Refund of pre-GST Cenvat credit under GST transition provisions upheld in cash despite later service tax payment.

Refund of Cenvat credit linked to service tax paid under the Reverse Charge Mechanism after GST commencement is stated to remain admissible under Section 142(3) of the CGST Act, because that provision preserves refund claims arising under the existing law and requires payment in cash, subject to unjust enrichment. The text says the later payment date did not defeat entitlement where the liability related to the pre-GST period and the credit arose under the earlier regime. Section 142(8)(a) was treated as inapplicable to deny such refund, and Rule 9(1)(bb) of the Cenvat Credit Rules, 2004 was rejected as not applying to a service recipient. The refund claim was allowed.

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Issues: Whether refund of Cenvat credit relatable to service tax paid under Reverse Charge Mechanism after the commencement of GST is admissible under Section 142(3) of the CGST Act, 2017, and whether the refund could be denied by invoking Section 142(8)(a) of the CGST Act, 2017 and Rule 9(1)(bb) of the Cenvat Credit Rules, 2004.

Analysis: Section 142(3) of the CGST Act, 2017 preserves claims for refund of amounts paid under the existing law and requires the amount eventually accruing to be paid in cash, subject only to the bar relating to unjust enrichment under Section 11B(2) of the Central Excise Act, 1944. The fact that the service tax was paid after the appointed day did not destroy the entitlement, since the liability related to the pre-GST period and the credit arose under the existing law. The invocation of Section 142(8)(a) was held inapplicable to deny a refund that otherwise fell within Section 142(3). The allegation of suppression was found unsupported by evidence, and the objection based on Rule 9(1)(bb) was rejected as that provision did not apply to a service recipient.

Conclusion: The assessee was entitled to refund of the Cenvat credit in cash, and the rejection of the refund claim was unsustainable.

Final Conclusion: The refund claim was allowed and the impugned order was set aside in favour of the assessee.

Ratio Decidendi: A refund claim for Cenvat credit arising under the existing law remains payable in cash under Section 142(3) of the CGST Act, 2017 even if the corresponding tax is discharged after GST commencement, and it cannot be denied on an inapplicable procedural bar or unsupported allegation of suppression.

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