2025 (2) TMI 898 - AT - Service Tax

Appeal dismissed for refund of unutilized Cenvat Credit under Section 142(3) CGST Act 2017 and Rule 5 Cenvat Credit Rules 2004

Good Luck Educational And Welfare Society Versus Commissioner of Central Excise and Service Tax, Ludhiana

CESTAT Chandigarh dismissed the appeal for refund of unutilized Cenvat Credit under Section 142(3) of CGST Act, 2017 read with Rule 5 of Cenvat Credit ... Refund of unutilized Cenvat Credit u/s 142(3) of the CGST Act, 2017, read with Rule 5 of the Cenvat Credit Rules, 2004, and Section 11B of the Central Excise Act, 1944, by virtue of Section 83 of the Finance Act, 1994 - Rejection on the ground that there exists no provision of refund of the balance Cenvat Credit in the Cenvat Credit Rules, 2004 - HELD THAT:- The decision of the Hon’ble Jharkhand High Court in the case of M/s Rungta Mines Limited [2022 (2) TMI 934 - JHARKHAND HIGH COURT] is exactly on the issue which is involved in the present case. The Hon’ble High Court after analyzing all the decisions cited before it, has come to the conclusion that under the existing law, cash refund cannot be granted of Cenvat Credit which is available on the appointed day i.e. 01.07.2017. Conclusion - The appellant's failure to transition the Cenvat Credit and the lack of export activity precluded them from claiming a refund under the applicable legal framework. Appeal dismissed. ISSUES PRESENTED and CONSIDEREDThe core legal issue in this case is whether the appellant is entitled to a refund under Section 142(3) of the CGST Act, 2017, read with Rule 5 of the Cenvat Credit Rules, 2004, and Section 11B of the Central Excise Act, 1944, by virtue of Section 83 of the Finance Act, 1994. The appellant's claim for a refund of unutilized Cenvat Credit was rejected by the lower authorities, and the appeal challenges the correctness of these decisions.ISSUE-WISE DETAILED ANALYSISRelevant Legal Framework and PrecedentsThe appellant's claim is based on the provisions of Section 142(3) of the CGST Act, 2017, which deals with transitional provisions for refunds. Rule 5 of the Cenvat Credit Rules, 2004, provides for the refund of Cenvat Credit when inputs are used in relation to export. Section 11B of the Central Excise Act, 1944, governs the procedure for claiming refunds under the existing law. The appellant relies on various judicial decisions to support their claim for a refund.Court's Interpretation and ReasoningThe Tribunal examined the applicability of Section 142(3) of the CGST Act, which provides for the disposal of refund applications according to the existing law. The Tribunal noted that the appellant did not transition the Cenvat Credit by filing TRANS-1, despite having sufficient time to do so. Instead, the appellant filed a refund claim, which was not permissible under the transitional provisions of the CGST Act.The Tribunal further analyzed the judgments cited by both parties. The appellant's reliance on Rule 5 of the Cenvat Credit Rules, 2004, was found to be misplaced, as this rule applies to cases involving the export of goods or services, which was not the situation in the appellant's case. The Tribunal found the decision of the Jharkhand High Court in the case of M/s Rungta Mines Limited to be directly applicable, as it addressed the issue of cash refunds for Cenvat Credit available on the appointed day of GST implementation.Key Evidence and FindingsThe Tribunal found that the appellant had not utilized the available time to file TRANS-1 for transitioning the Cenvat Credit. The appellant's reliance on various judicial decisions was deemed irrelevant, as those cases involved different factual scenarios, primarily concerning refunds on the closure of business units or exports, which were not applicable to the present case.Application of Law to FactsThe Tribunal applied the legal principles established in the M/s Rungta Mines Limited case, which clarified that Section 142(3) of the CGST Act does not create a new right to refund but preserves existing rights under the old law. The Tribunal concluded that the appellant did not have a right to a cash refund under the existing law, as they failed to transition the credit and did not meet the conditions for a refund under Rule 5 of the Cenvat Credit Rules, 2004.Treatment of Competing ArgumentsThe Tribunal considered the appellant's arguments regarding the entitlement to a refund due to the inability to utilize the credit after the implementation of GST. However, it found these arguments unpersuasive, as the appellant had not fulfilled the procedural requirements for transitioning the credit. The Tribunal also addressed the respondent's reliance on the Jharkhand High Court's decision, which it found to be directly applicable and supportive of the rejection of the refund claim.ConclusionsThe Tribunal concluded that the appellant was not entitled to a refund under Section 142(3) of the CGST Act, 2017, as they had not transitioned the Cenvat Credit and did not meet the conditions for a refund under the existing law. The appeal was dismissed, and the impugned order was upheld.SIGNIFICANT HOLDINGSThe Tribunal preserved the legal reasoning from the Jharkhand High Court's decision in M/s Rungta Mines Limited, emphasizing that Section 142(3) of the CGST Act does not create new rights but preserves existing rights under the old law. It highlighted that a refund in cash is only permissible if the claimant had a right to such a refund under the existing law, which the appellant did not.The Tribunal established the core principle that the transitional provisions of the CGST Act do not confer new rights to refunds but maintain existing rights, subject to compliance with procedural requirements. The final determination was that the appellant's failure to transition the Cenvat Credit and the lack of export activity precluded them from claiming a refund under the applicable legal framework.