2024 (1) TMI 1254 - AT - Service Tax

Cash refund allowed under Section 142(3) CGST Act 2017 for Service Tax paid during GST regime

NCL Industries Versus Commissioner of Central Tax Hyderabad-GST

CESTAT Hyderabad allowed the appeal for cash refund under Section 142(3) of CGST Act 2017. The appellant had paid Service Tax during GST regime for ... Cash refund under Section 142(3) of the CGST Act 2017 - Service Tax paid by the appellant during the present GST regime for the Service Tax which should have been paid by them under RCM basis during the previous Central Excise/Service Tax regime - HELD THAT:- The issue as to whether in such cases whether this Tribunal has a Jurisdiction to decide the case or not was before the Hon’ble Larger Bench in the case of M/S. BOSCH ELECTRICAL DRIVE INDIA PRIVATE LIMITED VERSUS COMMISSIONER OF CENTRAL TAX, CHENNAI [2023 (12) TMI 1145 - CESTAT CHENNAI-LB]. The Larger Bench has held This view also gains support from the fact the legislative intent could not have been to deprive either an assessee or the Revenue from the right of an appeal since an appeal against an order passed under section 142 of the CGST Act would not lie to the Appellate Tribunal constituted under the CGST Act. On going through the Show Cause Notice, OIO and OIA, it is seen that this issue was not raised by the Department at any point of time while rejecting the refund claim. The Adjudicating Authority has rejected the claim purely on the ground that there was no provision under Section 142(3) of CGST Act 2017 to grant the cash refund. Therefore, when no appeal was filed by the Department against the OIO passed, the Revenue is precluded from raising such an issue purely to contest a squarely covered case. The impugned order set aside - appeal allowed. Issues:The issues involved in the judgment are the refund claim under Section 142(3) of the CGST Act 2017 for Service Tax paid on Reverse Charge Mechanism (RCM) basis, rejection of refund claim by the Adjudicating Authority, dismissal of appeal by the Commissioner (Appeals), and the appellant's appeal before the Tribunal.Adjudicating Authority's Rejection of Refund Claim:The appellant paid Service Tax on Reverse Charge Mechanism (RCM) basis for transactions prior to June 2017, and filed a refund claim under Section 142(3) of the CGST Act 2017. The Adjudicating Authority rejected the refund claim stating that the claimant cannot circumvent legal provisions through Section 142(3), as the transitional provisions do not cover refund for amounts not mentioned in returns preceding July 2017. The Authority emphasized that Cenvat Credit Rules do not mandate refund in such cases, and transitional provisions do not allow refund for unmentioned amounts.Dismissal of Appeal by Commissioner (Appeals):The Commissioner (Appeals) dismissed the appeal, stating that there is no provision for refund of Service Tax paid under RCM in Cenvat Credit Rules, Finance Act, or Central Excise Act. The Commissioner held that the appellant misconstrued Section 142(3) of the CGST Act 2017, as there is no existing law provision for refund in the present situation. The Commissioner rejected the argument that additional mechanisms in transitional provisions allow refund, emphasizing that the appellant misunderstood the statutory provisions.Tribunal's Decision:The Tribunal considered the appellant's argument citing relevant case laws where RCM payments were refunded under Section 142(3) of the CGST Act 2017. The Tribunal confirmed its jurisdiction to decide such cases based on a Larger Bench decision. The Tribunal clarified that refund claims for CENVAT credit can be made only under Section 142(3) and allowed the appeal with consequential relief. The Tribunal differentiated the present case from a previous case where the appellant failed to utilize revised return facility, which was not applicable here.Conclusion:The Tribunal allowed the appellant's appeal, relying on applicable case laws and the Larger Bench decision, setting aside the impugned order and granting consequential relief. The Tribunal emphasized the correct application of Section 142(3) of the CGST Act 2017 for refund claims related to CENVAT credit, ensuring compliance with statutory provisions and legal principles.