The Goods and Services Tax Appellate Tribunal (GSTAT), Chandigarh Bench, has held that the entire unavailed CENVAT credit on capital goods can be claimed as transitional credit under Section 140(2) of the Central Goods and Services Tax Act, 2017, even where no portion of the credit was availed under the earlier Central Excise regime.

The Bench of Jatinder Pal Singh (Judicial Member) and Pradeep Kumar Goel (Technical Member) recognised the appellant’s entitlement to transitional credit of ₹2,13,593. However, it directed verification of 81 invoices supporting ₹1,54,400, which formed part of the total disputed credit.

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The original adjudicating authority was directed to verify those invoices and allow the credit, if otherwise in order, within one month.

The appellant/assessee manufactured and sold coated steel sheets and coils and had received capital goods before July 1, 2017, when GST came into force.

According to the company, mandatory and routine inspection of certain capital goods was pending. Consequently, CENVAT credit against some invoices and bills of entry had not been claimed before the transition to GST.

By the time inspection was completed and the goods were accepted, the GST regime had commenced. The company therefore claimed credit of the Central Excise duty and Additional Duty of Customs paid on those capital goods through Form TRAN-1.

The department issued a show cause notice dated May 25, 2022, proposing disallowance of the transitional credit, recovery of interest and imposition of penalty for alleged violation of Section 140(2).

By an order dated November 7, 2022, the adjudicating authority disallowed credit of ₹2,13,593 and ordered recovery of interest and imposition of penalty. The first appellate authority subsequently rejected the company’s appeal.

The authorities took the view that Table 6(a) of TRAN-1 was intended for taxpayers who had already availed a portion of the CENVAT credit on capital goods through their Central Excise or Service Tax returns and wanted to transition the remaining credit.

On this interpretation, a taxpayer who had not claimed any credit under the earlier regime could not claim the entire amount through that table. The disputed appellate reasoning relied on Annexure I to CBIC Circular No. 182/14/2022-GST dated November 10, 2022.

A separate objection concerned ₹1,54,400 within the total credit. The authorities found that this amount had been claimed against invoice No. 3500117 dated April 11, 2017, although an annexure detailed 81 invoices.

They treated the entry as accumulated credit relating to multiple invoices being claimed against a single invoice and denied it on that additional ground.

The appellant submitted that Section 140(2) neither restricted transitional credit to 50% of the eligible duty nor required an initial instalment to have been claimed under the old regime.

It relied on the statutory explanation defining “unavailed CENVAT credit” as the aggregate eligible credit reduced by the credit already availed under the existing law.

Where no credit had previously been taken, the company argued, the entire eligible amount remained unavailed and could be transitioned through TRAN-1.

The appellant also maintained that the credit was admissible under both the earlier law and GST law, and that administrative clarification could not restrict the entitlement conferred by the statute.

The tribunal followed its earlier decision dated October 16, 2026, in Deltron (a Division of Continental Device India Pvt. Ltd.) v. Commissioner CGST Ludhiana & Ors., Appeal No. APL/28/CHD/2026. The reasoning reproduced from that decision explained that Section 140(2) permits transition of unavailed capital-goods credit not carried forward in a return under the existing law, subject to the statutory conditions.

These include the registered person not opting for composition taxation under Section 10 and the credit being admissible under both the earlier law and GST law.

The Bench noted that the earlier Central Excise framework permitted capital-goods credit in instalments, with 50% available in the year of receipt and the remaining 50% in subsequent years. However, it did not interpret that framework as requiring a taxpayer to have first availed part of the credit to qualify for transition under Section 140(2).

The tribunal also considered Rule 117(2)(a), which requires disclosure of the amount of credit already availed or utilised and the amount yet to be availed or utilised. It observed that the rule did not stipulate that the credit already availed could not be nil.

Accordingly, the Bench held that capital-goods credit not carried forward in the Central Excise return could be transitioned through TRAN-1, whether it represented 50% or 100% of the total eligible credit.

Applying that reasoning, the tribunal set aside the impugned order to the extent that it denied transitional credit because no CENVAT credit had been taken earlier.

On the separate objection involving ₹1,54,400, the appellant explained that the amount represented the total credit relating to 81 invoices.

Due to a clerical oversight, only the first invoice number had been entered in TRAN-1, while the details of the remaining 80 invoices were omitted. This created the impression that the entire amount had been claimed against one invoice.

The company submitted that all 81 invoices were available and that copies, together with a list showing the total credit claimed, had been enclosed as Annexure 10 to its tribunal appeal.

The Bench noted that the authorities themselves had recorded that the single invoice entry contained an annexure detailing 81 invoices.

It further took account of the appellant’s submission that the documents were available, despite the show cause notice alleging otherwise.

The tribunal found no reason to deny the appellant an opportunity to produce the invoices before the original adjudicating authority.

It directed the appellant to submit all 81 invoices immediately. The authority must verify them and allow the ₹1,54,400 credit if otherwise in order.

Considering that the matter concerned duty suffered on capital goods before GST commenced, the Bench directed that verification be completed expeditiously and within one month in any event.

The decision therefore rejects the legal objection to transitioning the entire unavailed credit, while leaving the invoice-linked component subject to documentary verification.

The Bench also noticed that the GSTAT portal displayed the appeal as “Ashwani Kumar Sharma v. Bhagat Deepak Kumar, Joint Commissioner, Ludhiana and Ors.”

It observed that the official filing the appeal on behalf of the company appeared to have been shown as the appellant, while the officer who passed the appellate order appeared as the respondent.

Referring to Rule 33(1) of the GSTAT (Procedure) Rules, 2025, the tribunal stated that the Commissioner concerned must be made respondent in an appeal filed by a person other than the Commissioner.

It directed correction of the cause title to “M/s JSW Vallabh Tin Plate Pvt. Ltd. (now JSW Steel Coated Products Ltd.) v. Commissioner, CGST, Chandigarh.”

The tribunal held that the appellant was entitled to transition the entire eligible capital-goods credit of ₹2,13,593 under Section 140(2). It referred the ₹1,54,400 component to the original adjudicating authority for verification of the supporting invoices and allowance if otherwise in order.

The appeal was disposed of with these directions.

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