Maithan Steel Wins Appeal Against ₹13.17 Lakh Transitional-Credit Demand as GSTAT Says Section 73 Cannot Decide Pre-GST CENVAT Eligibility

The appellant transitioned CENVAT credit into GST through Form TRAN-1.

The department alleged excess transitional credit and issued a notice under Section 73 of the CGST Act, 2017, seeking recovery of ₹13,17,806.

The adjudicating authority confirmed the demand with interest and penalty; the first appellate authority set aside the demand relating to capital-goods credit of ₹3,52,678 but upheld the remaining demand.

Before the Tribunal, the appellant challenged, among other matters, the CGST authorities’ jurisdiction to determine the admissibility of CENVAT credit under the erstwhile law. The Tribunal addressed that jurisdictional objection first.

Section 140 of the CGST Act provides for the transition of eligible credit, while Section 73 provides for recovery of tax not paid or short paid, erroneous refunds, and input tax credit wrongly availed or utilised under the GST regime.

Section 174(2)(e) preserves investigations, adjudications, legal proceedings, and recovery remedies concerning liabilities under repealed laws, allowing them to be instituted or continued as if those laws had not been repealed.

Relying on Usha Martin Ltd. v. Additional Commissioner, Central GST and Excise, (2022) 145 taxmann.com 224 (Jharkhand), and the Calcutta High Court’s decision in Kunjal Synergies Private Limited v. Assistant Commissioner of CGST & CX, MAT 2333 of 2023, the Tribunal applied the rule that CGST authorities cannot use Section 73 to determine whether CENVAT credit was admissible under the erstwhile Central Excise Act, Finance Act, and CENVAT Credit Rules; such proceedings may instead be pursued under the saved provisions of the former law.

The Tribunal characterised the demand as concerning the alleged inadmissibility of CENVAT credit under the pre-GST regime, transitioned through TRAN-1, rather than an independent GST-law contravention.

It followed Usha Martin and Kunjal Synergies, which treated the determination of admissibility under the former laws as outside the jurisdiction of CGST authorities acting under Section 73, while recognising that Section 174 preserves recourse under the erstwhile laws.

The Revenue’s assertion that the cases were distinguishable did not identify a material difference in the legal issue.

The Tribunal therefore did not decide the substantive eligibility or quantification of the transitional credit.

It set aside the first appellate order, allowed the taxpayer’s appeal, and made no order as to costs.