ATANU MONDAL vs STORES & SPARES CO.

IN THE GOODS AND SERVICES TAX APPELLATE TRIBUNAL
KOLKATA BENCH
COURT NO. 1
Appeal No. APL/KLK/30/2026

ATANU MONDAL
…..Appellant
Versus

STORES AND SPARES CO
….Respondent
In appearance:
For the appellant : Mr. Tapas Kumar Mondal, Superintendent, CGST
For the respondent : Mr. Subham Khaitan, CA
CORAM:
Sri Satya Gopal Chattopadhyay : Hon’ble Judicial Member
Sri Anindya Mitra : Hon’ble Technical Member
FINAL ORDER
Date of Hearing:08.10.2026
Date of Order : 06.11.2026
Per Anindya Mitra:
[1] This appeal has been filed u/s 112(3) by the Revenue assailing the
Appellate Order (No.363/CGST/Kol North/2024 dated 31.12.2024)
passed by the Additional Commissioner, CGST & CX, Kolkata Appeal-I
Commissionerate.
[2] The facts of the case in brief.
I. In the show cause -cum-demand Notice No. 10/GST/AC/SASC/BBD
Bag-I/2023-24 dated 09.08.2023 it was alleged by Assistant
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Commissioner, BBD Bag -I Division, Kolkata North Commissionerate
that on scrutiny of Form GST TRAN-1 filed by the taxpayer on
10.07.2017, it was found that they have availed ITC of Rs. 36,35,704/-
(CGST) in their Electronic Credit Ledger through Table-5(a) of Form GST
TRAN-1 against Central Excise Dealer Registration No.
AAKFS6823KXD001. The taxpayer was registered as a Dealer.
Therefore, they were not liable to file the statutory returns under
Central Excise Law and so, they were not entitled to transfer credit
under Table-5(a) of TRAN-1( para 3.1)
II. It was stated in the SCN that sub-section (3) of Section 140 of the
CGST Act permits a first stage dealer or a second stage dealer or a
registered importer or a depot of a manufacturer to take in his
Electronic Credit Ledger, credit of eligible duties in respect of inputs
held in stock and inputs contained in semi-finished or finished goods
held in stock. But Table-5(a) of Form GST TRAN-1 is prescribed for the
amount of CENVAT credit carried forward to Electronic Credit Ledger as
Central Tax in respect of Section 140(1), Section 140(4)(a) and Section
140(9) only. Hence, a registered Dealer was not entitled to transfer
credit under Table-5(a) of TRAN-1.
IIII. The SCN stated that “for the purpose of verification of their
eligibility for availing the above-mentioned ITC, the taxpayer was sent a
notice dated 09.04.2021 & 01.07.2021, respectively, requesting them to
submit necessary documents. But the taxpayer did neither submit any
documents in support of their claim of above -mentioned ITC nor did
they make any reply to the Department.” ( para 3.4)
So, the taxpayer was asked to show cause as to why CGST credit
amounting to Rs. 36,35,704/- should not be demanded and recovered
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from them in terms of Section 73(1) of CGST Act, read with Rule 121 of
CGST Rules, for availing ineligible ITC.
IV. The taxpayer replied to the above SCN cum demand notice. In his
reply he stated, inter alia,
“Post introduction of CGST Act with effect from 01.07.2017, we were
entitled to avail Input Tax Credit in Form TRAN-1 for the eligible duties
and taxes on inputs, semi-finished and finished goods held as stock
under section 140 of CGST Act read with rule 117 of CGST Rules. Due to
inadvertence, the form was incorrectly uploaded under Table 5(a) of
TRAN-1 instead of 7(a). However, Input Tax Credit amounting to Rs.
36,35,704/- was eligible in terms of the provisions of Section 140(3) of
the CGST Act 2017.”( para 4 of the O-I-O)
The taxpayer referred to Section 140(3) of the CGST Act, 2017 which
states that a person is eligible to avail credit of duties paid on inputs,
semi-finished and finished goods held as stock on 30.06.2017 after
fulfilling the following conditions: -
a. Such inputs or goods are used or intended to be used for making
taxable supplies under this Act.
b. Registered person is eligible for an input tax credit on such
inputs under this Act.
c. The registered person is in possession of an invoice or other
prescribed documents evidencing payment of duty under the
existing law in respect of such inputs.
d. Invoices or other prescribed documents were issued not earlier
than twelve months immediately preceding the appointed day;
and
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e. Supplier of services is not eligible for any abatement under this
Act:
The taxpayer claimed that “All the above conditions have been
fulfilled by us at the time of availment of the transitional credit.
a. We are duly registered under the existing tax law i.e. GST as
Regular taxpayers.
b. We are in possession of all the invoices on which credit had
been claimed, evidencing that Excise Duty on the same had been
paid by us. Due to the bulkiness of the file, we are submitting a
copy of the invoices on a sample basis. However, at the time of the
hearing all the copies of the invoices in original will be produced
by us. (Copy of the Invoices on a sample basis are enclosed
herewith for your kind perusal as Annexure - A).
c. Credit availed by us on inputs and finished goods were not
purchased prior to 01.07.2016 i.e. 12 months prior to appointed
date. (Copy of the Invoice-wise and quantity-wise register is
enclosed herewith for your kind perusal as Annexure - B).”
(Para 4 of Order-in-Original (O-1-O) No. 19/AC/CGST&CX/BBD
BAG-1/GST/2023-24 Date: 10.11.2023)
A personal hearing was held where the authorised representative
of the taxpayer reiterated their written reply submitted on
18.09.2023. The Adjudicating Authority mentioned in the O-I-O
that the taxpayer had submitted copies of sample invoices and
produced hard copies of the related invoices.
Page 4 of 22

VI. Paragraph 6 of the O-I-O contains the discussion and the
findings of the O-I-O. The reasoning adopted by the Adjudicating
Authority for rejection of the claim of the taxpayer are as follows:
“6.2.1……….the noticee stated that due to inadvertence the form
was incorrectly uploaded under Table-5(a) of Form GST TRAN-1
instead of Table-7(a) of the same though, the ITC amounting to
Rs.36,35,704/- was eligible in terms of the provisions of Section
140(3) of the CGST Act.”
6.2.2 in support of their plea, the noticee relied upon following
judgments wherein Hon’ble Courts held that transitional credit
could not be denied on procedural grounds such as recording
details in the wrong table in Form GST TRAN-1, etc.: '
(i) M/s Sevoke Motors versus State of West Bengal, [2022] 142
taxmann.com 374 (Calcutta), decided on 07.07.2022;
(ii) M/S Blue Bird Pure Pvt. Ltd. versus Union of India & Ors. on
22 July, 2019, W.P.(C) 3798/2019;
(iii) M/s Ram Auto versus Commissioner of Central Taxes &
Central Excise, WP(MD) No. 15531 of 2020;
(iv) M/s Jakap Metind Pvt Ltd vs Union of India Through The
Secretary & 6 other(s) on 4 October 2019, C/SCA/ 19951/2018;
and many more.
6.3.1 in view of above, I find that the noticee have admitted that
they have availed the above said ITC through Table-5(a) of Form
GST TRAN-1 instead of Table-7(a)(A). But they have tried to
justify their mistake by relying upon several judgments with the
intention that the mistake on technical grounds may be condoned.
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6.3.2 in this regard, I also find that in terms of order dated
22.07.2022 & 02.09.2022 of Hon’ble Supreme Court in the case of
Uol versus Filco Trade Centre Pvt. Ltd. and subsequent Circular
No.180/12/2022-GST dated 09.09.2022 issued by the CBIC
wherein opportunity was given to the taxpayers those who were
committed mistake in filing Form GST TRAN-1 to file revised
TRAN-1. But in the instant case, the noticee did not avail such
opportunity of filing revised TRAN-1 though the Department has
pointed out their mistake vide letter dated 09.04.2021 &
01.07.2021.
6.3.3 Further, I find that all judgments, as relied upon by the
noticee, were decided before issuance of the Circular
No.180/12/2022-GST dated 09.09.2022. After issuance of the
Circular No.180/12/2022-GST scenario in respect of transitional
credit has been changed. Therefore, those judgments, decided
before the Circular No.180/12/2022-GST, are not applicable in
this case.
6.3.4 it is, therefore, evident that the noticee have availed the ITC
under wrong category which has also been admitted by them and
hence, I am of the opinion that the ITC to the tune of Rs.
36,35,704/- (CGST) was wrongly availed by them and thus, such
ITC is recoverable from them under Section 73(9) of the CGST
Act.”
VII. Aggrieved by the appellate order, the Revenue is before us by
way of this appeal in terms of sub-section (3) of Section 112 of
CGST Act,2017.

Page 6 of 22

[3] IMPUGNED ORDER-IN APPEAL OF THE FIRST APPELLATE
AUTHORITY
I. The Appellate Authority noted that the appellant had entered
transitional credit in Table 5(a) of Form GST TRAN-1 instead of Table
7(a), which is the correct table prescribed for recording transitional
credit under Section 140(3) of the CGST Act, 2017 by a registered
dealer. But he also noted that neither the SCN nor the O-I-O disputed
the taxpayer’s entitlement under Section 140(3). His observation is
reproduced below:
“7.5. On going through the SCN and impugned O-I-O, I find that the
respondent has nowhere disputed the legitimacy of the said transitional
credit. The eligibility of ITC under Section 140(3) of the CGST Act, 2017
was not brought into the question by the respondent. Moreover, there is
no implication of excess transitional credit taken nor has it been availed
of under any other head (SGST/IGST). The respondent’s only concern
was that the appellant had availed transitional credit under Table 7(A)
in place of Table 5(a) of TRAN-1. Therefore, the issue involved in the
present case for consideration is:
Whether transitional credit of Rs. 36,35,704/- (CGST) as availed by the
appellant under Table 5(a) in place of Table 7(a)7(A) of TRAN-l is
admissible or not.”
……………………………………………………….

II. The grounds on which the First Appellate Authority allowed the
appeal of the taxpayer are as follows
(i) Several Hon’ble High Courts have decided in favour of
taxpayers on similar issue. He relied on M/s Blue Bird Pure
Pvt Ltd vs Union of India [2019] 108 taxmann.com 218/75
Page 7 of 22

GST 59 (Delhi) and M/s Jakap Metind Pvt Ltd vs Union of
India (R/SPECIAL CIVIL APPLICATION NO. 19951 OF 2018),
Gujarat High Court.
(ii) “Substantive rights cannot be denied on account of
procedural matters.” and relied on various judgements of the
Hon’ble Supreme Court and the High Courts in support of this
proposition.

[4] GROUNDS OF APPEAL IN GSTAT
The Revenue has assailed the impugned order and has urged this
Tribunal to set aside the same. We reproduce the grounds of
appeal.
(i) The Appellate Authority, while allowing the appeal filed
by the taxpayer, has accepted at Para 7.4 of the impugned
O-I-A that the appellant had incorrectly availed
transitional credit through Table 5(a) of Form GST
TRAN-1 instead of Table 7(a), which is the correct table
prescribed for availing transitional credit under Section
140(3) of the CGST Act, 2017 by a registered dealer.
However, the Appellate Authority has proceeded to
allow the credit solely on the ground that input tax credit
(ITC) is a vested right and that it cannot be denied
merely on procedural grounds.
(ii) In terms of Section 107(11) of the CGST Act, 2017, the
Appellate Authority was required to make further
enquiry as may be necessary before passing the order. In
the instant case, the Appellate Authority has failed to
conduct any enquiry, as required under Section 107(11),
Page 8 of 22

in regard to eligibility of the taxpayer for availing the
transitional credit as held inadmissible by the
Adjudicating Authority. The failure of the Appellate
Authority to conduct an independent scrutiny of such
requisite conditions has rendered the order non-
speaking and legally deficient. Even if the eligibility was
not challenged specifically by the department, the
Appellate Authority was under a statutory obligation to
apply judicial mind and record a finding on the fulfilment
of statutory preconditions before granting relief.
(iii) The Appellate Authority has failed to appreciate that the
taxpayer was well aware of the mistake committed by
them in filing TRAN-1 declaration as the same was
brought to their notice twice by the Department on
09.04.2021 and 01.07.2021. Yet, the taxpayer did not
take any corrective measure although opportunity was
provided to them in terms of Circular No. 180/12/2022-
GST dated 09.09.2022 in the light of Hon'ble Supreme
Court of India's orders dated 22.07.2022 and 02.09.2022
in the case of Union of India vs. Filco Trade Centre Pvt.
Ltd. It is evident that such inaction on the part of the
taxpayer was intentional only to cover up their
ineligibility for availing transitional credit in terms of
Section 140(1) or 140(3) of the CGST Act, 2017. While
there is no dispute that the taxpayer was not eligible to
avail transitional credit under Section 140(1), they have
not produced or submitted any documentary evidence
to support their eligibility of availing credit under
Page 9 of 22

Section 140(3) except producing hard copies of the
purported invoices to the Adjudicating Authority.
Incidentally, the Appellate Authority has not even
verified the said invoices, let alone raise any question
over non-submission of any other documentary
evidence for fulfilling the conditions as laid down in
Section 140(3) of the Act. This renders the impugned
Order non-speaking and bad in law.’’
[5] ANALYSIS AND DECISION
I. We have heard the learned representative for the Revenue and
the `Counsel for the taxpayer and perused the records.
II. Section 140 of CGST Act,2017 provides for transitional
arrangements for input tax credit. Sub-section (1) to sub-sub-
section (4) of section 140 specify the eligibility conditions for
different categories of registered persons to take, in his Electronic
Credit Ledger, transitional credit. Accordingly, Rule 117(1) of
CGST Rules, 2017 requires submission of a declaration
electronically in FORM GST TRAN- 1 on the common portal. A
registered person entitled to take credit of input tax under Section
140 is required to specify in FORM GST TRAN- 1, separately, the
amount of input tax credit of eligible taxes and duties to which he
is entitled.
III. Sub-section (1) and sub-section (3) of section 140 which are
relevant to the present appeal are reproduced below-
“(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
Page 10 of 22

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 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 notified
by the Government.
………………………………..
“(3)A registered person, who was not liable to be registered under
the existing law, or who was engaged in the manufacture of
exempted goods or provision of exempted services, or who was
providing works contract service and was availing of the benefit of
notification No. 26/2012-Service Tax, dated the 20th June, 2012 or
a first stage dealer or a second stage dealer or a registered importer
or a depot of a manufacturer, shall be entitled to take, in his
electronic credit ledger, credit of eligible duties in respect of inputs
held in stock and inputs contained in semi-finished or finished goods
held in stock on the appointed day, within such time and in such
manner as may be prescribed, subject to the following conditions,
namely:-
Page 11 of 22

(i) such inputs or goods are used or intended to be used for making
taxable supplies under this Act;
(ii) the said registered person is eligible for input tax credit on such
inputs under this Act;
(iii) the said registered person is in possession of invoice or other
prescribed documents evidencing payment of duty under the existing
law in respect of such inputs;

(iv) such invoices or other prescribed documents were issued not earlier
than twelve months immediately preceding the appointed day; and

(v) the supplier of services is not eligible for any abatement under this
Act:
Provided that where a registered person, other than a manufacturer
or a supplier of services, is not in possession of an invoice or any other
documents evidencing payment of duty in respect of inputs, then, such
registered person shall, subject to such conditions, limitations and
safeguards as may be prescribed, including that the said taxable person
shall pass on the benefit of such credit by way of reduced prices to the
recipient, be allowed to take credit at such rate and in such manner as
may be prescribed.”
IV. Registered persons claiming transitional credit under section 140(1)
are required to enter the information in Table 5(a) of Form GST TRAN-
1 . Registered persons claiming transitional credit under section 140(3)
are required to enter the information in Table 7(a) of GST TRAN-1.
V. Rule 121 provides for verification of the transitioned credit and if any
credit has been wrongly availed, proceedings under section 73 or
section 74 shall be initiated.
Page 12 of 22

VI. As per the taxpayer, due to inadvertence, the Form was incorrectly
uploaded under Table 5(a) of TRAN-1 instead of 7(a). However, Input
Tax Credit amounting to Rs. 36,35,704/- was eligible in terms of the
provisions of Section 140(3) of the CGST Act 2017.
VII. First, we shall discuss a few leading case laws on this subject.
VIII. In M/s Blue Bird Pure Pvt. Ltd vs Union of India (2019) 108 Taxman.com
218 (Del.), a division bench of the Hon’ble Delhi High Court dealt with a case
where the petitioner committed an inadvertent error in showing the
th
available stock of goods as on 30 June, 2017 in column 7(d) of TRAN 1
instead of column 7(a). The Court held:
“ 12. In the present case, the Court is satisfied that, although the failure
was on the part of the Petitioner to fill up the data concerning its stock
in Column 7(d) of Form TRAN- 1instead of Column 7(a), the error was
inadvertent. The Respondents ought to have provided in the system itself
a facility for rectification of such errors which are clearly bona fide.”
IX. In R.R. DISTRIBUTORS PVT. LTD vs COMMISSIONER OF CENTRAL TAX,
GST, DELHI NORTH [2021] 129 taxmann.com 71 (Delhi) a division bench of
th
the Hon’ble Delhi High Court observed in its judgement dated 27 May,2021
“Situation similar to the one faced by the present Petitioner has already
been considered by this Court in the case of Blue Bird Pure Pvt. Ltd. v.
Union of India and Ors. In the said case as well, the Petitioner had
committed an inadvertent error in showing available stock of goods as
on 30th June, 2017 in Column 7(d) instead of 7(a) of the TRAN-1 Form.
Noting and relying upon the judgments of this Court in Bhargava Motors
v. Union of India and Ors , and Kusum Enterprises Pvt. Ltd. and Ors. v.
Union of India and Ors. the Court had directed the Respondents to enable
the Petitioner to rectify TRAN-1 Form.
Page 13 of 22

10. As can be seen from the aforesaid decisions, this Court has held
that inadvertent and genuine mistakes in filling up the correct
details of credit in TRAN-1 Form should not preclude taxpayers
from having claims examined by the authorities in accordance with
law . This Court has consistently been issuing directions to the
Respondents and granting relief to such taxpayers. When the Petitioner
attempted to upload TRAN-2 Form, it was prevented to do so because of
the error committed by him while making the declaration in the TRAN-
1 Form, however, the system did not enable the Petitioner to revise
TRAN-1 Form on the system. ………………
11. Further, this Court, in the case of Aadinath Industries & Ors. v. Union
of India and Ors. Lease Plan India Private Limited v. Government of
National Capital Territory of Delhi and Ors. , Godrej & Boyce Mfg. Co.
Ltd. v. Union of India and …… , Arora & Co v. Union of India & Ors., and
M/s Blue Bird (supra), has taken a similar view. In our view, the non-
filing of part 7B of table 7(a) and table 7(d) of TRAN-1 Form
cannot impair the rights of the petitioner to claim transitional
ITC, if he is otherwise eligible . This Court has observed in numerous
decisions that the GST system was in a trial-and-error phase as far as its
implementation was concerned and ever since GSTN network became
operational, taxpayers genuinely faced difficulties in filing the returns
and input tax credit in the GST portal. Acknowledging the procedure and
difficulties in claiming input tax credit, this Court and several other High
Courts have granted relief to such taxpayers. Failure on the part of the
Petitioner to give relevant details in TRAN-1 Form can only be taken
as a procedural lapse which should not cause any impediment to
its right to claim transitional ITC.” (emphasis added by us).
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X. In CALCUTTA RADIO SERVICE PRIVATE LIMITED (CALTRON) AND
ANR vs UNION OF INDIA (M.A.T 283/2024) the division bench of the
Hon’ble Calcutta High Court dealt with a similar situation. The
consistent case of the appellants was that they would fall under Entry
7B and inadvertently the TRAN-1 was filed under Entry 7A and the
appellants explained that since they are not registered under the
Central Excise Act, they are required to file TRAN-1 under Entry 7B.
The Hon’ble Court observed in the judgement dated 27.02.2024 :
“ 10. The question would be as to whether on account of such a technical
error which undoubtedly is an inadvertent error can the appellants be
denied the transitional credit. This issue is no longer res integra and has
been considered by several courts as well as this court in a batch of cases
in MAT 552 of 2020. More or less an identical issue arose for
consideration and the court considered the various orders passed by the
other High Courts and disposed of the appeals by permitting the writ
petitioners therein to file individual tax credit in GSTR-3B Forms for the
relevant months and the assessing officer was at liberty to verify the
genuineness of the claim. We are informed that the judgment and order
dated 14.12.2021 in MAT 552 of 2020 etc. batch has been given effect to.
More recently in the case of S.V. Halavagali and Sons v. Superintendent
of Central Excise reported in (2023) 13 Centax 343 (Karnataka) an
identical issue arose for consideration before the court. In the said case
also there was an inadvertent error and the credit was filed under wrong
head i.e. 7(d) instead of 7(b). The court after taking into consideration
the various orders passed by the other High Courts directed the
authorities to consider the claim of the petitioners therein under Column
7(b) of the CGST Rules, 2017 and if there are supporting documents to
make the claim and the claim is established, then consequential relief
Page 15 of 22

should be allowed. Earlier similar issue was considered in the case of G &
C Infra Innovations v. Union of India reported in 2022 (65) G.S.T.L. 17
(Kerala) wherein the court took note of the fact that after the GST regime
came into force the period between 2017 and 2020 ought to be regarded
as the nascent period of legislation and admittedly several glitches
occurred even from the part of the department. Further, it was pointed
out that the courts have repeatedly held that the said period as a trial-
and-error phase as far as implementation of the statute was concerned
and the taxpayers were also in a state of confusion, during the relevant
period…………………
11. Thus, taking note of the law and the subject as well as the facts of the
case, it is a fit case where directions should be issued to the authorities
to enable the appellants to rectify the mistake and submit GST TRAN-1
under heading 7B of Table 7(a) of Form GST TRAN-1 and the appellants
are directed to comply with the same within three weeks from the date
of receipt of the server copy of this order after which the adjudicating
authority is directed to verify the same and if admissible, extend the
transitional credit to the appellants.”
XI. So, it is abundantly clear that filing credit claim in wrong head or
Table of Form GST TRAN-1 has been viewed by the Hon’ble High
Courts as ‘inadvertent error’ or as “a procedural lapse which should
not cause any impediment to its right to claim transitional ITC”. As the
Hon’ble Delhi High Court has held in R.R. DISTRIBUTORS PVT. LTD vs
COMMISSIONER OF CENTRAL TAX, GST, DELHI NORTH (W.P.(C)
4143/2020,” the non -filing of part 7B of table 7(a) and table 7(d) of
TRAN-1 Form cannot impair the rights of the petitioner to claim
transitional ITC, if he is otherwise eligible.”
Page 16 of 22

XII. In Adfert Technologies Pvt. Ltd. vs Union of India (CWP No.30949
of 2018 (O&M)), the Hon’ble Punjab & Haryana High Court observed:
“10. During the course of arguments, counsel for the Petitioners
submitted various judgments and we find that a Division Bench of Gujrat
High Court in the case of Siddharth Enterprises Vs The Nodal Officer
2019-TIOL-2068-HC-AHM-GST has dealt with issue involved at length. It
has been held that denial of credit of tax/duty paid under existing Acts
would amount to violation of Article 14 and 300A of Constitution of
India. Unutilized credit has been recognized as vested right and
property in terms of Article 300A of the Constitution of India…….
and held
“Accordingly, we direct Respondents to permit the Petitioners to file or
revise where already filed incorrect TRAN-1 either electronically or
manually statutory Form(s) TRAN-1 on or before 30th November 2019.
The Respondents are at liberty to verify genuineness of claim of
Petitioners but nobody shall be denied to carry forward legitimate claim
of CENVAT / ITC on the ground of non-filing of TRAN-I by 27.12.2017.”
Special leave Petition ( Special Leave to Appeal (C) No.4408/2020) by
the Union of India against the judgement in Adfert Technologies Pvt.
Ltd was rejected by the Hon’ble Supreme Court.
XIII. We are surprised by the observation of the Adjudicating Authority
that “I find that all judgments, as relied upon by the noticee, were
decided before issuance of the Circular No.180/12/2022-GST dated
09.09.2022. After issuance of the Circular No.180/12/2022-GST
scenario in respect of transitional credit has been changed. Therefore,
those judgments, decided before the Circular No.180/12/2022-GST,
are not applicable in this case.”
Page 17 of 22

The judgements not only permit filing a corrected TRAN-1 but more
importantly, reiterate a cardinal principle of law that procedural lapses
or technical errors cannot impair the substantive rights of a petitioner
if he is otherwise eligible. So, we shall now deal with the matter of
eligibility.
XIV. In the Grounds of Appeal, the Revenue has stated “While there is
no dispute that the taxpayer was not eligible to avail transitional credit
under Section 140(1), they have not produced or submitted any
documentary evidence to support their eligibility of availing credit
under Section 140(3) except producing hard copies of the purported
invoices to the Adjudicating Authority”.
However, the SCN (Show Cause-cum-Demand Notice No.
10/GST/AC/SASC/BBD Bag-I/2023-24 Date: 09.08.2023) or the
subsequent O-I-O is completely silent about the taxpayer’s alleged
inability to fulfil the conditions laid down in section 140(3). They are
based solely on the ground of entry in wrong column of TRAN 1. We
reproduce the allegation against the taxpayer in the SCN.
“Whereas it appears from the brief facts of the case narrated here-in-
below that M/s Stores & Spares Co., having its principal place of business
at 26/1, Strand Road, 3rd Floor, Burrabazar, Kolkata700001, holding
GSTIN: 19AAKFS6823K1ZL ……………..have violated the provision of
Section 140 of CGST Act 2017 (hereinafter referred to as 'the CGST Act'),
as amended, inasmuch as they have availed and utilized ineligible
transitional credit of CGST of Rs.36,35,704/- ………….through Table
5(a) of Form GST TRAN-1, as carried forward balance of CENVAT
credit as on 30.06.2017 in respect of their legacy Central Excise
Registration No. AAKFS6823KXD001, though they are not entitled
Page 18 of 22

to transfer credit through Table-5(a) of TRAN-1. Thereby, the said tax
amount of Rs.36,35,704/- (CGST) appears to be recoverable from them
under Section 73(1) of the CGST Act….” (emphasis added by us ).
We find from the O-I-O that the Department was aware of the error in
filling up TRAN-1 by the taxpayer at least since April 2021 and
Department informed the taxpayer vide letter dated 09.04.2021 &
01.07.2021. In the Grounds of Appeal before this Tribunal, it has even
stated “they have not produced or submitted any documentary
evidence to support their eligibility of availing credit under Section
140(3) except producing hard copies of the purported invoices to the
Adjudicating Authority”. But the Revenue decided to initiate
proceedings u/s 73(1) of CGST Act,2017 and pass the O-I-O , not on the
ground of the taxpayer’s alleged ineligibility under section 140(3) of
CGST Act,2017 but on a completely different ground, i.e. the taxpayer
is not entitled to transfer credit through Table-5(a) of TRAN-1 . It is also
surprising that although empowered in terms of rule 121 of CGST
Rules, 2017, the Revenue never considered it necessary to undertake
an enquiry to verify whether the taxpayer fulfilled the conditions for
availing transitional credit under section 140(3) of CGST Act,2017.
XV. We have already reproduced in para 2.IV of this order, the contents
of the taxpayer’s reply to the SCN. The taxpayer offered to produce the
prescribed documents and registers in support of his claim of
fulfilment of the conditions under section 140(3) of CGST Act. However
the Adjudicating Authority did not deem it necessary to scrutinise the
documents or call for additional records. It is amply clear from
paragraph no. 6 of the O-I-O that the Adjudicating Authority confined
himself only to the issue of availment of transitional credit under the
wrong head.
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Since the adjudicating authority omitted to take the ground of
eligibility under section 140(3) of CGST Act,2017 in the O-I-O, it shall
be deemed to have been taken by him.
Once the officer while passing the O-I-O has himself constructively held
that the omitted ground is not a ground for disallowing the transitional
credit , he cannot be allowed to say in appeal that it is so . He cannot be
allowed to take such inconsistent stand .It is approbating and
reprobating on the same issue .
XVI. In Shankara Coop. Housing Society Ltd. v. M. Prabhakar, reported
in (2011) 5 SCC 607, the Hon’ble Supreme Court held that the ground
of non-compliance of statutory provision which was very much
available to the parties to raise but did not raise it as one of the
grounds, cannot be raised later on and would be hit by the principles
analogous to constructive res judicata. The relevant observations read
as under: -
“89. In the present case, it is admitted fact that when the contesting
respondents filed WP No. 1051 of 1966, the ground of non-compliance
with statutory provision was very much available to them, but for the
reasons best known to them, they did not raise it as one of the grounds
while challenging the Notification dated 11-12-1952 issued under the
Evacuee Property Act. In the subsequent writ petition filed in the year
1990, initially, they had not questioned the legality of the notification,
but raised it by filing an application, which is no doubt true, allowed by
the High Court. In our view, the High Court was not justified in
permitting the petitioners therein to raise that ground and answer the
same since the same is hit by the principles analogous to constructive res
judicata.”
Page 20 of 22

XVII. The above ratio is squarely applicable to the instant appeal by the
Revenue.
XVIII. The Revenue also pleaded in the present appeal that in terms of
sub-section (11) of section 107, the First Appellate Authority was
obliged to verify the entitlement of the taxpayer to avail of transitional
credit under section 140(3) of CGST Act,2017 and his failure to do so
renders the impugned order invalid.
Section 107(11) of CGST Act,2017 reads as under
“(11) The Appellate Authority shall, after making such further inquiry as
may be necessary, pass such order, as it thinks just and proper,
confirming, modifying or annulling the decision or order appealed
against but shall not refer the case back to the adjudicating authority
that passed the said decision or order.”
………………………”
The expression “ as may be necessary ” indicates that Appellate
Authority is not to undertake enquiry in each and every appeal as a
matter of routine. The sub-section (11) confers a discretionary power
on him which he is to exercise when the facts of a case demand.
Therefore there is no merit in the contention of the Revenue.
We have reproduced the observations of the First Appellate Authority
under the heading “IMPUGNED O-I-A of this order. We are unable to
see any infirmity in the above reasoning of the First Appellate
Authority.
XIX. We therefore uphold the impugned order and reject the appeal
filed by the Revenue.
Page 21 of 22

Communicate this order to the appellant as well as the
respondent by delivering certified copy of the same immediately.
No order as to costs. Pronounced in open court.
SATYA GOPAL
CHATTOPADHYAY
Digitally signed by SATYA GOPAL
CHATTOPADHYAY
Date: 2026.11.06 13:09:27 +05'30'


S.G Chattopadhyay
Judicial Member



Anindya Mitra
Technical Member

ANINDYA MITRA
Digitally signed by ANINDYA MITRA
Date: 2026.11.06 13:27:23 +05'30'




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