Tribunal Grants Refund of Input Credit: Appellant's Appeal Upheld

The Tribunal allowed the appellant's appeal challenging the denial of refund of un-utilized input Cenvat Credit under Rule 5 of Cenvat Credit Rules, 2004. The denial was set aside as the Tribunal found that services rendered at unregistered premises did not automatically disqualify input credit eligibility. Additionally, the Tribunal noted that the refund claim was filed within the prescribed timeline and that subsequent reversal in GSTR-3B sufficed as compliance with relevant regulations. Consequently, the impugned order was overturned, and the appellant was granted the refund with any consequential benefits as per law.

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Issues:
Challenging denial of refund of un-utilized input Cenvat Credit under Rule 5 of Cenvat Credit Rules, 2004.

Analysis:
The appellant, a provider of 'Information Technology Services' to foreign clients, filed a refund claim for service tax paid on input services amounting to Rs. 8,07,955 for April to June 2017. A Show Cause Notice was issued proposing to restrict the refund claim to Rs. 1,36,458 due to alleged ineligible input Cenvat credit claims. The adjudicating authority rejected the entire refund claim citing failure to debit the claimed amount from the Cenvat Credit Account at the time of filing. The appellant appealed this decision.

The Hon'ble Tribunal noted that services rendered at unregistered premises did not automatically disqualify input credit eligibility, citing a relevant High Court decision. The Tribunal set aside the denial based on unregistered premises as it was not a valid reason to reject the refund claim.

Regarding the timeline, the refund claim was filed in June 2018 for the period April to June 2017, falling within one year. Despite the transition to the GST regime and the absence of ST-3 Return filing, the Revenue did not contest the appellant's claim that the refund amount was debited in its GSTR-3B/Electronic Credit Ledger post filing of TRAN-1 Return. Precedents and decisions cited by the appellant supported the view that subsequent reversal in GSTR-3B sufficed as compliance with Notification No. 27/2012-CE (NT).

Based on the above analysis, the Tribunal concluded that the denial of refund was not legally sound. The impugned order was set aside, and the appeal was allowed with any consequential benefits as per law. The decision was pronounced in open court on 20.02.2020.

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