2019 (4) TMI 1918 - Commissioner - GST

Refund of CENVAT Credit - rejection on the ground that the claimant had not filed mandatory declaration electronically in the Form GST TRAN-1 as stipulated under Rule 117 of Central Goods and Services Tax Rules, 2017 - Rule 5 of Cenvat Credit Rules, 2004 - HELD THAT - Refund of Cenvat Credit not carried forwarded under GST is claimed by the appellant under Rule 5 of Cenvat Credit Rules, 2004 on 28-6-2018 i.e., after appointed day, it needs to be determined whether refund under erstwhile Rule 5 of Cenvat Credit Rules, 2004 is admissible under GST regime to the claimant who has not filed GST TRAN-1 required under Rule 117 of Central Goods and Services Tax Rules, 2017. The claim filed by the appellant even after introduction of GST was a routine and valid step for which no one can prevent them. On receipt of refund application, it becomes the function of the competent authority to scrutinize its legality and either sanction or reject the same applying the provisions under which it is claimed. In the instant case, when the appellant himself has preferred the claim under Rule 5 of Cenvat Credit Rules, 2004, deciding of the claim under CGST Act/Rules was not permissible, more particularly when transitional provisions i.e. Section 42(3) makes if mandatory on the authority to dispose such claim in accordance with the provisions of existing law. Thus, Rule 117 of CGST Rules, 2017 applied in processing/deciding the claim by the impugned authority is faulty. The grounds of denial of the refund claim is rejected and the matter is remitted back to the adjudicating authority to scrutinize the claim in accordance with the provisions of Central Excise law read with Cenvat Credit Rules, 2004 i.e. Rule 5 and Notification No. 27/2012-C.E. (N.T.), dated 18-6-2012 and to order a fresh on eligibility of the refund to the appellant ensuring principle of natural justice - Appeal allowed by way of remand.

Summary

Issues Involved:
Refund claim rejection under Rule 5 of Cenvat Credit Rules, 2004 for not filing GST TRAN-1 electronically as per Rule 117 of Central Goods and Services Tax Rules, 2017.

Analysis:
1. The appellant filed a refund claim under Rule 5 of Cenvat Credit Rules, 2004 for the quarter of April to June, 2017, amounting to ?26,80,547, which was rejected for not filing the mandatory declaration electronically in Form GST TRAN-1 as per Rule 117 of CGST Rules, 2017.

2. The appellant contested the rejection, arguing that they were not required to carry forward the credit for which the refund was filed, citing provisions of Rule 142(3) of CGST Act, 2017 and Section 142(3) for disposal of refund claims in accordance with existing law.

3. The Commissioner observed that the claim was filed under Rule 5 of Cenvat Credit Rules, 2004 after the appointed day, and the impugned authority failed to process the claim in accordance with the existing law, as stipulated under Section 142(3).

4. The Commissioner noted that the claim should have been processed under Central Excise law read with Cenvat Credit Rules, 2004, and not under GST law, even if filed after the appointed day, emphasizing the need for scrutiny based on the correct provisions.

5. The impugned order cited non-filing of TRAN-1 within the stipulated time, but the Commissioner highlighted an extension granted until 31st March, 2019, rendering the rejection on this ground premature.

6. The proviso to Section 142(3) of CGST Act, 2017 restricts refunds for Cenvat credit carried forward under GST law, implying that non-filing of TRAN-1 should not be the sole reason for rejecting a lawful claim.

7. Consequently, the grounds for denial of the refund claim were rejected, and the matter was remitted back to the adjudicating authority to reevaluate the claim in accordance with Central Excise law and Cenvat Credit Rules, ensuring the principles of natural justice were followed.