2020 (3) TMI 754 - AT - Service Tax

Refund of unutilized CENVAT Credit - rejection on the ground that the amount claimed as refund was not debited from the appellant s Cenvat Credit Account at the time of filing the claim - HELD THAT - The period involved is April, 2017 to June, 2017 and the refund claim was made in June, 2018, which is perhaps within the period of one year but, however, by that time it is an undisputed fact that the GST regime had taken over by which filing of ST-3 Return was done-away. There is also no denial by the Revenue as to the claim of the appellant that subsequent to the filing of TRAN-1 Return, the refund amount was debited in its GSTR-3B/Electronic Credit Ledger. With the introduction of GST there was a change in the scenario, there was also no provision in the ACES system to debit the refund amount and that subsequent reversal by the appellant in its GSTR-3B file is a sufficient compliance with condition at paragraph 2(h) of Notification No. 27/2012-CE (NT) dated 18.06.2012. This aspect has also been clarified by the CBIC in its Circular No. 58/32/2018-GST dated 04.09.2018. The denial of refund is not in accordance with law - Appeal allowed - decided in favor of appellant.

Summary

Issues:
Challenging denial of refund of un-utilized input Cenvat Credit under Rule 5 of Cenvat Credit Rules, 2004.

Analysis:
The appellant, a provider of 'Information Technology Services' to foreign clients, filed a refund claim for service tax paid on input services amounting to ?8,07,955 for April to June 2017. A Show Cause Notice was issued proposing to restrict the refund claim to ?1,36,458 due to alleged ineligible input Cenvat credit claims. The adjudicating authority rejected the entire refund claim citing failure to debit the claimed amount from the Cenvat Credit Account at the time of filing. The appellant appealed this decision.

The Hon'ble Tribunal noted that services rendered at unregistered premises did not automatically disqualify input credit eligibility, citing a relevant High Court decision. The Tribunal set aside the denial based on unregistered premises as it was not a valid reason to reject the refund claim.

Regarding the timeline, the refund claim was filed in June 2018 for the period April to June 2017, falling within one year. Despite the transition to the GST regime and the absence of ST-3 Return filing, the Revenue did not contest the appellant's claim that the refund amount was debited in its GSTR-3B/Electronic Credit Ledger post filing of TRAN-1 Return. Precedents and decisions cited by the appellant supported the view that subsequent reversal in GSTR-3B sufficed as compliance with Notification No. 27/2012-CE (NT).

Based on the above analysis, the Tribunal concluded that the denial of refund was not legally sound. The impugned order was set aside, and the appeal was allowed with any consequential benefits as per law. The decision was pronounced in open court on 20.02.2020.