Cash refund of service tax under reverse charge refused where no independent entitlement existed under transitional GST provisions.

A claim for cash refund of service tax paid under reverse charge mechanism was held not admissible under Section 142(3) of the CGST Act because that provision does not create an independent right to refund. Refund had to be supportable under the existing law, and Section 142(6) was found inapplicable on the facts. The claim was also rejected under the Cenvat Credit Rules, 2004 and Section 11B of the Central Excise Act, as the refund was not otherwise legally due. The argument based on Section 174 and on credit as a substantive right failed, since credit was treated as a concession rather than an absolute entitlement to cash refund.

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Issues: Whether refund of service tax paid under reverse charge mechanism could be granted in cash under Section 142(3) of the Central Goods and Services Tax Act, 2017, and whether Section 142(6) or Section 174 of the Act supported such refund.

Analysis: The refund claim was examined on the premise that Section 142(3) does not create an independent right to cash refund. The decisive factor is whether the refund is otherwise admissible under the existing law. On the facts, Section 142(6) was held inapplicable. The claim for refund of service tax paid under reverse charge mechanism was found not to be supported by the existing law, including the Cenvat Credit Rules, 2004 and Section 11B of the Central Excise Act, 1944. The plea based on Section 174 and the contention that credit is a substantive right were rejected, as credit was treated as a concession and not an absolute right enforceable to obtain cash refund in the absence of an enabling provision.

Conclusion: The claim for cash refund was not admissible, and the rejection of refund was upheld.

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