Section 142(5) CGST Act exempts refund claims from one-year limitation when service contract cancelled before provision

CESTAT NEW DELHI allowed the appeal, setting aside the refund claim rejection. The lower authority had rejected the claim citing one-year time limitation under section 11B(1) of Central Excise Act. CESTAT held that Section 142(5) of CGST Act, 2017 exempts such refund claims from the one-year limitation, applying only sub-section (2) provisions. Since the service contract was cancelled before service provision and no unjust enrichment occurred, the appellant remained entitled to refund. The authority lacked constitutional power under Article 265 to retain amounts without corresponding tax liability.

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Issues Involved:
1. Jurisdiction of refund claim.
2. Timeliness under Section 11B of the Central Excise Act.
3. Admissibility of the refund claim.
4. Unjust enrichment.

Summary:

Jurisdiction of Refund Claim: The original adjudicating authority confirmed that the refund claim was filed with the correct jurisdictional authority.

Timeliness Under Section 11B of the Central Excise Act: The refund claim was rejected on the grounds of being filed beyond the one-year period stipulated in sub-section (1) of Section 11B of the Central Excise Act, 1944. The Commissioner (Appeals) upheld this finding. However, Section 142(5) of the CGST Act, 2017, under which the claim was filed, expressly states that the limitation provided in sub-section (1) of Section 11B is not applicable. Therefore, the Tribunal held that invoking Section 11B for rejecting the refund claim was incorrect.

Admissibility of the Refund Claim: The Tribunal noted that the appellant was eligible for a refund under Section 142(5) of the CGST Act, 2017, as the service was not provided due to the cancellation of the contract. The refund claim was admissible as there was no tax liability since no service was rendered.

Unjust Enrichment: The adjudicating authority found that there was no unjust enrichment involved in this case. The Tribunal agreed, stating that the appellant was not unjustly enriched and was entitled to the refund.

Conclusion: The Tribunal set aside the order under challenge, holding that the refund claim was wrongly rejected. The appeal was allowed with consequential relief.

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