2019 (1) TMI 1854 - Commissioner - GST

Refund of tax paid in cash - Scheme of Budgetary Support - Reverse Charge Mechanism - refund based on unutilized tax credit at the end of the quarter July, 2017 to September, 2017 - HELD THAT - The Government of India vide Notification No. 10/2017-Integrated Tax (Rate), dated 28th June, 2017 notified the payment of IGST on reverse charge basis i.e. for certain category of supply of services tax liability has been shifted on the recipient of services to be paid in cash and under the said scheme the tax paid can be claimed as credit in their book of accounts for utilising the same for discharging their outward tax liabilities. Hence, it is observed that the tax paid under Reverse Charge Mechanism cannot be treated as duty paid under the forward charge i.e. outward tax for claiming the refund of the same under the scheme of Budgetary Support. As such the plea of the appellant does not hold good inasmuch as every payment made in cash has to be treated as tax paid in cash, whereas in this scenario the tax paid on behalf of other person s liability is available in the form of Cenvat credit. Hence, the adjudicating authority has correctly rejected the claim of the appellants on this issue and there are no infirmity in the impugned order. Rejection on the ground that they had balance in TRAN-1 by the end of the quarter i.e. July, 2017 to September, 2017 - HELD THAT - The Scheme of Budgetary Support was introduced by the Ministry of Commerce and Industry vide their Notification dated 5-10-2017 followed by the Central Board of Excise Customs Circular dated 27-11-2017 whereunder it has been made amply clear that the said scheme has been worked out on quarterly basis for which claims shall be filed on a quarterly basis - In view of the provisions of the Scheme it is quite evident that the refund under budgetary support can only be filed after the end of the quarter from the tax amount paid in cash once the entire credit is exhausted and not on monthly basis as has been pleaded by the appellant in the grounds of appeal. Moreover, it is found that even the jurisdictional Range Officer in his report has categorically mentioned that at the end of the quarter the appellant had balance in their credit account and the claim of the refund on this account was not recommended for sanction. Accordingly, the adjudicating authority has correctly rejected the claim of the appellant in view of the provisions laid down in the scheme of budgetary support ibid. Further, the appellant has pleaded that the amount of credit which was appearing at the end of the quarter primarily due to Transitional credit which had been subsequently utilized by the appellants in the future tax payments and accordingly, reduced the refund for the quarter ended 31 December, 2017, does not hold good because for any reason once the balance of credit figures out in the records of the appellant, the tax in cash during the said quarter is to be paid only once the entire credit has been exhausted in view of the provisions of the Scheme of Budgetary support. The refund has been correctly rejected by the adjudicating authority. The appeal filed by the appellant is rejected and the impugned order passed by the adjudicating authority is upheld.

Summary

Issues:
1. Eligibility for refund of tax paid under Reverse Charge Mechanism
2. Entitlement to refund based on unutilized tax credit at the end of the quarter

Eligibility for refund of tax paid under Reverse Charge Mechanism:
The appellant, a registered entity under the "Scheme of Budgetary Support," filed a claim for refund with the jurisdictional CGST authorities. The adjudicating authority provisionally sanctioned a refund of ?7,01,058/- but rejected claims totaling ?13,76,741/- for the quarter. The rejection was based on two issues, one being the tax paid under Reverse Charge Mechanism. The appellant argued that the tax paid under RCM should be considered eligible for refund as it was paid in cash as per GST laws. However, the authority correctly rejected this claim, stating that RCM payments cannot be equated to tax paid under the forward charge. The authority's decision was upheld as per the provisions of the scheme.

Entitlement to refund based on unutilized tax credit at the end of the quarter:
The appellant's claim was also rejected due to a balance in TRAN-1 at the end of the quarter. The scheme of Budgetary Support required claims to be filed on a quarterly basis after the tax amount paid in cash was exhausted. The appellant's argument of monthly filing was dismissed, and the rejection was upheld since the appellant had a balance in their credit account at the quarter-end. The authority correctly followed the scheme's provisions, and the rejection was deemed valid. Additionally, the appellant's plea regarding Transitional credit utilization reducing the refund for a subsequent quarter was not accepted, as the tax in cash had to be paid only after exhausting the credit balance.

The Central Board of Indirect Taxes & Customs clarified that the support under the scheme is a grant and not a refund of duty under taxation law, making the decision of the sanctioning authority final. Consequently, the appeal filed by the appellant was rejected, and the impugned order was upheld, as the authority had correctly applied the provisions of the budgetary support scheme.

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