2023 (1) TMI 392 - AT - Service Tax

Tribunal allows appeal for Service Tax refund, citing elimination of limitation under Section 142(3) CGST Act.

M/s NIIT Limited Versus Commissioner, CGST-Delhi East

The Tribunal allowed the appeal, overturning the rejection of the refund claim amounting to Rs. 19,73,966 for Service Tax. The appellant successfully ... Rejection of refund claim - transitional provisions - rejection on the ground of time limitation and unjust enrichment - HELD THAT:- Under the transitional provision Section 142 of CGST Act, limitation have been done away with for the purpose of refund arising under the existing law. The appellant have demonstrated during the course of hearing by producing extracts from their accounts maintained on SAP system, wherein they have demonstrated that they have debited the invoices which were raised and no service was provided, and have also demonstrated the copies of credit notes issued to their customers. In the facts and circumstances, appellant have not taken any credit in their accounts, nor claiming transition refund by through Form TRAN-1 through GST regime. Further, it is found that appellant have passed the bar of unjust enrichment, as under the facts and circumstances they have not passed on any credit to their customers which is duly certified by their Chartered Accountant. Appeal allowed. Issues involved:1. Rejection of refund claim of Service Tax amounting to Rs. 19,73,966.2. Disallowance of refund claim on the grounds of limitation.3. Rejection of refund claim due to doubts regarding unjust enrichment.4. Claiming refund of Krishi Kalyan Cess (KKC) and Swachh Bharat Cess (SBC).5. Appeal against rejection of refund claim before the Commissioner (Appeals).Issue 1: Rejection of refund claim of Service Tax amounting to Rs. 19,73,966:The appellant, a service provider, filed a refund claim for service tax deposited on invoices raised during January 2017 to June 2017, which were later reversed as no services were provided. The appellant submitted various documents to support the refund claim, including service tax returns, challans, credit notes issued to clients, and financial statements. The Assistant Commissioner rejected the refund claim on the ground of limitation, stating that it was time-barred. The rejection was based on the observation that credit notes were issued after six months from the date of invoice during the GST regime, raising doubts about unjust enrichment. The rejection also included the refund claim for Krishi Kalyan Cess (KKC) and Swachh Bharat Cess (SBC), as their transfer under GST regime was not allowed. The Commissioner (Appeals) upheld the rejection, leading to the appeal before the Tribunal.Issue 2: Disallowance of refund claim on the grounds of limitation:The appellant argued that the transitional provision of Section 142(3) of the CGST Act eliminated the limitation for refund claims arising under the existing law. The Tribunal found merit in the appellant's argument and noted that the appellant had demonstrated through their accounts that they had reversed the invoices, issued credit notes, and had not taken any credit or claimed transition refund under GST regime. The Tribunal concluded that the appellant had passed the bar of unjust enrichment, as certified by their Chartered Accountant, and directed the Adjudicating Authority to grant the refund within 45 days along with interest.Issue 3: Rejection of refund claim due to doubts regarding unjust enrichment:The rejection of the refund claim was based on concerns about unjust enrichment, as credit notes were issued after a certain period from the date of the invoice during the GST regime. The Tribunal, however, found that the appellant had not passed on any credit to their customers, as certified by their Chartered Accountant. The Tribunal determined that the appellant had met the requirements to avoid unjust enrichment and allowed the appeal, setting aside the impugned order.Issue 4: Claiming refund of Krishi Kalyan Cess (KKC) and Swachh Bharat Cess (SBC):The refund claim included amounts for KKC and SBC, which were rejected on the basis that their transfer under the GST regime was not allowed. The Tribunal upheld this rejection, stating that the refund of KKC and SBC was not admissible. In conclusion, the Tribunal allowed the appeal, setting aside the rejection of the refund claim and directing the Adjudicating Authority to grant the refund along with interest within 45 days. The Tribunal found that the appellant had met the requirements to avoid unjust enrichment and had demonstrated compliance with the transitional provisions under the CGST Act.