TaxTMI 
TaxTMI 
2022 (1) TMI 744
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....8, dated 12-10-2020 Appellant has filed refund claim under Section 54(1) of the CGST Act, 2017 for the period August, 2018 in respect of inadvertent reversal of Cesses Amount Refund rejection Amounting to Rs. 5,72,604/- + Interest Rs. 6,600 2. Brief facts of the case : 2.1 Brief facts of the case are that the appellant having GSTIN 08AAACL0140P4ZG has filed the application for refund of Rs. 5,72,604/- in any Other Category of Cesses which was carry forwarded in TRAN-1 and later on, the said amount was reversed in GSTR-3B return filed for the period of August, 2018 vide GST-RFD-01 with ARN No. 0808200558235, dated 31-8-2020 under Section 54(1) of the CGST Act, 2017. 2.2 Further the adjudicating authority has issued Form GST RFD-08 vide reference No. Z00809200122410, dated 7-9-2020 on the following grounds : (1) As per explanation (3) of Section 140 of CGST Act, 2017 which was inserted vide the Central Goods and Services Tax Amendment Act, 2018 read with Notification No. 2/2019-Central Tax, dated 29-1-2019 - w.e.f. 1-7-2017, Cesses credit cannot be carry forwarded through Tran-1 which is reproduced as below : "For removal of doubts, it ....
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....o the claimant. Thus the credit wrongly taken through Tran-1 has been reversed by them in GSTR-3B returns for the month of August, 2017. The assesse have filed refund claim under Section 54 of the Act for the said amount in the category "Any Other (Specify)" of reversal of ITC pertaining to cess which was carry forwarded through Tran-1 but the reversal of ITC was made by the assessee for wrongly taken credit of Cesses through Tran-1 which was not admissible to the assessee under GST regime. The impugned credits could not be carry forwarded to GST regime as per the GST law. Since the credits are not even carry forwarded to the GST regime, the question of refund of the same under GST regime does not arises. The case law i.e. M/s. Eicher Motors Limited v. Union of India - 1999 (106) E.L.T. 3 (S.C.) and decision of the Hon'ble CESTAT in the matter of M/s. Bharat Heavy Electricals Ltd. v. Commissioner Central Goods and Service Tax, Central Excise and Customs, Bhopal Excise (Appeal No. 50081 of 2019) pertains to the old regime i.e. Central Excise and do not hold relevance in this case. 5. Being aggrieved with the impugned order dated 12-10-2020, the appellant has filed the appe....
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....ppellant denies the aforesaid allegation made in the impugned order inasmuch as the prevalent legal position has never obligated the appellant to reverse or forgo such credit of cesses availed prior to the introduction of GST. Therefore, the appellant filed the application in order to seek refund of the amount of such cesses as per the provisions contained in Section 54 of CGST Act, 2017 under "any other" category. (A.4) Pertinently, the Education Cess and the Secondary and Higher Secondary Education Cess was abolished vide Section 153 and Section 159 of the Finance Act, 2015. However, the said abolition nowhere mandated lapse of accumulated credit of such cesses lying in ST-3 and ER-1 returns on such date. In fact, the appellant continued to carry forward such credit in their returns without any doubt or demur by the tax authorities. Similarly, Section 174(2)(c) has stated that the amendment in Finance Act, 1994, pursuant to the introduction of GST shall not effect any right, privilege, obligation, or liability acquired, accrued or incurred under the amended Act or repealed Acts or orders under such repealed or amended Acts. Thus, there was no intention of the Government t....
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....t Heavy Electricals Ltd. v. Commissioner Central Goods and Services Tax, Central Excise and Customs, Bhopal Excise (Appeal No. 50081 of 2019) pertains to old regime i.e. Central Excise and do not hold relevance in this case (B.2) The appellant denies the allegation and submits that both the aforementioned cases are equally relevant in its case inasmuch as the credits earned by the Appellants in the said cases were also a vested right which became unutilizable in light of changes made in law and thereafter, the refund of such credits have been allowed by the Hon'ble Authorities in both the cases. (B.3) Pertinently, the facts of the case of Bharat Heavy Electricals Ltd. v. Commissioner Central Goods and Services Tax, Central Excise and Customs, Bhopal Excise (Appeal No. 5008l of 2019) [attached as Exhibit 3] are very similar to that of the appellant inasmuch as in the referred case also it was held that the right to credit of EC, SHEC and KKC accrued and got vested in the appellant by virtue of the payment of the value of such cesses to its manufacturers who supplied the goods to the appellant that were used as inputs in the manufacturing of its final products. ....
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....manufactured products and if such a situation is sought to be altered, necessarily it follows that right, which had accrued to a party such as availability of a scheme, is affected and in particular, it loses sight of the fact that provision for facility of credit is as good as tax paid till tax is adjusted on future goods on the basis of the several commitments which would have been made by the assessees concerned. Therefore, the scheme sought to be introduced cannot be made applicable to the goods which had already come into existence in respect of which the earlier scheme was applied under which the assessees had availed of the credit facility for payment of taxes. It is on the basis of the earlier scheme necessarily the taxes have to be adjusted and payment made complete. Any manner or mode of application of the said rule would result in affecting the rights of the assessees. Relying upon the ratio of the above decision the Learned Counsel has argued that a right accrued to the assessee on the date when they paid the tax on the raw materials on the inputs and that right would continue until the facility available thereto gets worked out or until those goods existed. Therefore....
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....ictory decisions of High Courts on the same issue. 5. Accordingly we hold that impugned order-in-appeal is without any merit and thus we set aside the same. The appeal is accordingly allowed..." (B.4) The facts of the above cases are relevant to that of the appellant inasmuch as the balance of cesses lying in credit of appellant, before reversal, pertain to input services procured for use in providing output services, which are mainly in the nature of works contract. The nature of works contract is such that there is always a significant time lag between the receipt of input services and the provisioning of output services. While the input services are continuously procured and used in the construction work, the billing to the customer is done periodically or on the achievement of specified milestones as settled in the contract entered between the parties. The subject credit was pertaining to the input services which were availed and used prior to the abolition of cesses but the corresponding finished work was billed post such abolition under the new scheme of taxation. It is the case of the appellant that the said credit was validly earned by it, used in the provisi....
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....ch cess lying in the return on such date. The credit of cesses earned by the appellant during the material period was never been taken back by the legislature accordingly, he contended that once the benefit has not been explicitly withdrawn by the legislature, the proposal made in the impugned order to refuse the refund claim of such credit reversed by the appellant is improper. In the above context, it is observed that there is no iota of doubt in the fact that after insertion of explanation 3 of Section 140 of CGST Act vide S. 28 of the CGST (Amendment) Act, 2018 (31 of 2018) which were made effective from 1-7-2017, accumulated credit of cesses could not be carry forwarded and also could not be utilized for payment of outward supply. The same view has also been taken by the Hon'ble Madras High Court vide its order dated 16-10-2020 in the case of Commissioner of CGST & Central Excise v. Sutherland Global Services Pvt. Ltd., The Hon'ble High Court set aside the earlier Single Bench judgment dated 5-9-2019 and allow the appeal of the revenue. The Hon'ble Madras High Court hold that the assessee was not entitled to carry forward and set off of unutilized Education Cess, Secondary & ....
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.... (Tri. - Hyd.)] observed that the judgment of the Larger Bench of the Hon'ble High Court of Bombay in the case of M/s. Gauri Plasticulture v. Commissioner of Central Excise Indore [2019 (30) G.S.T.L. 224 (Bombay)] was precisely on the point as to whether the assessee can get cash refund of Cenvat credit which they were not able to utilize and it was also answered in negative. The same view has also been taken by the Learned CESTAT, Hyderabad in case of M/s. Myland Laboratories Ltd., [2020-TIOL-576- CESTAT, Hyderabad] wherein it has been held that refund of cesses in cash is disallowed. In view of above ratio of judgment, it is quite clear that this issue has not yet been attained the finality. The issue whether the balance of credit of cesses was liable to be refunded or not, was also raised in case of M/s. Banswara Syntex Ltd. v. Commissioner of Central Excise, Udaipur - 2019 (365) E.L.T. 773 before the Hon'ble Rajasthan High Court wherein also given the answered in negative. The relevant concluding para of the above order is reproduced as under :- "25. Since the Cenvat Credit Rules, the repository of rights of an assessee to avail credit of the duty or other sums paid on I....