2026 (1) TMI 425 - AT - Service Tax

Cash refund claim for pre-GST CENVAT credit not carried forward in TRAN-1, despite ST-3 classification mismatch, allowed

Section 142(9)(b) CGST Act was interpreted to permit an assessee to seek cash refund of eligible pre-GST CENVAT credit even if it was not carried forward ... Entitlement for cash refund in view of Section 142(9)(b) of CGST Act - appellant had not carried forward the balance amount in TRANS-1 filed by them - figure mentioned in ST-3 Return and the relevant supporting documents did not match with each other - HELD THAT:- No objection can be taken on the ground that the appellant had not carried forward the amount of Rs.2,61,188/- in TRANS–I though the same has been shown as outstanding balance in ST-3 Return. In the case of the appellant decided by the Bangalore Bench vide Final Order dated 07.07.2021 [2021 (7) TMI 326 - CESTAT BANGALORE], the learned Member observed that if two options are available, the assessee may choose, which is more beneficial for them and, therefore, did not find any error where the appellant did not choose to carry forward the credit in TRANS-1 and preferred to claim cash refund as provided under Section 142(9)(b) of the Act. Discrepancy pointed out by the Department with reference to the supporting documents submitted by the appellant as against the ST-3 return - HELD THAT:- It is an admitted position that in the ST–3 Return, the CENVAT Credit accrued on account of inputs even in the revised returns filed on 19.09.2017, the supporting documents relates to credit of service tax paid on audit fee/input service. In the earlier case of the appellant disposed of vide Final Order dated 07.07.2021, it was noticed that the appellant had failed to furnish the original invoices which are necessary for verification of the claim of refund and, therefore, for the purpose of verification of the documents, the case was remanded back to the Original Authority. Thus, what emerges is that the appellant is required to substantiate the refund claim by submitting the requisite and correct documents - Tribunal agree with the Adjudicating Authority that the supporting documents were incompatible with the information mentioned in ST–3 Return, which were found to be mismatched. However, considering the fact that the appellant had the balance of Rs.2,61,589/- in their Cenvat Credit Account but by mistake had mentioned as towards ‘input’ in the ST-3 Returns though in the documents, it has been reflected as towards ‘input service’. The fact remains that the appellant had availed the cenvat credit and was therefore, entitle to claim the refund thereof. The error is not really very serious affecting the merits of the entitlement. Moreover, the appellant is a nationalized Bank and no malafides can be attributed except there has been some negligence on the part of some officer. The Authorities below have erred in denying the benefit to the appellant. The impugned order is set aside - appeal allowed. Issues: (i) Whether a registered person is entitled to cash refund under Section 142(9)(b) of the Central Goods and Service Tax Act, 2017 where a revised ST-3 return increases the closing balance of cenvat credit, despite mismatches in supporting documents and non-carriage of credit in TRANS-1.Analysis: Section 142(9)(b) provides for refund where a return filed under the existing law is revised after the appointed day and the closing balance of cenvat credit in the revised return exceeds that in the original return, entitling the registered person to claim the differential amount as cash refund under the existing law. The Tribunal examined whether documentary mismatches and the appellant's choice not to carry forward credit in TRANS-1 defeat entitlement. The factual record showed the cenvat credit was availed and the increased closing balance was reflected in the revised return. The Tribunal accepted that supporting documents did not perfectly mirror the ST-3 entries but found the discrepancy to be a clerical error concerning classification (input versus input service) rather than evidence of absence of credit or mala fide intention. Prior decisions applying Section 142(9)(b) were followed, and where verification requires original documents the matter can be remanded for substantiation; however, on the present facts the appellant had sufficiently established entitlement to the credited amount.Conclusion: The appellant is entitled to the cash refund of the differential cenvat credit under Section 142(9)(b) of the Central Goods and Service Tax Act, 2017; the impugned order denying the refund is set aside and the appeal is allowed in favour of the assessee.