2026 (4) TMI 7 - AT - Service Tax

Transitional GST refund rights preserve service tax refunds despite loss of Cenvat credit under the earlier regime.

Refund of service tax paid under the erstwhile regime was held admissible where credit could not be carried forward after GST transition. Section 142(3) ... Transitional refund of service tax - Section 142(3) of the CGST Act - Reverse charge tax paid under the erstwhile regime. Transitional refund - Service tax paid under reverse charge - Unavailable Cenvat credit after GST transition - HELD THAT:- The Tribunal held that the controversy stood covered by earlier Tribunal decisions dealing with similar facts. It accepted that where service tax was paid under the pre-GST law, but the corresponding credit could not be availed because the Cenvat regime had ceased on introduction of GST, the claim had to be considered under section 142(3) of the CGST Act. Following the view taken in NSSL Pvt Ltd [2021 (8) TMI 239 - CESTAT MUMBAI] and Gigamon Solutions Pvt Ltd [2024 (6) TMI 1111 - CESTAT CHENNAI], it held that such tax paid under the existing law was refundable and the rejection of the claim on the ground that no refund provision existed was unsustainable. [Paras 5] The appellant was held entitled to refund of the service tax so paid, and the matter was remanded to the jurisdictional authority to consider and allow the refund applications in terms of the Tribunal's findings. Final Conclusion: The Tribunal held that service tax paid by the appellant under the erstwhile regime, whose credit could not be availed after transition to GST, was refundable under the transitional provisions. The appeals were allowed and the refund claims were remanded to the jurisdictional authority for grant in accordance with the Tribunal's findings. Issues: Whether refund of service tax paid under the erstwhile regime, where credit could not be availed after transition to GST, was admissible under the transitional provisions of the CGST Act.Analysis: The refund claim arose from tax paid under the earlier service tax law after the appointed day, when the assessees could no longer take Cenvat credit because the GST regime had come into force. The governing provision was Section 142(3) of the CGST Act, 2017, which mandates that refund claims for amounts paid under the existing law are to be disposed of under that law and any amount found due is to be paid in cash. The Tribunal followed prior decisions holding that such claims are covered by the transitional scheme and that the inability to carry forward or utilise credit in GST does not defeat the substantive right to refund of amounts paid under the erstwhile law.Conclusion: Refund of the service tax paid under the earlier law was admissible, and the matter was remanded to the jurisdictional authority to consider and allow the refund claims in accordance with the Tribunal's findings.