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Issues: (i) whether unutilised Cenvat credit could be claimed as cash refund after discontinuance of production when the registration was not surrendered and the credit could have been carried forward into the GST regime; (ii) whether the claim was admissible under the existing refund provisions and the transitional scheme under the CGST Act.
Issue (i): whether unutilised Cenvat credit could be claimed as cash refund after discontinuance of production when the registration was not surrendered and the credit could have been carried forward into the GST regime.
Analysis: The claim was examined against the settled principle that refund of tax credit is purely statutory and cannot be claimed as a matter of right outside the conditions prescribed by law. The appellant had not surrendered registration and had continued filing returns till migration into GST, so the situation was materially different from cases where registration had been surrendered and refund of balance credit had been allowed. On the facts, the credit could have been transitioned through the prescribed GST mechanism, and failure to do so did not create a right to cash refund.
Conclusion: The claim for cash refund was not admissible on this basis and was correctly rejected.
Issue (ii): whether the claim was admissible under the existing refund provisions and the transitional scheme under the CGST Act.
Analysis: Rule 5 of the Cenvat Credit Rules permitted refund only in the limited situations specified by the rule, particularly where credit related to exports, and Section 11B governed refund claims under the existing law with its own limitation and procedural requirements. Section 142(3) of the CGST Act was held to be only an enabling transitional provision that preserves an existing right and provides the mode of refund in cash if such right otherwise exists; it does not create a new right or revive a lapsed one. Since the appellant had neither established entitlement under the existing law nor shown a permissible transitional claim, the statutory route for refund was unavailable.
Conclusion: The refund was not permissible under the existing law or under the transitional provisions.
Final Conclusion: The appeal failed because the appellant had no enforceable right to cash refund of the unutilised credit, and the rejection of the refund claim was sustained.
Ratio Decidendi: Transitional provisions for refund do not create a fresh entitlement to cash refund; they operate only where an enforceable right exists under the pre-existing law and the claim satisfies the prescribed statutory conditions.
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