TaxTMI 
TaxTMI 
2025 (5) TMI 1527
X X X X Extracts X X X X
X X X X Extracts X X X X
....t credit was not permissible except under the conditions laid down in Rule 5 ibid, which was not the case of the appellant. The inability to utilize the Cenvat credit due to the closure of the factory was not the ground for claiming the refund in cash, as has been held in the case laws cited supra. The claim of the appellant has, therefore, rightly been rejected as communicated vides impugned letter. 6. In view of the above discussion and findings, the appeal bearing No. 27-CE/APPL-MRT/MRT/2020-21 dated 21.08.2020 filed by M/s Reema Steel Pvt. Limited, 4th K.M. Stone, Nazibabad Road, Bijnor is rejected." 2.1 Appellant was engaged in the manufacture of M.S. Ingots falling under chapter 72 of the First Schedule to Central Excise Tariff Act, 1985. Appellant vide his letter dated 26.04.2013 informed that his factory was closed. After six years i.e. vide letter dated 09.12.2019 appellant again requested from the department for the cash refund of the Cenvat credit of Rs.20,07,793/- lying in balance in his records and shown in ER-1 return as on June-2017. 2.2 After following due procedure of the law, Original Authority rejected the refund claim by observing as follows:- ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.....2013 is reproduced below:- Subsequently, they wrote another letter dated 09.12.2019 received on 11.12.2019 which is also reproduced below:- 4.3 In the present case the claim made by the appellant has been rejected by the Original Authority but he may advice that they could have transit this credit which was appearing in their ER-1 return filed on 10.07.2017 to their GST-ITC credit account by filing requisite TRAN-I. 4.4 Appellant's letter dated 26.04.2013 is of no relevance as the same has been filed, intimating about suspension/closer of production activities. However, no registration has been surrendered. They were also filing ER-1 return regularly till the time of introduction of GST i.e. till the period 30th June, 2017. As appellant has neither surrendered the registration and continued to file the returns under Central Excise Act, return cannot be compare with the cash as accumulated credit as in case of surrender of registration. Thus the case laws/decisions relied upon by the appellant cannot be invoked for allowing this refund claim. The decision of Hon'ble Supreme Court upholding the decision in the case of M/s Slovak India Trading Co. Pvt. Ltd. 2008 (10) STR 101....
X X X X Extracts X X X X
X X X X Extracts X X X X
....n authorities to the appellant. 4.7 In case of Rugta Mines Ltd [2022 (67) G.S.T.L. 180 (Jhar.)] Hon'ble Jharkhand High Court has held as follows: Legal proposition on the point of refund :- "7. In a recent judgment of the Hon'ble Supreme Court, in the case of Union of India and Others v. VKC Footsteps India Private Ltd. reported in 2021 SCC online SC 706 = 2021 (52) G.S.T.L. 513 (S.C.), 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 on account of rate of tax on inputs being higher than the rate of tax on output supplies. The Hon'ble Supreme Court ultimately upheld the view of the Hon'ble Madras High Court which held that refund is statutory right and the extension of the ben....
X X X X Extracts X X X X
X X X X Extracts X X X X
....g 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 assessee to establish a claim for a concession or benefit; (xi) The manner in which a proviso can be construed has been elucidated in the precedents of this Court. A proviso may not be only an exception but may constitute a restriction on the opera....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... 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 interpretation, if carried to its logical conclusion would involve unforeseen consequences, circumscribing the legislative discretion of Parliament to fashion the rate of tax, concessions and exemptions. If the judiciary were to do so, it would run the risk of encroaching upon legislative choice....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... 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 Legislative Drafting has stated : "The function of a transitional provision is to make special provision for the application of legislation to the circumstances which exist at the time when that legislation comes into force." For the purpose of ascertaining whether a....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... laid down by the Hon'ble Supreme Court in the case of Union of India v. 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. v. 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 instant case is as to whether there was any existing right of availing Cenvat credit or refund on the date of coming into force of the CGST Act in favour of the petitioner which can be said to have accrued or vested and consequently saved by the repealing provision of CGST Act. The finding in later part of this judgment ho....
X X X X Extracts X X X X
X X X X Extracts X X X X
..... 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 57F(4A) 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 Heading 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 of which such inputs were used. The condition required for the same was that the credit of duty paid on inputs could have been used for discharge of duty/liability only in respect of those final products in the manufacture of which such inputs were used. xx xx xx As pointed out by....
X X X X Extracts X X X X
X X X X Extracts X X X X
....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 Kumar Tiwari v. State of Bihar (supra) is concerned, the same has been relied upon by the petitioner to submit that an interpretation which advances the purpose of object underlying the Act should be preferred. But the Learned Counsel for the petitioner has failed to show as to how the entitlements to Cenvat credit on servi....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... of services from M/s. Kolkata Port Trust during 26-4-2017 to 29-4-2017 in the nature of "port services" who issued Bill dated 23-5-2017 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 23-5-2017. 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 Return, the petitioner could not have claimed the transition of the said Cenvat credit as permissible transitional credit referrable to Section 140 of CGST Act through TRAN-1 and could not utilise the same under CGST Regime. Admittedly, the time for filing TRAN-1 was extended till 31-10-2017 but still the impugned service tax on "port s....
X X X X Extracts X X X X
X X X X Extracts X X X X
....1B of the Central Excise Act, 1944 and sub-section (2) of Section 11B also refers to application for refund made under Section 11B(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 judgment, 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 words "such application" which is clearly referrable to Section 11B(1) of Central Excise Act, 1944. Further, the proviso to Section 11B(2) deals with situations of rebate of duty; unspent advance deposits; principles of unjust enrichment in cases where duty of excise is paid by manufacturer or borne by buyer and who have not passed on the incidence of such duty to any other person; and also where duty of excise is borne by any other class of applicant as the central government may notify in official gazette with a further proviso regarding unjust enrichment. ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....tire 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 1-7-2017 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 assessee has failed to take transitional credit under Section 140(1), is also devoid of any merits. The second proviso only indicates that if the assessee has taken transitional credit he will not be entitled to refund. Certainly, an assessee cannot simultaneously claim transitional credit as well as refund of the same amount. The second proviso to Section 143(2) cannot be said to be an eligibility condition to claim refund but is only a condition which governs refund as an assessee cannot be permitted to have transiti....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ade and the payment in such cases could be made only after 30-6-2017. However, in the instant case the bill was admittedly generated on 23-5-2017, 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 output services. Therefore, it cannot be their input services under Rule 2(l) of Cenvat Credit Rules, 2004. I am also of the considered view that the petitioner could not have claimed the impugned service tax on port services in ST-3 return as they were registered for discharging their liability under the service tax only on reverse charge mechanism. Rather it is the case of the petitioner that they had included the impugned service tax in ST-3 Return under compelling circumstances of non-receipt of original invoice da....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ing 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 20-9-2017 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 collecting authorities had nothing to do in the matter. Certainly, the delay in receipt of original invoice is not attributable to the respondent authorities under the existing law or under the new law. 54. The authorities have held in the impugned orders that in the instance case, the timeline for claiming Cenvat credit qua the service tax paid on port services was not followed by the petitioner, although the services were availed, the entire payment was made and the bill was also generated in the month of April/M....
X X X X Extracts X X X X
X X X X Extracts X X X X
....gislation by identifying the "mischief" or "evil" the law aimed to address. It essentially prioritizes the purpose of the law over its literal wording. The rule also aims to prevent clever evasions or circumventions of the law that would allow the mischief to continue. Even if the Slovak India has decided the issue of refund of accumulated credit, it has decided the issue prior to the amendments made in the Rule 5 of the CENVAT Credit Rules, 2004 and not for the subsequent period. Hence I do not find any applicability of the said decision or any decision rendered following the said decision in facts and circumstances of this case. 4.10 In case of C A D Vision Engineers s Pvt. Ltd. [FINAL ORDER No. A/30289/2024 dated 30.04.2024 in Service Tax Appeal No. 30202 of 2020] Hyderabad bench held as follows: "9. At the very outset, it is to be understood that after the introduction of GST Laws with effect from 01.07.2017 certain transitional provisions were made so as to ensure that certain provisions of the existing law are further carried forward and claims, liability etc., under the existing laws were to be disposed off in terms of provisions made in the Act. In so far as it ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....able under the provisions of the existing law, the same cannot be processed and allowed under Section 142(3) also and therefore refund of the tax or credit in respect of service tax paid under reverse charge mechanism for import of service after the appointed date would not be admissible to the appellant under the provisions of Section 142(3). 12. I have also perused the citations relied upon by the appellant in the case of BHEL. The Hon'ble Tribunal was dealing with the matter of grant of refund in cash in respect of certain "cesses", which is not the case here and therefore it is distinguishable. Moreover, as pointed out by Learned DR the said Order of the Hon'ble Tribunal has been stayed by Hon'ble High Court of Madhya Pradesh. The other citations relied upon are in relation to substantive right to claim input credit. However, I find that these judgments are in relation to the cenvat credit and it's admissibility under the erstwhile CCR and not in relation to the entitlement of refund under Section 142 of the Act. Moreover, as pointed out by the Learned DR, Division Bench of CESTAT, Hyderabad, in the case of CCE, Tirupati Vs Rani Plastic Pipe Industries [2020 (6) TMI 35....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... 4.11 Further I find that the issue is also covered against the appellant by the decision of larger bench of Bombay High Court in case of Gauri Plasticulture (P) Ltd. [2019 (30) GSTL 224 (Bom)] and other decisions relied in the impugned order. In case of Gauri Plasticulture, Hon'ble Bombay High Court has considered the Rule 5 prior to its amendment in 2012 and has held as follows: 22. In the case at hand, we are considering a claim of refund of duty. Section 11B(1) clearly says that a person claiming refund has to make an application for refund of such duty before the expiry of the period prescribed and in such form and manner. The application has to be accompanied by such documentary or other evidence as the applicant may furnish to establish that the amount of duty of excise, in relation to which such refund is claimed, was collected from or paid by him and incidence of such duty had not been passed by him to any other person. The later provision enabling the claiming of refund is now worded differently. We have reproduced it and now it is only when the proviso is attracted that the amount of refund can be paid over to the applicant or else it has to be credited to the ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....es of this rule, the words 'output service which are exported' means any output service in respect of which payment is received in India in convertible foreign exchange and the same is not repatriated from, or sent outside, India. Provided that the CENVAT credit or inputs shall not be denied to job worker referred to in rule 12AA of the Central Excise Rules, 2002, on the ground that the said inputs are used in the manufacture of goods cleared without payment of duty under the provisions of that rule." 23. Thus, a perusal of this rule indicates that where any input or input service is used in the final product, which is cleared for export etc. or used in the intermediate product cleared for export or used for providing output service which is exported, then, the Cenvat credit in respect of the input or input service so used shall be allowed to be utilised by the manufacturer or provider of output service towards payment of duty of excise on any final product cleared for home consumption or for export on payment of duty or service tax on output service. Whether for any reason, such adjustment is not possible, the manufacturer shall be allowed refund of such amount s....