2025 (4) TMI 109 - AT - Service Tax

Krishi Kalyan Cess refund denied under Section 142(9)(b) during GST transition following SBI Cards precedent

M/s Mann and Hummel Filter Pvt. Ltd. Versus Commissioner of Central Excise, Goods and Service Tax, Faridabad

CESTAT Chandigarh dismissed the appeal seeking refund of Krishi Kalyan Cess under Section 142(9)(b) of CGST Act, 2017 during GST transition. The Tribunal ... Refund of the Krishi Kalyan Cess (KKC) under Section 142(9)(b) of the Central Goods and Services Tax (CGST) Act, 2017 - transition to GST regime - HELD THAT:- This issue is no more res integra and the Division Bench of this Tribunal in the case of M/s SBI Cards and Payment Service Ltd. [2024 (7) TMI 1404 - CESTAT CHANDIGARH] has already rejected the appeal of the assessee by holding that they are not entitled to refund of Krishi kalyan Cess. Conclusion - The appellant is not entitled to the refund of Krishi Kalyan Cess. Appeal dismissed. ISSUES PRESENTED and CONSIDEREDThe core legal question considered in this judgment is whether the appellants are entitled to a refund of the Krishi Kalyan Cess (KKC) under Section 142(9)(b) of the Central Goods and Services Tax (CGST) Act, 2017, following the transition from the previous tax regime to the Goods and Services Tax (GST) regime.ISSUE-WISE DETAILED ANALYSISRelevant Legal Framework and PrecedentsThe legal framework involves Section 142(9)(b) of the CGST Act, 2017, which addresses the refund of amounts found refundable or admissible as CENVAT credit under the existing law prior to the transition to GST. The provision allows for refunds in cash under the existing law, notwithstanding contrary provisions, except for those in Section 11B(2) of the Central Excise Act, 1944.Precedents considered include the Tribunal's decision in the case of M/s SBI Cards and Payment Service Ltd., which relied on the Division Bench decision in M/s Lupin Limited, holding that refunds of KKC are not permissible. Additionally, the Tribunal referenced the case of Bharat Heavy Electricals Ltd., where the eligibility for cash refunds of cesses was discussed, but the decision was stayed pending appeal in the Madhya Pradesh High Court.Court's Interpretation and ReasoningThe Tribunal interpreted Section 142(9)(b) as not permitting the refund of KKC in cash. The reasoning was based on the precedent set by the Division Bench in the case of M/s Lupin Limited, which held that non-utilized CENVAT credit, such as KKC, could not be refunded in cash. The Tribunal emphasized that the issue was settled and not open to reinterpretation (res integra).Key Evidence and FindingsThe key finding was that the appellant had reversed the KKC credit in December 2017 due to confusion over its eligibility under GST law. The appellant later sought a refund, which was rejected by the Original Authority and upheld by the Commissioner on both merit and limitation grounds. The Tribunal found that the appellant's claim was not supported by the legal framework or precedents.Application of Law to FactsThe Tribunal applied the legal principles from the aforementioned cases to the appellant's situation, concluding that the appellant was not entitled to a refund of KKC. The Tribunal noted that the appellant's situation was analogous to the cases of M/s SBI Cards and Payment Service Ltd. and M/s Lupin Limited, where similar claims were denied.Treatment of Competing ArgumentsThe Tribunal considered the appellant's argument for a refund based on the reversal of KKC credit but found it unpersuasive in light of the established legal precedents. The Tribunal highlighted that the appellant's claim was contrary to the prevailing interpretation of Section 142(9)(b) and related case law.ConclusionsThe Tribunal concluded that the appellant was not entitled to a refund of the KKC, affirming the decisions of the lower authorities and dismissing the appeal.SIGNIFICANT HOLDINGSThe Tribunal's significant holding was that the appellants are not entitled to a refund of Krishi Kalyan Cess under Section 142(9)(b) of the CGST Act, 2017. The Tribunal relied on established precedents, notably the decisions in M/s SBI Cards and Payment Service Ltd. and M/s Lupin Limited, to conclude that non-utilized CENVAT credit, such as KKC, cannot be refunded in cash.Preserve verbatim quotes of crucial legal reasoning:'The issue is no more res integra and the Division Bench of this Tribunal in the case of M/s SBI Cards and Payment Service Ltd. has already rejected the appeal of the assessee by holding that they are not entitled to refund of Krishi Kalyan Cess.''Following the ruling of Larger Bench in the case of Gauri Plasticulture Pvt. Ltd., wherein it was held that a non-utilised portion of Cenvat credit cannot be claimed as refund in cash.'Core Principles EstablishedThe principle established is that non-utilized CENVAT credit, including cesses like KKC, cannot be refunded in cash under the CGST Act, 2017. This aligns with the broader interpretation that transitional provisions do not extend to cash refunds of such credits.Final Determinations on Each IssueThe final determination was that the appellant's appeal for a refund of KKC was dismissed, affirming the decisions of the lower authorities and adhering to the established legal framework and precedents. The Tribunal's decision reinforces the interpretation that such refunds are not permissible under the current legal regime.