AI Drafter 
TaxTMI 
TaxTMI 
2024 (10) TMI 1070
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....n 29.09.2017 2.3 The Appellant filed ST-3 return for the period April to June 2017 on 13.08.2017 and the last date to revise the said return was 27.09.2017. Due to payment of service tax under RCM on 29.09.2017, the Appellant could not reflect the Cenvat credit amounting to Rs.4,53,986/- in its ST-3 return filed for the period April to June 2017. 2.4 Since the Appellant was otherwise eligible to avail Cenvat credit on the above service tax paid by it under RCM and the same could not be carried forward due to introduction of GST regime w.e.f. 01.07.2017, the Appellant filed an application dated 03.05.2018 claiming the refund of amount of Rs. 4,53,986/- in cash under Section 11B of Central Excise Act, 1944 read with Section 142(3) of the Central Goods and Services Tax Act, 2017. 2.5 SCN dated 12.07.2018 was issued to the Appellant proposing to reject the refund claim basis the allegation that there was no provision which allowed refund of service tax paid under RCM. 2.6 The show cause notice was adjudicated by the Assistant Commissioner vide order in original referred in para 1 above whereby, the refund claim was rejected. The Assistant Commissioner specifically stated th....
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....39;ble Supreme Court was not placed before the larger bench of Hon'ble Bombay High Court in case of Gauri Plasticulture • Article 265 of the Constitution of India states the government cannot levy tax without authority of law. Hence retention of service tax paid by the appellant under RCM is against the provisions of Section 11B read with Section 142 (3) of the CGST Act, 2017 • Appellant is entitled to interest on delayed payment of refund in cash. 3.3 Learned authorized representative reiterated the findings recorded in the impugned order 4.1 I have considered the impugned order along with the submissions made in appeal and during the course of arguments. 4.2 Impugned order records the findings as follows for dismissing the appeal- "3. I have carefully gone through the submissions of the appellant and also the contention of the Authorised Representatives of the appellant during the course of personal hearing and find that the amount of Service Tax was actually deposited by them under RCM in the month of September 2017 which was pertaining to an earlier period. But the credit was never earned by them prior to 30/06/2017 which was the ....
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....AT Credit was placed before the Larger Bench of the Hon'ble Bombay High Court in the case of Gauri Plasticulture Private Ltd. Versed CCE reported in 2019 (30 GSTL 224) and the Larger Bench after considering the provision of Section 11(B) carefully, came to the conclusion that there is no provision for refund of accumulated CENVAT Credit, as there was no rule framed for the purpose, nor was there a notification issued for the purpose. The only provision under Section 11B governing such refunds is rebate of duties of excise on excisable goods exported out of India and as such does not include the simple accumulation of credit which cannot be utilized for whatever reasons. The Hon'ble Bombay High Court in the said judgement also examined the applicability of Rule 5 of the CENVAT Credit Rules, 2002 pertaining to refund of CENVAT Credit and came to the definite conclusion that Rule 5 does not pertain to mere accumulation of credit etc. but was actually the accumulation of credit on account of exports and nothing else. In view of the decision of the Larger Bench of the Hon'ble Bombay High Court on the issue, I find that the contention of the appellant regarding admissibility ....
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....appellant on this account. 4.5 Appellant have relied upon series of decision of tribunal to support their case. However I do not find any relevance of the decisions of tribunal in the matter as the issue has been authoritatively considered by Hon'ble High Court of Jharkhand in the case of Rungta Mines [2022-TIOL-252-HC-JHARKHAND-GST] and following has been held: "Legal proposition on the point of refund: - 7. In a recent judgement of the Hon'ble Supreme Court, in the case of "Union of India and Others vs VKC Footsteps India Private Ltd." reported in 2021 SCC online SC 706 = 2021-TIOL-237-SC-GST, the Hon'ble Supreme Court dealt with the provision of refund of tax under Section 54 of the CGST Act and has extensively dealt with the principles of refund in the matter of taxation. In the said case, the Hon'ble Supreme Court was dealing with the conflicting view of Hon'ble Gujarat High Court and Hon'ble Madras High Court on the point of validity of Rule 89 (5) which provided a formula for a refund of ITC and the case of refund on account of inverted duty structure under sub-Section 3 and Section 54 inter alia dealing with credit accumulation o....
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....tled to the widest latitude when it identifies categories of classification and unless things constituting the same class are treated differently without a rationale, the provision cannot be declared as unconstitutional; (v) The doctrine of reading down is employed to narrow down the scope of a proviso under challenge, when it may otherwise be unconstitutional. The doctrine cannot result in expansion of a statutory provision for refund which would amount to rewriting the legislation; (vi) Accepting the submission of the assessees that goods and services must be treated at par can lead to drastic consequences in terms of: (a) rates of taxes; (b) concessions, benefits and exemptions; (c) intervention in the areas of political, economic and legislative policies; (vii) Refund of taxes is one form of granting exemption; (viii) Once a refund is construed as a form of exemption from taxes, the provision has to attract strict interpretation; (ix) Exemptions, concessions and exceptions have to be treated at par and must be strictly construed; (x) ITC is not a matter of right and the burden of proof is on the as....
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.... payment of tax or a reduction in liability [Assistant Commissioner of Commercial Tax (Asst.) vs Dharmendra Trading Company reported in (1988) 3 SCC 570] = 2002-TIOL-1803-SC-CT. 98. Parliament while enacting the provisions of Section 54(3), legislated within the fold of the GST regime to prescribe a refund. While doing so, it has confined the grant of refund in terms of the first proviso to Section 54(3) to the two categories which are governed by clauses (i) and (ii). A claim to refund is governed by statute. There is no constitutional entitlement to seek a refund. Parliament has in clause (i) of the first proviso allowed a refund of the unutilized ITC in the case of zero-rated supplies made without payment of tax. Under clause (ii) of the first proviso, Parliament has envisaged a refund of unutilized ITC, where the credit has accumulated on account of the rate of tax on inputs being higher than the rate of tax on output supplies. When there is neither a constitutional guarantee nor a statutory entitlement to refund, the submission that goods and services must necessarily be treated at par on a matter of a refund of unutilized ITC cannot be accepted. Such an interpretatio....
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.... amending Act bears the heading "Transitional provisions". Explaining the role of transitional provisions in a statute, Bennion has stated: "Where an Act contains substantive, amending or repealing enactments, it commonly also includes transitional provisions which regulate the coming into operation of those enactments and modify their effect during the period of transition. Where an Act fails to include such provisions expressly, the court is required to draw inferences as to the intended transitional arrangements as, in the light of the interpretative criteria, it considers Parliament to have intended." (Francis Bennion : Statutory Interpretation, 2nd Edn., p. 213) The learned author has further pointed out: "Transitional provisions in an Act or other instrument are provisions which spell out precisely when and how the operative parts of the instrument are to take effect. It is important for the interpreter to realise, and bear constantly in mind, that what appears to be the plain meaning of a substantive enactment is often modified by transitional provisions located elsewhere in the Act." (p. 213) Similarly Thornton in his treatise on....
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....o demonstrate as to how any of the provisions of CGST Act which have been referred to by the petitioner has led to any absurdity. The interpretation of the provisions of CGST Act particularly with reference to refund as contemplated in the Act itself is required to be seen in the light of the principles as has been laid down by the Hon'ble Supreme Court in the case of Union of India vs VKC Footsteps (supra), whose relevant portions have already been quoted above. There can be no doubt that the right to refund in the matter of taxation is a statutory right which is neither a fundamental right nor a constitutional right and there is no equity in taxation. The right crystalizes only when the statute permits refund as per law and prescribed procedure. 15. It has been submitted that in the case of Gammon India Ltd. vs Chief Secretary (supra), it has been held that the rights which are saved by saving provisions continues even after repeal. Further in the judgment passed by the Hon'ble Supreme Court in the case of Baraka Overseas Trader (supra), it has been held that the accrued rights under old law is to be continued under the new law. However, the moot question in the ....
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....ckground of Section 6 of the General Clauses Act. That being so, the order of the Division Bench cannot be sustained and that of the learned Single Judge has to operate. The appeal is allowed but in the circumstances without any order as to costs." 18. In the case of Eicher Motors Ltd. vs Union of India (supra), it has been held that the rights of credit facilities accrued under existing law are not to be altered. Paragraphs-5 and 6 of the aforesaid judgment are quoted as under: - "5. Rule 57-F(4-A) was introduced into the Rules pursuant to the Budget for 1995-96 providing for lapsing of credit lying unutilised on 16-3-1995 with a manufacturer of tractors falling under Heading No. 87.01 or motor vehicles falling under Headings Nos. 87.02 and 87.04 or chassis of such tractors or such motor vehicles under Heading No. 87.06. However, credit taken on inputs which were lying in the factory on 16-3-1995 either as parts or contained in finished products lying in stock on 16-3-1995 was allowed. Prior to the 1995-96 Budget, the Central excise/additional duty of customs paid on inputs was allowed as credit for payment of excise duty on the final products, in the manufacture....
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....so referred to the judgment passed in the case of CCE vs Grasim Industries Ltd. (supra) to submit that excise duty/CENVAT is value added tax. There is no doubt about the aforesaid proposition, as it is not in dispute in the instant case that the petitioner was entitled to take credit of the service tax paid to the port authorities for the "port services" by way of CENVAT Credit as per the provisions of the rules. 20. However, in the instant case the petitioner has failed to follow the prescribed procedure to avail such a credit and consequently having lost such a right, he cannot claim revival of such a right and claim refund of the same by virtue of transitional provisions under Section 140(3) of the CGST Act. The facts involved in the present case would demonstrate that the petitioner had no existing right on the date of coming into force of CGST Act to avail credit of the service tax paid on "port services" as CENVAT Credit and accordingly, the provision of Section 140(3) of the CGST Act cannot be construed to have conferred such a right which never existed on the date of coming into force of CGST Act. 21. So far as the judgment passed in the case of Kunal Kuma....
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....es" if used in the manufacturing activity for which the petitioner was registered under the Central Excise Act, 1944. 26. The petitioner had imported coal through Bill of entry dated 27.04.2017 for using the same in or in relation to manufacture of dutiable final products. In course of the import, they received a bundle of services from M/s Kolkata Port Trust during 26.04.2017 to 29.04.2017 in the nature of "port services" who issued Bill dated 23.05.2017 for Rs. 89,36,836/- which included service tax of Rs. 10,88,328/-. The petitioner claims to have paid the entire bill including service tax on port services in the month of April itself. The petitioner was entitled to claim the service tax paid on "port services" as CENVAT Credit in their ER-1 return as per the provisions of existing law. The petitioner has submitted that the CENVAT Credit was not taken as the original bill/invoice was not received though generated on 23.05.2017. Admittedly, the petitioner did not claim the service tax paid on "port services" involved in this case as CENVAT Credit in their relevant ER-1 return. 27. On account of non-inclusion of the service tax paid on port services in ER-1 Retur....
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....2.09.2017 with a view to keep the said transaction above board so that their claim was not lost. It is also not in dispute that the last date for filing TRAN-1 was extended up to 31.10.2017. 31. From the entire records of the case this court does not find any explanation from the side of the petitioner as to under what circumstances the Bill dated 23.05.2017 was received by them as late as on 20.09.2017 (although as per the petitioner the port services were availed and the payment including service tax was made to the port authorities in the month of April 2017), except the statement that delayed receipt of the bill was beyond their control. 32. It is the case of the petitioner that they filed a refund claim for aforesaid amount of service tax paid to the port authority as they could not carry forward the aforesaid credit to their GST TRAN-1. 33. On 28.06.2018 the petitioner filed application for refund in Form - R for refund of service tax paid on "port services" to the port authorities by referring to provisions of Section 11B of Central Excise Act read with Section 142(3) of the C.G.S.T. Act, 2017. 34. Notice dated 24.07.2018 was issued to the....
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....Since, in the instant case the provision of Section 140(5) or any other sub-Section does not cover the contingencies as in the present case, it would be covered by the residuary provision of Section 142(3); (v) Section 142(3) specifically saves Section 11B(2)(c) of Central Excise Act which deals with refund of CENVAT Credit which remained un-utilized for one or another reason; (vi) Referring to the second proviso to Section 142(3) of the CGST Act, 2017 which provides that if carry forward of the transitional credit is claimed (under Section 140), then refund of such CENVAT Credit would not be admissible. Therefore, from a plain reading of section 142(3) it is crystal clear that CENVAT Credit lawfully admissible/earned under the CENVAT Credit Rules, 2004 shall be allowed to be carried forward in the Electronic Credit Ledger (as per ER-1) or shall be allowed to be refunded in cash where it is not possible to carry forward in Electronic Credit Ledger. 36. The Adjudicating Authority, after considering the submissions of the petitioner observed that the petitioner is a manufacturer of dutiable goods and is registered under Service tax only as a person liable t....
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.... The appellate authority rejected the appeal with the following findings: a. The transitional provisions contained in Section 140 of the CGST Act, 2017 provide for carrying forward of closing balance of the amount lying in CENVAT Credit account as reflected in the statutory returns for the period immediately preceding the appointed day i.e. 01.07.2017. b. The Appellant could not carry forward the credit of Rs. 10,88,328/- of service tax, paid to Kolkata Port Trust for procurement of a raw material used in manufacture of excisable goods, is not under dispute nor is the eligibility of CENVAT Credit under "input service" under dispute. c. The transitional provisions under the CGST Act, 2017 provides specifically transition of credit through TRAN-1. The appellant has failed to declare the same in time in ER-1 return and also in TRAN- 1 after enactment CGST Act. Section 140 of the CGST Act, 2017, which is a transitional provision, essentially preserves all taxes paid or suffered by a taxpayer. Credit thereof is to be given in electronic credit register under the provisions of CGST Act, 2017. d. Further, the Board vide Circular No. 207/5/2017-ST clarif....
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.... all. g. The appellate authority also held that the claim of refund is not a matter of right unless vested by law. The plea of injustice or hardship cannot be raised to claim refund in the absence of statutory mandate. In this regard, a reference was made to the judgment of the Hon'ble Supreme Court setting out the fundamental legal principles that in a fiscal statute, nothing can be read into its provisions and rather should not be read, which is expressly not there. In other words, an implied meaning cannot be given. Para 20 of the judgement passed by the Hon'ble Supreme Court, Union of India and Ors. vs Ind-Swift Laboratories Limited - (2011) 4 SSC 635 = 2011-TIOL-21-SC-CX was referred as under: - "20. A taxing statute must be interpreted in the light of what is clearly expressed. It is not permissible to import provisions in a taxing statute so as to supply any assumed deficiency. In support of the same we may refer to the decision of this Court in CST vs Modi Sugar Mills Ltd. wherein this Court at AIR para 11 has observed as follows: "11. ......... In interpreting a taxing statute, equitable considerations are entirely out of place. Nor can t....
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....is not admissible as input tax credit under this Act; or (ii) where he has not furnished all the returns required under the existing law for the period of six months immediately preceding the appointed date; or (iii) where the said amount of credit relates to goods manufactured and cleared under such exemption notifications as are notified by the Government. 140 (5) A registered person shall be entitled to take, in his electronic credit ledger, credit of eligible duties and taxes in respect of inputs or input services received on or after the appointed day but the duty or tax in respect of which has been paid by the supplier under the existing law, within such time and in such manner as may be prescribed, subject to the condition that the invoice or any other duty or tax paying document of the same was recorded in the books of account of such person within a period of thirty days from the appointed day: PROVIDED that the period of thirty days may, on sufficient cause being shown, be extended by the Commissioner for a further period not exceeding thirty days: PROVIDED FURTHER that said registered person shall furnish a statement, in such ....
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.... right, privilege, obligation, or liability acquired, accrued or incurred under the amended Act or repealed Acts or orders under such repealed or amended Acts: PROVIDED that any tax exemption granted as an incentive against investment through a notification shall not continue as privilege if the said notification is rescinded on or after the appointed day; or (d) affect any duty, tax, surcharge, fine, penalty, interest as are due or may become due or any forfeiture or punishment incurred or inflicted in respect of any offence or violation committed against the provisions of the amended Act or repealed Acts; or (e) affect any investigation, inquiry, verification (including scrutiny and audit), assessment proceedings, adjudication and any other legal proceedings or recovery of arrears or remedy in respect of any such duty, tax, surcharge, penalty, fine, interest, right, privilege, obligation, liability, forfeiture or punishment, as aforesaid, and any such investigation, inquiry, verification (including scrutiny and audit), assessment proceedings, adjudication and other legal proceedings or recovery of arrears or remedy may be instituted, continued or enforc....
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.... be disposed of in accordance with the provisions of existing law and if any such amount accrues the same shall be paid in cash. Such right to refund in cash has been conferred notwithstanding anything to the contrary contained under the provisions of existing law other than the provisions of sub-section (2) of section 11-B of the Central Excise Act, 1944. 42. It is not in dispute that the refunds under the existing law of Service Tax as well as Central Excise Act, 1944 are governed by section 11B of the Central Excise Act, 1944 and subsection 2 of section 11 B also refers to application for refund made under section 11 B(1) of Central Excise Act, 1944. Further section 11B(3) of Central Excise Act, 1944 clearly provides that all kinds of refunds including those arising out of judgement , decree or orders of court or tribunal are to be dealt with in accordance with the provisions of section 11B (2) of Central Excise Act, 1944 . It is also important to note that section 11B(2) of Central Excise Act, 1944 deals with the manner in which applications for refund under section 11B (1) are to be dealt with as it uses the word "such application" which is clearly referrable to secti....
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.... Act and the rules framed and notifications issued. Meaning thereby, section 142(3) does not confer a new right which never existed under the old regime except to the manner of giving relief by refund in cash if the person is found entitled under the existing law in terms of the existing law. Section 142(3) does not create any new right on any person but it saves the existing right which existed on the appointed day and provides the modalities for refund in cash if found entitled under the existing law as the entire claim is mandated to be dealt with as per the existing law. It neither revive any right which stood extinguished in terms of the existing law nor does it create a new right by virtue of coming into force of CGST, Act. 46. Section 174 of the CGST Act read with section 6 of the General Clauses Act saves the right acquired, accrued or vested under the existing law and does not create any new right which never existed on the appointed day i.e on 01.07.2017 under the existing law. 47. The argument of the petitioner by referring to second proviso to section 142(3) of CGST Act that it indicates that section 142(3) would apply to the situations where the asses....
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.... the petitioner did not include the impugned service tax paid on "port services" in its ER-1 return and accordingly was neither entitled to include nor included the same as transitional credit in TRAN-1 under CGST Act. As per the notification (Annexure-5) extending the date of filing TRAN-1 to 31.10.2017, the same was in relation to certain service tax issues which were paid after 30.06.2017 under reverse charge basis to cover instances of bills raised on 30.06.2017 since credit is available only if the payment is made and the payment in such cases could be made only after 30.06.2017. However, in the instant case the bill was admittedly generated on 23.05.2017, services availed and bill amount including service tax was paid in April 2017 but the original bill did not reach the petitioner for unknown/undisclosed reasons. 51. It is apparent from the impugned orders that the specific case of the respondent is that the petitioner had claimed CENVAT Credit under ST-3 return thereby treating the services involved in the present case as their input services used for providing output service, whereas they are not output service provider and the same cannot be used for providing ou....
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....section 142(3) of CGST, Act by the impugned orders. 53. All the aforesaid provisions referred to and relied upon by the learned counsel of the petitioner do not entitle a person like the petitioner to any relief in the circumstances of acts and omissions of the service provider (port authority) or the service recipient (the petitioner) who have failed to comply the provision of law, both under the existing law and also under the CGST Act. The relied upon provisions of CGST Act do not cover any such situation relating to any consequences due to inter parte acts and omissions. In the instant case, as per the case of the petitioner, the entire problem has cropped up due to non-receipt of the invoice in original from the port authorities although the port services were availed and payments for the same to the port authorities were made by the petitioner in the month of April 2017, the invoice was generated by the port authorities in the month of May 2017 but the original invoice was received by the petitioner only on 20.09.2017 i.e after coming into force of CGST Act. The late receipt of the invoice is essentially between the petitioner and the port authorities and the tax col....