Refund of service tax credit available as on 30.6.2017

[Lalitha Krishnamurthy]

Our client providing Business Support service had unutilized credit of service tax as on 30.6.2017, because of exports and was desirous of claiming refund of the same.He did not carry it forward to the opening balance of GST credit on 1.7.2017 because of the provisions of Section 142(3) of the CGST Act, which contains the following proviso:

'Provided further that no refund shall be allowed of any amount of CENVAT credit where the balance of the said amount as on the appointed day has been carried forward under this Act'.

When he applied for refund of the accumulated Cenvat credit, under Notification no. 27/2012- CE(NT) dated 18.6.2012, it was rejected on the sole ground that the said amount has not been debited from the assesee's CENVAT credit account as required under the said Notification. Neither the adjudicating Authority nor the first appellate authority appreciated the fact that since the credit was not formally carried forward, it could not be formally debited also. But the availability of credit is not in dispute since the same is reflected in the Service Tax return for the period ending 30.6.2017.

Would appreciate the experts' advice on the grounds to be taken in the second appeal.

AI Summary

Client Denied Refund of Unutilized Service Tax Credit Due to Procedural Lapse; Consider Appeal and Legal Precedents Under Section 142(3) CGST Act. A client providing Business Support services sought a refund of unutilized service tax credit from 30.6.2017 due to exports but did not carry it forward to GST credit on 1.7.2017, per Section 142(3) of the CGST Act. The refund was denied as the credit wasn't debited from the CENVAT account. Experts suggest appealing to CESTAT and leveraging procedural lapse case laws. The client, having ceased business, cannot use the TRAN-1 option. Suggestions include exploring legal precedents for refunds due to business closure and considering procedural defenses.