Credit in Tran -01 on the basis of Revised Service Tax Return

[POOJA AGARWAL]

The assessee filed the Service Tax Return for Apr-June 2017 in August 2017. Howvere after filing the return it was noticed that due to typographical error the CENAVT credit was claimed less. It was Rs. 7,25,49,965 (7.25 Crores) whereas it was wrongly typed as 75,49,965 (the figure 2 was omitted). So the assessee revised the Service Tax return in Sep 2017 and calimed the correct credit Rs. 7.25 crores in Tran-01 form. Whether the claim on the basis of revised return is barred u/s 140(8) of the CGST Act? if yes what is the option available because the time limit to claim refund u/s 140(9)(b) has also expired?

Please suggest

[Amit Agrawal]

Needless to say that Dept's views are - almost surely - expected to be unfavourable from point of view the tax-payer in given situation. Issues raised is subject to different interpretations, complex in nature and will be ultimately settled by higher courts one way or other.

With above caveats, my views are as under:

A. Section 142 (9) (b) of the CGST Act, 2017 is not applicable in given situation. This is because, in my view, pursuant to filing of revised return, CENVAT credit is NOT found to be admissible to such assessee. Credit of Rs. 7.25 crores was admissible to the assessee whether he files return (including revised return) or not in given situation.

B. I read the restrictions of first proviso to Section 140 (8) in light of my above-reading of Section 142 (9) (b). In other words, restrictions of first proviso to Section 140 (8) does not apply to the given situation in my view.

C. (Though one HC has ruled otherwise in the context of Credit of KCC, if I remember correctly), the difference between Section 140 (1) & 140 (8) - w.r.t. filing of revised return - also needs to be kept in mind, while defending oneself.

Furthermore, kindly note that if 'Section 142 (9) (b) of the CGST Act, 2017 is said to be applicable in given situation', I hold a view that there is no time limit prescribed to claim refund of resultant additional Cenvat Credit' either under section 11B of the Central Excise Act, 1944 (1 of 1944.) or under GST Act, 2017.

These are ex facie views of mine and the same should not be construed as professional advice / suggestion.

[KASTURI SETHI]

A period of more than 5 years has elapsed. Have you received any communication from the department ? Has audit been conducted or not ? Your query requires elaboration.

It appears to me that full and correct facts have not been disclosed in this query.

Prima facie, the case is worth fighting. Case laws on the issue can be traced out. You will have to work hard because facts & circumstances of each case are not always the same.

First of all exhaust the department channel. Meanwhile you will come by more case laws on the issue. Since GST laws were in its infancy and even now (after crossing 5 years) are in its infancy. It takes time to be acquainted with new laws. It is a technical issue and you should not lose hope.

[POOJA AGARWAL]

@ Kasturi Sethi - Sir the department has raised an audit objection and have issued notice (not the SCN DRC 01). The officer is threatning that we deposit the amount before issue of Show Cause notice, else he shall impose 100% penalty in the SCN

[KASTURI SETHI]

It is only a technical fight. A tax payer must not suffer such a huge loss because of technicalities. A SCN is an opportunity to defend yourself. You have no other option. Relief is possible only through litigation. No logic to be afraid of SCN. Be pro-active and commence searching case laws in your favour. There are so many ways to defend such a case. A complicated task should be cherished.

[Padmanathan KV]

I agree with views of Ld. Amit Ji. A view can be taken that Section 142(9)(b) is not applicable since the cenvat credit of 7.25 crores becomes admissible to you not by virtue of filing the revised return but admissible even before that. With regard to Trans credit, Courts have held that it is a right accrued and it cannot be denied merely on technicality.

AI Summary

Cenvat credit claim: correction by revised return should not be denied on time bar grounds, defend via departmental remedies and litigation. Taxpayer corrected a typographical underclaim of CENVAT credit by filing a revised return and Tran-01. Experts opine the additional credit was admissible irrespective of the revised filing, so time-bar or revised-return restrictions should not defeat the claim. An audit query and pre-SCN notice were issued; practitioners advise exhausting departmental remedies and defending through litigation. One view offered is that, if a refund route applies, there may be no prescribed time limit under central excise or GST refund provisions to recover the additional credit, though this remains an opinion.