2021 (5) TMI 954 - AT - Service Tax

Tribunal grants refund claim for unutilized credits under GST regime

The Tribunal allowed the appeal, granting the appellant the refund claim for unutilized credits of Education Cess, Secondary & Higher Education Cess, ... Transitional credit under Section 140 of the CGST Act, 2017 - carry forward of cenvat credit of Education Cess, Secondary & Higher Education Cess and Krishi Kalyan Cess - refund of cenvat credit lying unutilized as on 01.07.2017 - retrospective amendment to Section 140 and its effect on admissibility of credit - limitation for filing refund claims - vested right not extinguished by change of lawTransitional credit under Section 140 of the CGST Act, 2017 - carry forward of cenvat credit of Education Cess, Secondary & Higher Education Cess and Krishi Kalyan Cess - Status of the cenvat credit of Education Cess, Secondary & Higher Education Cess and Krishi Kalyan Cess as on 01.07.2017 and whether it became GST credit on transition to GST regime. - HELD THAT: - The Tribunal found that on 01.07.2017 there was no statutory bar to carry forward cenvat credits, but the amendment to Section 140 of the CGST Act, 2017 effected on 30.08.2018 - applied retrospectively - disallowed transfer of these cesses as GST transitional credit. Consequently, amounts pertaining to those cesses, which could not lawfully be treated as GST credit after the amendment, remained as cenvat credit lying unutilized as on 01.07.2017. The Revenue's contention that those amounts became GST credit on 01.07.2017 is not accepted because the law, as interpreted after the retrospective amendment, precludes such transfer and the appellant duly reversed the amounts in the GST account once the position became clear. [Paras 6]The cenvat credit of the specified cesses did not validly become GST transitional credit and must be treated as cenvat credit lying unutilized as on 01.07.2017.Retrospective amendment to Section 140 and its effect on admissibility of credit - limitation for filing refund claims - Whether the refund claim filed by the appellant is barred by limitation. - HELD THAT: - The Tribunal held that the relevant triggering event for filing the refund could not be prior to the retrospective amendment which clarified that the cesses were not transferable as GST credit. Since the amendment was notified on 30.08.2018 and applied retrospectively, the appellant could not reasonably have filed a refund within one year from 01.07.2017 when the law did not then disallow transfer. Treating 30.08.2018 as the relevant date, the appellant filed the refund within one year of that date; accordingly the claim is not time barred. [Paras 7]The refund claim is not barred by limitation.Vested right not extinguished by change of law - refund of cenvat credit lying unutilized as on 01.07.2017 - Whether the Tribunal's earlier decision in M/s Bharat Heavy Electricals Ltd can be relied upon to allow refund of the cesses lying unutilized as on transition date. - HELD THAT: - The Tribunal applied the reasoning in the cited decision that credits of the specified cesses which validly existed and were unutilizable on account of change in law constitute vested rights and are eligible for refund unless a provision specifically extinguishes them. The earlier decision held that such cenvat credits as on 30.06/01.07.2017 are refundable, and the present Tribunal found that principle applicable to the appellant's case. Consequently, the appellant is entitled to refund subject to usual verification of records. [Paras 8]The Tribunal's precedent is applicable and supports allowance of the refund claim, subject to verification.Final Conclusion: The impugned order rejecting the refund is set aside; the appellant is entitled to the refund of the cenvat credit of the specified cesses lying unutilized as on the transition date, the claim is not time barred and allowance is subject to verification of records. Issues:Appeal against denial of refund claim for Education Cess, Secondary & Higher Education Cess, and Krishi Kalyan Cess under GST Regime.Analysis:1. The appellant's refund claim for Education Cess, Secondary & Higher Education Cess, and Krishi Kalyan Cess was denied as per the impugned order due to an amendment in Section 140 of the CGST Act, 2017. The appellant transferred the unutilized cenvat credit to their GST account when the GST Regime came into force on 01.07.2017. Subsequently, an amendment on 30.08.2018 disallowed carrying forward such credits to the GST regime. The appellant reversed the credits and filed a refund claim, which was rejected as time-barred. The issue was whether the refund claim was valid under the circumstances.2. The appellant argued that a similar case precedent allowed the refund claim, citing M/s Bharat Heavy Electricals Ltd vs. Commr. of CGST & Customs. The respondent contended that the appellant should have filed the refund claim within one year from 01.07.2017, as per Section 140 of the CGST Act, 2017. The respondent also argued that the appellant's case differed from the precedent cited.3. The Tribunal found that the appellant had taken the cenvat credit under the CGST Act before the retrospective amendment to Section 140 in 2018. As per the amendment, the credits were not admissible under the GST regime, leading the appellant to reverse the credits and file the refund claim. The Tribunal held that the refund claim was not time-barred, considering the retrospective nature of the amendment.4. Regarding the applicability of the precedent case, the Tribunal noted that the precedent established that Education Cess, Secondary & Higher Education Cess, and Krishi Kalyan Cess could not be transferred to the GST account. The Tribunal held that the appellant was entitled to file the refund claim based on the precedent, setting aside the impugned order and allowing the refund claim, subject to verification.5. In conclusion, the Tribunal allowed the appeal, stating that the appellant was entitled to the refund claim for the unutilized credits of Education Cess, Secondary & Higher Education Cess, and Krishi Kalyan Cess. The decision was based on the interpretation of the law and the applicability of the precedent case.