Transitional refund under GST law allows cash refund of pre-GST service tax paid, with Tribunal appeal jurisdiction preserved.
Section 142(3) of the CGST Act provides that refund claims relating to duty, tax or other amounts paid under the existing law must be dealt with under that law, and any refundable amount is to be paid in cash. Applying that transitional framework, the Tribunal noted that service tax paid under reverse charge for pre-GST transactions could not be denied merely because the payment occurred after GST implementation, where the amount was not otherwise capable of being carried forward as GST credit. It also held that appellate jurisdiction over such refund matters remains available under the saving provisions. The refund claim and cash refund relief were therefore upheld, and the appeal was maintainable before the Tribunal.
Issues: (i) Whether service tax paid under reverse charge mechanism after the introduction of GST, for transactions relating to the pre-GST regime, could be refunded in cash under section 142(3) of the Central Goods and Services Tax Act, 2017. (ii) Whether an appeal against an order passed on such a refund claim lies before the Tribunal.
Issue (i): Whether service tax paid under reverse charge mechanism after the introduction of GST, for transactions relating to the pre-GST regime, could be refunded in cash under section 142(3) of the Central Goods and Services Tax Act, 2017.
Analysis: Section 142(3) requires refund claims relating to CENVAT credit, duty, tax or other amounts paid under the existing law to be disposed of in accordance with the existing law, with any refundable amount to be paid in cash. The Tribunal noted that the payment in question related to service tax liability under the earlier regime and that the transitional provision could not be confined to the narrow view adopted by the lower authorities. Relying on the Larger Bench view and the cited co-ordinate Bench decisions, it held that such a claim is maintainable under section 142(3) where the amount cannot otherwise be carried forward into GST credit.
Conclusion: The refund claim was held to be maintainable and the denial of cash refund was set aside.
Issue (ii): Whether an appeal against an order passed on such a refund claim lies before the Tribunal.
Analysis: The Tribunal relied on the Larger Bench view that refund claims under section 142(3) continue to be governed by the existing law for appellate purposes as well, and that the saving provisions preserve pending and related proceedings under the repealed or amended enactments. On that basis, it concluded that the Tribunal has jurisdiction to entertain the appeal.
Conclusion: The appeal was held to be maintainable before the Tribunal.
Final Conclusion: The impugned order rejecting the refund claim was set aside and the assessee was granted consequential relief in law.
Ratio Decidendi: A refund claim under section 142(3) of the Central Goods and Services Tax Act, 2017 must be examined under the existing law, and where the transitional framework preserves the remedy, the Tribunal retains appellate jurisdiction to grant cash refund relief.