2023 (5) TMI 762 - AT - Service Tax

Appeals upheld for refund claims under repealed notification; rights protected under existing law

M/s. S. Vinod Kumar Diamond India Pvt. Ltd. Versus Commissioner of CGST & CE, Mumbai East

M/s. S. Vinod Kumar Diamond India Pvt. Ltd. Versus Commissioner of CGST & CE, Mumbai East - TMI Issues Involved:1. Applicability of Notification No 41/2012-ST post-GST implementation.2. Legitimacy of refund claims under repealed Notification No 41/2012-ST.3. Interpretation of Section 142(4) and Section 174(2) of the CGST Act, 2017.4. Jurisdiction of the Assistant Commissioner in sanctioning refunds under the repealed notification.Issue-wise Detailed Analysis:1. Applicability of Notification No 41/2012-ST post-GST Implementation:The appellant filed refund claims under Notification No 41/2012-ST dated 29.06.2012, for service tax paid on technical inspection and certification services before the GST regime commenced on 01.07.2017. The Assistant Commissioner sanctioned a partial refund under this notification. However, the Revenue challenged this decision, arguing that the notification ceased to be applicable post-GST implementation. The Commissioner (Appeals) upheld this view, stating that refund claims filed after 01.07.2017 should be processed under the CGST Act, 2017, as the notification was repealed.2. Legitimacy of Refund Claims under Repealed Notification No 41/2012-ST:The Assistant Commissioner found that the refund claims were in accordance with Notification No 41/2012-ST, which provided for a rebate of service tax paid on specified services used for export of goods. The claims were filed within the stipulated time and met all conditions of the notification. The Commissioner (Appeals), however, held that since the claims were filed post-GST implementation, they should be governed by the CGST Act, 2017, not the repealed notification.3. Interpretation of Section 142(4) and Section 174(2) of the CGST Act, 2017:The appellant argued that their right to a refund accrued under the existing law (Finance Act, 1994) should not be affected by the introduction of GST. They cited Section 142(4) of the CGST Act, which states that claims for refunds filed after the appointed day should be disposed of in accordance with the existing law. The Commissioner (Appeals) interpreted 'existing law' to mean the CGST Act, 2017, post-GST implementation, thus rejecting the refund claims under the repealed notification. The Tribunal, however, emphasized that the right to claim a rebate accrued when the service tax was paid, and such a right could not be extinguished by the subsequent repeal of the notification.4. Jurisdiction of the Assistant Commissioner in Sanctioning Refunds under the Repealed Notification:The Assistant Commissioner sanctioned the refund claims based on the provisions of Notification No 41/2012-ST, finding that all conditions were met and the claims were filed within the time limit. The Tribunal supported this view, stating that the right to a refund accrued at the time of payment of service tax and could not be nullified by the repeal of the notification. The Tribunal cited precedents from the Supreme Court and High Courts, affirming that accrued rights under the existing law are protected even after the repeal of the law.Conclusion:The Tribunal allowed the appeals, holding that the right to claim a rebate accrued when the service tax was paid, and this right could not be extinguished by the repeal of Notification No 41/2012-ST. The Tribunal set aside the impugned order of the Commissioner (Appeals), thereby upholding the Assistant Commissioner's decision to sanction the refund claims under the repealed notification. The Tribunal emphasized that the accrued rights under the existing law are protected by Section 174(2) of the CGST Act, 2017.