refund of cenvat credit of service tax under Rule 5 of Cenvat Credit and Notification no 27/2012 by servive provider.

[bk r]

We are service provider and engaged in exporting our entire services and claim refund regularly quarterly for cenvat credit availed in respect of inputs service used for providing output service under Rule 5 of the Cenvat Credit Rules read with notification No. 27/2012 CEx and department was providing service tax refund. But after GST we submitted the refund claim for the Q.E.12/2016 on 25/09/2017, for Q.E 03/2017 on 26/12/2017 and for Q.E. 06/2017 on 27/03/2018. All claims were filed after GST implementation i.e. after 01/07/2017. We were having Cenvat Credit Balance of ₹ 92 lacs as on 30.06.2017 and the same was also shown in ST 3 return for the period of April 2017 to June 2017 as a closing balance. but this amount was not carried forward by us in the GST under Trans-1 or other wise. We took opening balance of ITC zero as on 01.07.2017 and no ITC claimed in respect of balance Cenvat credit available on 30.06.2017 during 01/07/2017 to till date. But in our purchase/cenvat register maintained manually the above /said ₹ 92 lacs was showing as closing balance as on 01.07.2017 and as per the condition of claiming refund the refund amount to be claimed was required to be reversed before filing refund claim, therefore, we reversed the cenvat amount of ₹ 32 lacs on 23/09/2017 for the refund of Q.E 12/2016, ₹ 30 lacs reversed from the Cenvat Account on 23/12/2017 for claiming refund of Q.E 03/2017 and ₹ 30 lacs was also reversed from the Cenvat Account on 26/03/2018 for claiming refund for the Q.E. 06/2017. After 26/03/2018 our closing balance of cenvat credit was zero as all the amount was reversed upto 26/03/2018. But the department is not granting the refund on the ground that after 30/06/2017 there was no provision to maintain manual cenvat credit account and we cannot reverse the amount claimed as refund from cenvat account after GST implementation. and the cenvat credit lying as on 01/07/2017 get lapsed. The Department also asked for the copy of return whereunder it has been shown that the amount claimed as refund has been reversed but after GST we filed GSTR-3B /GSTR-1 and in this returns no debit entry made as the cenvat credit balance as on 30/06/2017 was not carried forward in ITC of GST. We also cannot file any return under Service Tax. What we can do now. whether the department contention is right? and they reject my refund claim on these grounds.

AI Summary

Cenvat credit transition: failure to transfer pre GST credits into TRANS 1 may foreclose procedural refund rights and prompt litigation.
A service exporter with pre GST Cenvat credit who did not transfer the balance via TRANS 1 filed refund claims after the appointed day and made manual reversals in private registers; the department holds that transitional rules required transfer into the electronic credit ledger and that unreconciled private register reversals and absence of debit entries in statutory returns render refund claims procedurally defective, making appellate or litigatory challenge the primary remedy.