2020 (2) TMI 908 - AT - Service Tax

Refund of un-utilized Cenvat Credit - refund denied for the reason that the appellant did not debit the refund amount from its Cenvat Credit balance at the time of making the claim - HELD THAT - The period of dispute in this case is April, 2017 to June, 2017 and the application for refund was filed on 06.10.2017. There is no dispute that the appellant did not debit the refund amount since the same was carried over to GST through TRAN-1 and that the appellant did reverse the refund amount in their GSTR-3B Return for the month of October, 2018 under ITC reversal. There being no provision in the ACES system to debit the refund amount in the GST regime, subsequent reversal in the GSTR-3B file is sufficient compliance with paragraph 2(h) of Notification No. 27/2012 ibid, which is also in tune with the CBIC Circular No. 58/32/2018 ibid - there is no justification in the denial of refund by the authorities. The denial of refund is not in accordance with law - Appeal allowed - decided in favor of appellant.

Summary

Issues:
Challenge to denial of refund of un-utilized Cenvat Credit under Rule 5 of Cenvat Credit Rules, 2004 (CCR) read with Notification No.27/2012-CE (NT) dated 18.06.2012.

Analysis:
The appellant, a provider of "Business Support Services," filed for a refund of un-utilized Cenvat Credit amounting to ?20,09,063. A Show Cause Notice was issued proposing to reject the refund claim, and after due consideration, the adjudicating authority rejected the claim citing non-compliance with conditions at paragraphs 2 (g) and 2 (h) of the Notification. The denial was based on the appellant's failure to debit the refund amount from its Cenvat Credit balance at the time of making the claim. This decision was upheld by the First Appellate Authority. The appellant challenged this denial through the present appeal.

The appellant did not debit the refund amount as it was carried over to GST through TRAN-1. Subsequently, the appellant reversed the refund amount in their GSTR-3B Return for October 2018 under ITC reversal. The appellant relied on various decisions and a CBIC Circular to support their case. These decisions highlighted that there was no provision in the ACES system to debit the refund amount in the GST regime, and subsequent reversal in the GSTR-3B file was deemed sufficient compliance with the relevant Notification. The Tribunal found merit in these arguments and concluded that the denial of the refund was unjustified.

In light of the above analysis, the Tribunal held that the denial of the refund was not in accordance with the law. Therefore, the impugned order was set aside, and the appeal was allowed with consequential benefits, if any, as per law. The order was pronounced in the Open Court on 20.02.2020.