CESTAT allows CENVAT credit refund despite Form-A and ST-3 mismatch due to Swachh Bharat Cess reporting issue

CESTAT NEW DELHI allowed the appeal regarding CENVAT credit refund claim for July 2016 to June 2017. The department rejected the refund citing mismatch between Form-A and ST-3 returns and improper credit reversal by Bangalore unit instead of Delhi unit. CESTAT held that since Bangalore unit was part of centralized registration in service tax regime, credit transfer under section 140(8) of 2017 Act was correct. The mismatch occurred because Swachh Bharat Cess was not reportable in ST-3 returns despite being paid. The appellant was entitled to refund of CENVAT credit plus Swachh Bharat Cess of Rs. 56,42,239/- with prescribed interest.

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Issues Involved:
1. Compliance with condition 2(h) of the Notification dated 18.06.2012.
2. Mismatch between CENVAT credit claimed as refund and availed in ST-3 returns.
3. Eligibility for refund of Swachh Bharat Cess.

Summary:

Issue 1: Compliance with condition 2(h) of the Notification dated 18.06.2012

The appellant, M/s. Times Content Limited, contended that they fulfilled condition 2(h) of the Notification dated 18.06.2012, which requires debiting the refund amount from the CENVAT credit account at the time of making the claim. The appellant claimed the CENVAT credit through Tran-1 in the Delhi GST registration and transferred it to the Bangalore Unit, which reversed the accumulated CENVAT credit in its GST returns. The Tribunal observed that practical difficulties arose due to the transition from the Service Tax regime to the GST regime, and as the Bangalore Unit was part of centralized registration in the service tax regime, the transfer and reversal were correctly done in terms of section 140(8) of the 2017 Act. The Tribunal concluded that the appellant fulfilled condition 2(h) of the Notification dated 18.06.2012, referencing decisions in MSYS Tech India Private Limited and Global Analytics India Pvt. Ltd.

Issue 2: Mismatch between CENVAT credit claimed as refund and availed in ST-3 returns

The refund was also denied due to a mismatch between the CENVAT credit claimed as refund in Form-A and the amount availed in the ST-3 returns. The Tribunal noted that this mismatch occurred because the Swachh Bharat Cess paid was not reported in the ST-3 returns due to the absence of a relevant column. The Tribunal found that the appellant correctly filed the refund claim for the Swachh Bharat Cess amount and was entitled to the refund.

Issue 3: Eligibility for refund of Swachh Bharat Cess

The appellant claimed a refund of Rs. 56,42,239/- for Swachh Bharat Cess in terms of Notification No. 3/2016 dated 03.02.2016. The Tribunal upheld this claim, noting that the appellant correctly filed the refund claim.

Conclusion:

The Tribunal set aside the order dated 16.03.2020 passed by the Commissioner (Appeals), allowing the appellant's refund claim with interest at the prescribed rate. The appeal was allowed.

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