2025 (2) TMI 591 - AT - Service Tax

Refund of excess CENVAT credit allowed under CGST Act transitional provisions overriding Central Excise Act limitations

Star India Private Limited Versus Commissioner of CGST & Central Excise Mumbai Central Commissionerate

Star India Private Limited Versus Commissioner of CGST & Central Excise Mumbai Central Commissionerate - TMI 1. ISSUES PRESENTED and CONSIDEREDThe core legal question considered in this judgment is whether the refund of CENVAT credit arising from the balance of Education Cess and Secondary & Higher Education Cess, as per the revised ST-3 return for the period of June-September 2017, is refundable under sub-sections (3) and (9) of Section 142 of the CGST Act, 2017, read with Section 11B of the Central Excise Act, 1944.2. ISSUE-WISE DETAILED ANALYSISRelevant Legal Framework and Precedents:The legal framework involves the interpretation of Section 142 of the CGST Act, 2017, which provides transitional provisions for the refund of CENVAT credit. Additionally, Section 11B of the Central Excise Act, 1944, is considered for refund procedures. The Tribunal also referenced various precedents, including decisions from the Hon'ble Supreme Court and previous Tribunal rulings, to support its interpretation of the law.Court's Interpretation and Reasoning:The Tribunal interpreted Section 142 of the CGST Act, 2017, as providing a mechanism for refunding CENVAT credit in cash, notwithstanding the absence of specific provisions for such refunds in the existing CENVAT Credit Rules. The Tribunal emphasized that the transitional provisions in Section 142 are intended to facilitate a smooth transition from the previous tax regime to the GST regime, allowing for cash refunds of unutilized CENVAT credit.Key Evidence and Findings:The Tribunal found that the appellants had duly complied with the procedural requirements under the CENVAT Credit Rules, 2004, and had appropriately claimed the refund of unutilized CENVAT credit. The evidence showed that the appellants had a closing balance of Education Cess and Secondary & Higher Education Cess, which could not be transitioned to the GST regime.Application of Law to Facts:The Tribunal applied the provisions of Section 142(3) and 142(9)(b) of the CGST Act, 2017, to the facts of the case, concluding that the appellants were entitled to a cash refund of the unutilized CENVAT credit. The Tribunal noted that the provisions of Section 142 override any contrary provisions in the existing law, except for the unjust enrichment clause in Section 11B(2) of the Central Excise Act, 1944.Treatment of Competing Arguments:The Tribunal addressed the arguments presented by the Revenue, which contended that the refund was not permissible due to the lack of specific provisions under Rule 5 of the CENVAT Credit Rules. The Tribunal rejected this argument, stating that the transitional provisions in the CGST Act specifically allow for cash refunds, and the absence of such provisions in the CENVAT statute does not preclude the refund.Conclusions:The Tribunal concluded that the appellants are entitled to a refund of the unutilized CENVAT credit in cash, as provided under Section 142 of the CGST Act, 2017. The Tribunal set aside the impugned order and allowed the appeal with consequential relief.3. SIGNIFICANT HOLDINGSPreserve Verbatim Quotes of Crucial Legal Reasoning:'The provisions of Sections 142(3) and 142(9)(b) of the CGST Act, is a transitional arrangement wherein it has been specifically provided that such provisions apply as a non-obstante clause whereby such provisions will have overriding effect, if anything to the contrary is contained under the provisions of existing law i.e., Central Excise Act, 1944, except for the provisions of sub-section (2) of section 11B ibid.'Core Principles Established:The Tribunal established that the transitional provisions under the CGST Act are designed to ensure that taxpayers are not deprived of their vested rights to CENVAT credit during the transition to the GST regime. The provisions allow for cash refunds of unutilized credit, notwithstanding the absence of such provisions in the existing CENVAT Credit Rules.Final Determinations on Each Issue:The Tribunal determined that the appellants are entitled to a refund of Rs. 25,52,385/- in cash, representing the unutilized balance of Education Cess and Secondary & Higher Education Cess, as per the revised ST-3 return. The impugned order was set aside, and the appeal was allowed with consequential relief.