. Vyas, Addl.G.P a/w Mr. Aditya R. Deolekar, A.G.P for
the Respondent – State.
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CORAM : M. S. KARNIK &
SANDESH D. PATIL, JJ.
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DATE : 30 OCTOBER, 2026
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JUDGMENT (PER SANDESH D. PATIL, J.)
1. Rule. Rule is made returnable forthwith with the consent of
the parties and the matter is taken up for final hearing.
2. By the present petition, the petitioner is seeking to quash and
set aside the impugned order dated 24/02/2022 issued by the
respondent No.7. The impugned order is at ‘Exhibit-A’ to the
petition.
3. The case of the petitioner is that the petitioner is a public
limited company duly registered under the provisions of the
Companies Act, 1956 and is engaged in manufacture of Ethyl
Acetate. The petitioner is having common GST registration number
for two units. The Superior Denatured Spirit (SDS), input required
for manufacturing of Ethyl Acetate, is imported or procured from
sugar factories. It is the contention of the petitioner that the said
material was stored tanks at in unit No.2 and was transported to unit
No.1 with due permission from the competent authorities.
4. The petitioner filed TRAN-1 form. Accordingly, the credit was
carried forward under the GST regime and the credit was utilized
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thereinafter in terms of Section 140(5) of the Central Goods and
Services Tax Act, 2017 (‘CGST Act’ for short) and rules made
thereunder.
5. On 30/09/2020, a show-cause notice was issued by the
respondent No.6 to the petitioner alleging that the petitioner has
wrongly transitioned the credit of Rs.6,29,02,146/- under Section
140(5) of the CGST Act, 2017 and thus proposed to disallow the
aforesaid input tax credit transferred to GST regime.
6. Reply was filed by the petitioner. The respondent No.6
confirmed the demand raised in the show-cause notice. The
petitioner filed appeal before the respondent No.7. On 24/02/2022,
the impugned order was passed.
7. The learned Counsel Mr. Raichandani appearing for the
petitioner contended that the eligibility of the CENVAT credit / input
tax credit was never under dispute. He submitted that the duty/tax
has been paid on inputs. The returns were filed under the erstwhile
regime. With introduction of GST, the petitioner has filed
Declaration Form TRAN-1. The said form was accepted. Once this
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was done, the question of denying input tax credit due to mere
inadvertent disclosure in Form TRAN-1 cannot arise.
8. He submitted that the petitioner has transitioned the impugned
credit under Section 140(5) of the CGST Act. He submitted that the
petitioner was entitled to transition credit under Section 140(1) of
the CGST Act, 2017. He relied upon the judgment in the matter of
Heritage Lifestyles and Developers Private Limited vs. Union of
1
India , in support of his contention.
9. The learned Counsel appearing for the respondent / Revenue
supported the order.
10. We have heard the learned Counsel appearing for the parties
and perused the documents on record.
11. There are two units of the petitioner's business. Both have
common GST registration number 27AAACL2435R1Z5. The SDS
stored in tanks in Unit-2 was transferred through pipeline to Unit
No.1, and account to that effect was maintained, as is claimed by the
petitioner. The different bills of entries with which the present
1 2020 (43) GSTL 33 (Bom.)
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petition is concerned are tabulated as under:
Sr.
No.
Bill of entry Invoice Date Taxes paid on
Full consighment
Date on which
consignment
receipt date at
entered in
Unit No.2
books of
account
1. 9850021 26/05/2017 27,79,350/- 13/06/2017 31/07/2017
2. 9867908 29/05/2017 1,91,24,880/- 24/06/2017 31/07/2017
3. 9831676 25/05/2017 2,89,32,970/- 25/06/2017 31/07/2017
4. 2200201 22/06/2017 2,20,747/- 28/06/2017 31/07/2017
5. 2276191 29/06/2017 93.05,349/- 03/08/2017 31/07/2017
6. 2195070 22/06/2017 20,31,080/- 18/10/2017 23/08/2017
7. 2194771 22/06/2017 5,07,770 11/09/2017 23/08/2017
Total 6,29,02,146/-
12. The entire dispute revolves around Section 140(1) and Section
140(5) of the CGST Act, 2017. Under Section 140 of the CGST Act,
2017 read with Rule 117 of the Rules, 2017, a migrated registered
supplier is permitted to file a declaration in Form TRAN-1 intimating
details of CENVAT credit of tax paid on inputs, capital goods, and
input services in order to carry forward the same to the electronic
credit ledger / input tax credit account under the CGST Act, 2017.
13. In the present case, the total quantum of transitional credit as
is contended by the petitioner was Rs. 6,29,02,146/-. The quantum
of credit is not disputed by the respondents. The petitioner filed
TRAN-1 form within the prescribed time limit. Under bonafide
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belief, the petitioner transitioned the CENVAT credit into GST regime
under Section 140(5) of the CGST Act, 2017.
14. On 30/09/2020, a show-cause notice was issued by the
respondent No.6 alleging that the petitioner has wrongly transitioned
the credit to the tune of Rs. 6,29,02,146/- under Section 140(5) of
the CGST Act, 2017 and thus proposed to disallow the input tax
credit transferred to GST regime. The show-cause notice proposed to
recover the amount. By an order dated 26/02/2021, the show-cause
notice was confirmed, and ultimately the respondent No.6 upheld
the demand of reversal of input tax credit of Rs. 6,29,02,146/- on
24/02/2022. The respondent No. 7 dismissed the appeal.
15. Section 140(1) and Section 140(5) of the CGST Act, 2017
reads as under:
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
[within such time and]in such manner as may be
prescribed: Provided that the registered person shall not
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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 his 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 notified by the Government.
…..
…..
…..
(5) A registered person shall be entitled to take, in his
electronic credit ledger, credit of eligible duties and taxes
in respect of inputs or input services received on or after
the appointed day but the duty or tax in respect of which
has been paid by the supplier under the [existing law,
within such time and in such manner as may be
prescribed, subject to the condition that the invoice or
any other duty or tax paying document of the same was
recorded in the books of subject to the condition that the
invoice or any other duty or tax paying document of the
same was recorded in the books of account of such
person within a period of thirty days from the appointed
day:
Provided that the period of thirty days may, on sufficient
cause being shown, be extended by the Commissioner for
a further period not exceeding thirty days:
Provided further that said registered person shall furnish
a statement, in such manner as may be prescribed, in
respect of credit that has been taken under this sub-
section.”
16. The eligibility of CENVAT credit / input tax credit was never
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under dispute. The returns were filed under the erstwhile regime.
With introduction of GST, the petitioner has filed declaration in the
nature of form TRAN-1. The said form was accepted. Once this is
the case, the question of denial of input credit for mere inadvertent
disclosure in the form TRAN-1 would not arise. The petitioner had
taken transitional credit under Section 140(5) of the GST Act. The
petitioner was entitled to transitioned credit pertaining to inputs in
terms of Section 140(5) of the CGST Act. The petitioner had applied
for extension beyond 30 days to the jurisdictional Commissioner in
accordance with provisions of Section 140(5) of the CGST Act. Even
the impugned order does not dispute the eligibility of transitional
input credit. The impugned order notes that the petitioner is entitled
to transitional credit under Section 140(1) of the CGST Act.
17. The whole case of the Revenue is that the petitioner has
wrongly taken credit in terms of Section 140(5) instead of Section
140(1) of the CGST Act. TRAN-1 is a declaration which would be
subject to verification and scrutiny by the Revenue. Only on the
ground that the credit was transitioned under a wrong
category/column could not be a ground to disallow the same. The
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unutilized credit arising on account of duty/tax paid is a vested right
which cannot be taken away on a technical grounds. Right to input
credit is an indefeasible right. Only because incorrect
provision/column was mentioned was not sufficient to disallow the
same.
18. This Court in the matter of Heritage Lifestyles and Developers
Private Limited (supra) has held in paragraph Nos. 22 and 23 as
under:
“22. Be that as it may, it is true that the above circular
has been issued keeping in mind cases where difficulties
have been faced by a section of tax payers owing to
technical glitches on the GST Portal. However, the facts
of this case are peculiar in as much as the respondents
themselves admitted that the Petitioner is eligible for
input tax credit but have rejected the claim because the
ITGRC has not approved it saying that the tax payer has
neither tried for saving/submitting or filing TRAN-1.
There is no further explanation or clarification on this
issue by the Respondents except to state the ITGRC
description viz. "The tax payer has neither tried for
saving/submitting or filing TRAN-1". Therefore it would
be not necessary for us to even deal with the Circular
under which the application for manual TRAN-1 has
been made. When there is no dispute to the fact that the
Petitioner is otherwise eligible for credit of Rs.
78,62,466/- then to deny the benefit of such Input credit
merely on technical grounds cannot be justified. Merely
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on technical ground an admitted input credit is sought to
be denied to the Petitioner. That according to us would
be wholly unfair and a travesty of justice. It is in these
facts and circumstances that we are compelled to invoke
our writ jurisdiction in this case.
23. In this context, we would like to refer to the
Supreme Court decision in the case of Mangalore
Chemicals and Fertilizers Ltd. v. Deputy Commissioner
(supra). That was a case where there was no dispute
that the appellant was entitled to the benefit of an
exemption under notification dated 30.06.1969 nor
there was a dispute that the refunds were eligible to the
adjusted against sales tax payable for respective years,
but the only controversy was whether the appellant not
having actually secured "prior permission" would be
entitled to adjustment having regard to the words of
notification of 11th August, 1975, that until permission
of renewal is granted by the Deputy Commissioner of
Commercial Taxes, the new industry should not be
allowed to adjust the refunds. Hon'ble Supreme Court
aptly summarized the contention as under :-
"The contention virtually means this:
"No doubt you were eligible and entitled to make the
adjustments. There was also no impediment in law to
grant you such permission. But see language of Clause 5.
Since we did not give you the permission you cannot be
permitted to adjust" Is this the effect of the law?"
19. In the present case also, admitted input credit is sought to be
denied to the petitioner on technical grounds. In absence of any
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dispute that the petitioner was otherwise eligible for the input credit
of Rs. 6,29,02,146/- the impugned order is totally without
jurisdiction and hence deserve to be quashed and set aside.
20. In the result, the following order is passed :
ORDER
Writ Petition No. 5508 of 2024 is allowed in terms of
prayer clauses (a) to (e) which reads as under :
“a) that this Hon'ble Court be pleased to issue a Writ of
Certiorari or a writ in the nature of Certiorari or any
other writ, order or direction under Article 226 of the
Constitution of India calling for the records pertaining to
the Petitioner's case and after going into the validity and
legality of the provisions set aside and quash the
impugned order dated 24.02.2022 issued by Respondent
No.7 (Exhibits A);
(b) that this Hon'ble Court be pleased to issue a Writ of
Certiorari or a writ in the nature of Certiorari or any
other writ, order or direction under Article 226 of the
Constitution of India calling for the records pertainingto
the Petitioner's case and after going into the validity and
legality of the provisions direct the respondents to not
initiate any coercive action seeking recovery of credit
availed by the Petitioner during the pendency of the
present petition;
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(c) that this Hon'ble Court may be pleased to issue any
writ, order or direction more particularly in the nature of
a Writ of Declaration to hold that once there is no
dispute regarding the eligibility of credit, the Petitioner
has correctly transitioned the same within time specified
under the Act, the said credit cannot be
denied/disallowed on the count that the credit was
transit under incorrect provision;
(d) that this Hon'ble Court may be pleased to issue any
writ, order or direction more particularly in the nature of
a Writ of Declaration to hold that the petitioner has
correctly transitioned the credit under provisions of
section 140(5) of the CGST Act, 2017;
(d) that this Hon'ble Court may be pleased to issue any
writ, order or direction more particularly in the nature of
a Writ of Declaration to hold that the petitioner has
correctly transitioned the credit under provisions of
section 140(1) of the CGST Act, 2017;
(e) that this Hon'ble Court may be pleased to issue any
writ, order or direction more particularly in the nature of
a Writ of Declaration to allow the credit transitioned in
conformity with Section 140(5) read with Rule 117 of
the CGST Rules, 2017 and Article 14, 19, 246, 248, 265,
268A, 286 and 302 read with Entry 41 and 83 of List 1
of VII Schedule of the Constitution of India and as also
being within the legislative competence of Parliament
under Article 269A of the Constitution of India in so far
as it is impugned and pass such further or other orders
as this Hon'ble Court may deem fit and necessary in the
facts and circumstance of the case and thus render
justice;”
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21. Rule is made absolute in the aforesaid terms and petition is
disposed of accordingly.
(SANDESH D. PATIL, J.) (M. S. KARNIK, J.)
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