refund of amount deposited under protest in service tax proceedings

[POOJA AGARWAL]

Dear Sir,

We had deposited the demand of service tax under protest during pendency of proceedings. The amount was deposited by debiting RG 23 Register part A (SC + Cess + SHE Cess) and was deposited by utilizing the ITC of respective heads.

Now the appeal has been decided in our favour, but the department is rejecting the refund of the amount deposited under protest, by pressing into service section 140(1) of CGST Act.

Please guide how to defend the SCN

AI Summary

Refund of deposits under protest: transitional credit cannot bar refund once tax liability is quashed on appeal.
Whether refund of amounts deposited under protest, paid by utilising CENVAT/ITC balances, can be denied by invoking Section 140(1) of the CGST Act. Deposits under protest retain a contingent character until adjudication; Section 140(1) applies to closing balances transitioned into GST and does not automatically capture credits spent to meet contested liabilities. Denial of refund on transitional grounds requires proof that the same credit was carried forward and not adjusted; otherwise a factual, record based rebuttal and reliance on precedents supporting refund of protested deposits is appropriate.