Court Directs Union of India to Re-credit Rs. 3.74 Crore in Electronic Credit Ledger under GST Law
In a significant ruling, the Gujarat High Court has directed the Union of India to re-credit Rs. 3,74,33,462 to Inductotherm India Pvt Ltd's electronic credit ledger under the GST law. The division bench, comprising Justices A.S. Supehia and Vaibhavi D. Nanavati, set aside the Assistant Commissioner of Central Excise's communication rejecting the company's re-credit request. The court emphasized the necessity of re-credit to prevent double recovery of the amount.
The case stemmed from a situation where Inductotherm India Pvt Ltd, a manufacturer of excisable goods, had initially paid excise duty using Cenvat credit, which was later contested by the Department. Following a legal battle, the company paid the duty in cash through its Personal Ledger Account (PLA) as per a previous court order. However, when Inductotherm sought re-credit for the initially utilized Cenvat amount, the Department denied the request citing a lack of provisions for such re-credit under the Central Excise Act and Rules.
The High Court noted that the Department's refusal to re-credit the amount resulted in a double payment scenario for the company, as they had already paid the excise duty once through Cenvat and again in cash. The court held that the respondent Department should have proactively re-credited the amount after accepting the cash payment from PLA.
The ruling clarified that Inductotherm was not seeking re-credit on a suo motu basis but was requesting regularization of the amount in line with the cash payment made following the court's directive. The court cited precedents from the Madras and Allahabad High Courts supporting such re-credit actions as mere account entry reversals without necessitating refund claims under Section 11B of the Central Excise Act.
This judgment mandates the re-crediting of the amount into the electronic credit ledger maintained under the GST regime, reflecting the transition in tax regulations. The court's directive is to be complied with within six weeks from the order date, marking a critical decision in preventing undue financial burdens on the petitioner and ensuring fair treatment in tax credit adjustments.
Bottom line:-
Central Excise - Re-credit of amount debited from Cenvat Account after payment of excise duty from PLA - Denial by respondent Department was impermissible - Double payment situation arises without re-credit - Department directed to sanction re-credit of amount in electronic credit ledger under GST law.
Statutory provision(s): Central Excise Act, 1944 Section 11B, Cenvat Credit Rules, 2004
Inductotherm India Pvt Ltd v. Union of India, (Gujarat)(DB) : Law Finder Doc id # 2936501
