2021 (10) TMI 849 - AT - Service Tax

Tribunal orders cash refund of 41,94,304 under CGST Act

The Tribunal allowed the appeal, directing the Adjudicating Authority to refund the amount of &8377; 41,94,304/- in cash to the appellant within 45 ... Transitional provisions - cenvat credit versus cash refund - refund of pre-deposit - Section 142 of the CGST Act - interest on delayed refund - Sandvik Asia principle on interestTransitional provisions - Section 142 of the CGST Act - cenvat credit versus cash refund - Refund of pre-deposit allowed earlier by way of cenvat credit must be disbursed in cash in view of the transitional provisions of Section 142 of the CGST Act. - HELD THAT: - The Commissioner (Appeals)/(Audit) had affirmed refund by way of cenvat credit of an amount earlier deposited in cash and reflected in ER-I returns. The Tribunal found that such a direction was in conflict with the transitional provisions contained in Section 142 of the CGST Act, which require that on or after 1.7.2017 any adjustment regarding refund of duty or liability has to be in cash. Applying that statutory mandate, the Tribunal modified the order-in-appeal and directed the Adjudicating Authority to disburse the impugned amount in cash. [Paras 6, 8]Order modified to direct disbursement of the refunded amount in cash.Interest on delayed refund - Sandvik Asia principle on interest - Assessee is entitled to interest on the amount to be refunded from the date of reversal until actual refund, at the rate applied by the Supreme Court in Sandvik Asia. - HELD THAT: - The Tribunal held that interest should be paid on the amount ordered to be refunded from the date of reversal (03.11.2015) until payment of the refund in cash. The Tribunal fixed the rate of interest at 12% per annum, citing the principle laid down by the Hon'ble Supreme Court in Sandvik Asia Private Limited as the applicable yardstick for awarding interest on delayed refunds. [Paras 8]Interest at 12% p.a. to be paid from 03.11.2015 until cash refund is made.Final Conclusion: Appeal allowed; impugned order modified to direct cash disbursement of the disputed pre-deposit amount with interest at 12% p.a. from 03.11.2015 until payment; refund to be granted within 45 days of receipt of this order. Issues: Refund of pre-deposit amount, challenge to directions on cenvat credit, conflict with transitional provisions of CGST Act.Refund of Pre-deposit Amount: The appellant had made a pre-deposit of &8377; 75,63,721/- pending litigation, which was subsequently set aside in their favor. The appellant applied for a refund, and &8377; 33,69,417/- was allowed in cash while &8377; 41,94,304/- was allowed as cenvat credit. The appellant challenged the direction to take cenvat credit of the balance amount.Challenge to Directions on Cenvat Credit: The Commissioner (Appeals) observed that the appellant had taken cenvat credit of &8377; 41,94,304/-, which was deposited in cash and reflected in their ER-I Return. The Commissioner upheld the refund by way of cenvat credit, leading the appellant to appeal against this decision.Conflict with Transitional Provisions of CGST Act: The appellant argued that the order directing the refund by way of cenvat credit was in conflict with Section 142 of the CGST Act, which mandates adjustments regarding refunds to be made in cash after 1.7.2017. The Tribunal acknowledged this conflict and allowed the appeal, modifying the order to direct the Adjudicating Authority to disburse the refund of &8377; 41,94,304/- in cash. The Tribunal also held that the appellant was entitled to interest on the refunded amount.In conclusion, the Tribunal allowed the appeal, ordering the refund with interest to be granted within 45 days from the date of the order. The decision highlighted the importance of complying with the transitional provisions of the CGST Act, ensuring that adjustments regarding refunds are made in cash as mandated by the law.