TaxTMI 
TaxTMI 
2025 (6) TMI 1265
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....2000 audit conducted by the department of the records maintained by the appellants for the period July, 2012 to June, 2017, it was pointed out by audit report dated 06.03.2018, that the appellants were required to pay an amount of Rs.12,86,186/- towards inadmissible input credit of CENVAT. The appellants had accordingly paid such an amount of Rs.12,86,186/- being the service tax payable on Reverse Charge Mechanism (RCM) basis against the services availed by the appellants from foreign service providers under the category of Online Information Database Access and Retrieval (OIDAR) services. Since, there was no provision to take credit of such input services received by the appellants, they had filed a refund claim in Form-R for Rs.12,86,186/-on 10.01.2019 with the jurisdictional authorities. 2.3 Upon receipt such refund application, the jurisdictional Assistance Commissioner (Refund), CGST & Central Excise, Division-VI (Hadaspar) CGST Commissionerate, Pune-II had issued a deficiency memo-cum-show cause notice dated 10.01.2019 seeking for certain details from the appellants and also offered personal hearing to them. In adjudication of the said refund claim, the Original authority ha....
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....riginal dated 14.03.2019, the learned Commissioner (Appeals-II) vide impugned order dated 30.09.2019, had rejected such appeal by upholding the order of the original authority. 2.5 Being aggrieved with the above Order-in-Appeal dated 18.11.2020being the impugned order herein, the appellants have filed this appeal before the Tribunal. 3.1 Learned Advocate appearing for the appellants had submitted that they had paid the service tax on being pointed out by the departmental audit officers, in post GST regime, and such tax paid could notbe availed/utilized, the appellants had requested for refund of the same under the transitional provisions of Section 142(3) of the CGST Act, 2017. However, there refund application was rejected by the authorities below. 3.2 Learned Advocate further submitted that that it is not in dispute that service tax was paid on taxable services, and the appellant is eligible to avail credit under the provisions of the CENVAT Credit Rules, 2004 under transitional provisions. With advent of GST, the appellants are eligible for refund of such credit, which could not be transitioned or availed by them. He further submitted that the refund cannot be denied on the a....
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....ise Act, 1944? 5.1 In order to appreciate the issues under dispute, the specific legal provisions of the CGST Act, 2017, Central Excise Act, 1944 and CENVAT Credit Rules, 2004 (CCR) relevant to the dispute are extracted and herein given below for ease of reference: Central Goods and Services Tax Act, 2017 "Miscellaneous transitional provisions. Section 142. (1) Where any goods on which duty, if any, had been paid under the existing law at the time of removal thereof, not being earlier than six months prior to the appointed day, are returned to any place of business on or after the appointed day, the registered person shall be eligible for refund of the duty paid under the existing law where such goods are returned by a person, other than a registered person, to the said place of business within a period of six months from the appointed day and such goods are identifiable to the satisfaction of the proper officer: Provided that if the said goods are returned by a registered person, the return of such goods shall be deemed to be a supply. xxx xxx xxx xxx (3) Every claim for refund filed by any person before, on or after the appointed day, for refund of any amount of CEN....
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....mencement of the Central Excises and Customs Laws (Amendment) Act, 1991, such application shall be deemed to have been made under this sub-section as amended by the said Act and the same shall be dealt with in accordance with the provisions of sub-section (2) as substituted by that Act : Provided further that the limitation of one year shall not apply where any duty and interest, if any, paid on such duty has been paid under protest. Explanation.- Omitted by the Finance (No. 2) Act, 1980. (2) If, on receipt of any such application, the Assistant Commissioner of Central Excise or Deputy Commissioner of Central Excise is satisfied that the whole or any part of the duty of excise and interest, if any, paid on such duty paid by the applicant is refundable, he may make an order accordingly and the amount so determined shall be credited to the Fund: Provided that the amount of duty of excise and interest, if any, paid on such duty as determined by the Assistant Commissioner of Central Excise or Deputy Commissioner of Central Excise under the foregoing provisions of this sub-section shall, instead of being credited to the Fund, be paid to the applicant, if such amount is relatable t....
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....osed of in accordance with the provisions of the existing law. Therefore, even if the service tax had been deposited by the appellant after 01.01.2017, nonetheless the refund of any amount of the CENVAT credit could be claimed only under subsection (3) of section 142 of the CGST Act and against this order an appeal will lie to the Tribunal. (4) The reference is, accordingly, answered in the following manner: An appeal would lie to the Customs, Excise & Service Tax Appellate Tribunal against an order passed under section 142 of the Central Goods and Services Tax Act, 2017." Thus, it could be seen that Larger Bench of the Tribunal has held that this Tribunal is the appropriate appellate forum for preferring an appeal against an order passed under Section 142 of the CGST Act, 2017. 6. From the facts of the case, it is seen that the appellants had duly followed the procedure and conditions prescribed in complying with the obligations in payment of service tax on 30.01.2018, for which refund application was filed on 31.12.2018 with the department. In terms of legal provisions prescribing the procedure for transitional credit under Section 142(9)(b) of the CGST Act, 2017, when the sa....
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....l Excise Act, 1944 amongst other laws relating to old tax regime was repealed by Section 174 of the CGST Act, 2017 and that the CCR is also being superseded vide Notification No.20/2017-C.E. (N.T.) dated 30.06.2017, by the Central Government for smooth implementation of transfer to GST regime in indirect taxation, it is not feasible to make a specific provision in CENVAT statute, for enabling cash refund of excess CENVAT credit relating to earlier regime while moving to the new GST regime. 8.2 As the issue is relating to transitional provisions in moving from Central Excise duty and Service Tax regime to GST regime, where both the taxes though remain by nature as indirect taxes, the whole concept of its levy, the power drawn from the Constitution of India, enabling legislation being different, it is also worthwhile to see the background of the GST scheme and the see whether such cash refund of CENVAT credit, duty etc., during its migration to GST regime as provided under Section 142 of the CGST Act, 2017 is proper and legally sustainable. 8.3 It is known very well that the taxation of goods and services in India has, hitherto, been characterized as a cascading and distortionary t....
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....e legal provisions of Section 142 of the CGST Act, 2017 are read carefully, it transpires that sub-section (3) specifically provide for refund of any amount of CENVAT credit, duty, tax, interest or any other amount paid under the existing law shall be paid in cash. Further, it is only such amount of CENVAT credit which is rejected, as not being eligible, that alone shall be allowed to lapse. Further, the transitional provisions under Section 142 of the CGST Act, 2017, for smooth transition from earlier indirect taxes of Central Excise Act, 1944 and Finance Act, 1994 to a new GST Act, 2017, providing refund of CENVAT credit in accordance with the provisions of existing law, cannot be interpreted to mean that the existing CENVAT Credit Rules, 2004 provided only for refund in specified situations as stated in Rule 5 ibid, and hence cash refund of CENVAT credit is not permissible, as it has been specifically enabled under Section 142 of the CGST Act. Such a narrow interpretation of transitional provision, in my view, is not correct interpretation of legal provisions of the law in the backdrop of above discussions on migration from earlier taxation regime to new GST regime, and the same....
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....he inputs used by him. It was introduced w.e.f. 1-3-1986. The said scheme was regulated under rules 57A to 57J of Central Excise Rules, 1944. Rule 57A entitled a manufacturer to take instant credit of the central excise duty paid on the inputs used by him in the manufacture of the finished product, provided that the input and the finished product were excisable commodities and fell under any of the specified chapters in the tariff schedule. Under rule 57G, every manufacturer was required to file a declaration before the jurisdictional Assistant Collector, declaring his intention to take Modvat credit after paying duty on the inputs. The object behind rule 57A read with rule 57G and rule 57-I was utilization of credit allowed towards payment of duty on any of the final products in relation to manufacture of which such inputs were intended to be used in accordance with the declaration under rule 57G. Rule 57-I referred to consequences of taking credit wrongly. 10. The object of the Modvat scheme was to reduce cost of final product by taking credit for the duty paid on the inputs. 9. From the detailed discussions as above, it is reasonable to conclude that when the Central Excise A....
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.... the existing law, it is not recovery as arrears under CGST Act, 2017. Further, post the introduction of GST, the appellant having left with no option to claim the above credit under the CENVAT Credit Rules with also no scope to report the same under Transitional Credit while migrating to GST. Also they have claimed that tax has been paid by the appellant themselves and not collected from others, the refund in cash was payable under Section 142(3) of CGST Act, 2017. Though the contention of the appellant that they would be eligible for Cenvat Credit if it was paid before June 2017 is true, the fact is that the appellant have paid the due Service Tax with interest only in January, 2018 when the Transitional provisions for allowing credit of such tax paid under existing law has lapsed in 27-12-2017. So their claim for input tax credit was not entertainable and rightly rejected by the LAA in the impugned order." [ Emphasis supplied ] 6.2 The refund claim has been rejected resorting to Section 142(8)(a) of GST Act, 2017. The provision has already been noticed in earlier paragraphs. The department is of the view that the payment made by the appellant is consequent to an assessment/a....
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....der the CGST Act, 2017. 6.4 Section 142(3) is the transitional provision for claim of refund after the introduction of GST Act, 2017. It says that refund claims of any amount paid under the erstwhile law have to be disposed according to the provisions of the erstwhile law and the amount has to be paid in cash. The appellants have paid the tax under the erstwhile law. In the present case, the claim is only for refund and not proceedings for assessment or adjudication. In such a scenario, only sub-section (3) of Section 142 will be attracted. Rejection of the refund claim by referring to sub-section (8) of Section 142 of CGST Act, 2017 is misplaced. For these reasons, rejection of refund is unjustified." 10.2 The relevant paragraphs in the Final Order No. 42467/2021 dated 16.12.2021 in the case of M/s Circular Flow Technologies India Pvt. Limited Vs. Principal Commissioner of GST & Central Excise, Coimbatore are extracted and given below: "11. Section 142 (3) of GST Act provides how to deal with claims of refund of service tax of tax and duty / credit under the erstwhile law. It is stated that therein that such claims have to be disposed in accordance with the provisions of exis....
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....as per sub-section (6)(a) of Section 142, every proceeding of appeal, review or reference relating to a claim for Cenvat credit initiated whether before, on or after the appointed day under the existing law shall be disposed of in accordance with the provisions of existing law, and any amount of credit found to be admissible to the claimant shall be refunded to him in cash, notwithstanding anything to the contrary contained under the provisions of existing law other than the provisions of sub-section (2) of Section 11B of the Central Excise Act, 1944. Further I find that the appellant had already debited the entire amount in their Cenvat account and the said amount was debited under a bona fide belief that the cash refund would be sanctioned to them and the very fact that Cenvat credit was never disallowed, hence the Cenvat credit lying in the balance of Cenvat account are liable to be refunded in cash to the appellant as per the provisions of sub-section (3) or sub-section (6)(a) of Section 142 of CGST Act. This issue is no more res integra and has been held in favour of the appellant by various decisions cited supra. Hence, by following the ratio of the said decisions, I am of th....
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....f the following reasons. Firstly, it is not the case of refund arising on account of denial of any exemption or setting aside of any demand in the SCN, but refund arising on account of the excess CENVAT credit paid by the appellants, which is in excess of the CENVAT credit that is required to be paid in terms of the Rule 6(3A) of the CCR and specifically allowed to be adjusted in terms of clause (f) of Rule 6(3A) of the CCR. Secondly, the transition provisions referred to therein are regarding credit earned by a manufacturer under the CENVAT Credit Rules, 2002 and how they will be allowed to be utilised in accordance with CENVAT Credit Rules, 2004. In the present case, the existing indirect tax law relating to levy of Central Excise duty i.e., Central Excise Act, 1944 has been repealed and law relating Service Tax in Chapter V of the Finance Act, 1994 have been suitably amended to pave way for implementation of new GST regime. Hence, I find that the judgement in the case of Gauri Plasticulture P. Ltd. (supra) is not applicable to the present factual matrix of the case. 10.5 Further, I have also gone through the various case laws cited by both sides to support their respective stan....
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....ed that where any claim for refund of CENVAT credit is fully or partially rejected, the amount so rejected shall lapse: Provided further that no refund shall be allowed of any amount of CENVAT credit where the balance of the said amount as on the appointed day has been carried forward under this Act. ********************************" 11. In our view, Section 142(3) of the Act is very clear in as much as, it says " every claim for refund filed by any person before, on or after the appointed day, for refund of any amount of CENVAT credit, duty, tax, interest or any other amount paid under the existing law and any amount eventually accruing ........ shall be paid in cash ......". It is very widely worded in as much as it uses the expression "CENVAT credit" and also "any other amount paid". Even if, we take it that petitioner has made voluntary deposit, that amount has to be shown as CENVAT credit in the account of petitioner. In the alternative, it would certainly come under the category "or any other amount paid". Therefore, either way the amount paid by petitioner, admittedly, has to be refunded. In fact, it is also admitted that an amount of Rs.10,48,11,737/- is refundable to pet....