Cash refund under GST prevails over Cenvat credit where statute mandates payment in cash and appeal remains maintainable.

A challenge to a refund order was held maintainable where the assessee had sought modification of the original sanction, and rejection of that modification request was treated as sufficient to question the underlying refund determination. The appeal was also held within limitation because time spent before the adjudicating authority on the modification request was excluded for computing delay. On the merits, Section 142(3) of the CGST Act required refund to be sanctioned in cash, so crediting the refund to the Cenvat account was inconsistent with the statutory mandate and could not be sustained. The order was set aside and cash refund with consequential relief was directed.

---

---

Issues: (i) Whether the appeal before the Commissioner (Appeals) was maintainable despite no separate challenge to the original order sanctioning refund partly in Cenvat credit. (ii) Whether the appeal against the rejection of the request for modification was barred by limitation. (iii) Whether, under Section 142(3) of the Central Goods and Services Tax Act, 2017, the refund was required to be sanctioned in cash.

Issue (i): Whether the appeal before the Commissioner (Appeals) was maintainable despite no separate challenge to the original order sanctioning refund partly in Cenvat credit.

Analysis: The request made to modify the original refund order showed that the assessee had not accepted the manner in which the refund was sanctioned. Once the modification request was entertained and then rejected, the challenge to that rejection was treated as a challenge to the underlying refund determination. The absence of a separate appeal against the original sanction order did not defeat maintainability.

Conclusion: The appeal was maintainable.

Issue (ii): Whether the appeal against the rejection of the request for modification was barred by limitation.

Analysis: The period spent before the adjudicating authority on the modification request was required to be excluded for computing limitation. On that basis, the appeal filed before the Commissioner (Appeals) was within time.

Conclusion: The appeal was not barred by limitation.

Issue (iii): Whether, under Section 142(3) of the Central Goods and Services Tax Act, 2017, the refund was required to be sanctioned in cash.

Analysis: The statutory mandate under Section 142(3) required refund claims to be sanctioned in cash. The impugned order sanctioning the refund in Cenvat credit account was therefore inconsistent with the statutory requirement and could not be sustained.

Conclusion: The refund was required to be sanctioned in cash.

Final Conclusion: The impugned order was set aside and the assessee was held entitled to cash refund with consequential relief.

Ratio Decidendi: Where the statute mandates refund in cash, an order granting refund in Cenvat credit contrary to that mandate cannot stand, and a challenge to a subsequent rejection of modification may render the appeal maintainable and within limitation.

---