2021 (2) TMI 300 - AT - Service Tax

Refund claim - time limitation - appeal not filed within 6 months from the date of the Finance Bill, 2016 received the assent of the President i.e. by 13.11.2016 - validity of refund only to the service provider and not to the party being the service recipient - relevant date for claiming Service Tax refund - output services in the instant case were fully tax exempt - retention of CENVAT Credit - refund of exports as provided under Rule 5 of the CCR, 2004 - Section 103 of the Finance Act, 1994 - HELD THAT - Undisputedly the appellant in the present case is the service recipient, who has paid the service tax against the invoices issued to them by the service providers. The service providers have in turn collected the service tax and deposited the same as per the assessment made by them in their ST-3 return. These ST-3 returns which are self assessed have been filed by the service provider and there is no appeal filed by any person aggrieved by the said self assessment order. Counsel for the appellant submitted that what they are claiming is the refund of the accumulated CENVAT Credit which has accumulated in their credit account for the reason of the payment of service tax which was not due from them. The argument of the counsel though appears attractive but needs to be rejected at the first instant itself, because as per the CENVAT Credit rule the refund of accumulated CENVAT Credit is permitted only as per the Rule 5 of the CENVAT Credit Rules, 2004 and definitely the case under consideration cannot be said to be the case in terms of Rule 5 - Appellant submitted for getting the refund applications processed they had reversed the entire amount claimed as refund by them from their Input Tax Credit Ledger under GST regime. This fact is not in dispute. In fact the details of the debits made by the appellants from their ITC Ledger, have been recorded by the Assistant Commissioner in his order. Since we hold that the refund applications as such are not maintainable, Assistant Commissioner should consider restoring the input tax credit so debited by the appellant to them if permissible in the GST Law. With regards to the CENVAT Credit has been adjudged subsequent to changeover from the previous regime of Central Excise and Service Tax to the regime of GST. In all the cases the refund application or the rebate claim was filed before 01.07.2017 and determined subsequent to that date. It is not so in the present case. In the case of the appellant the CENVAT credit was available in the book of accounts of the appellant and had been carried forward by them to the GST regime, in manner as provided under the GST Law. The appellants for the processing of the refund claims have not debited the CENVAT account, but have debited the amounts from their Input Tax Credit Ledger. Hence in our view there is no case for cash refund of the amounts debited from the Input Tax Credit Ledger - the matter is remitted back to the original authority for considering allowing the re-credit of the amounts of ITC Credit debited by the Appellant for the processing of these refund applications, if permissible under the GST Law - Appeal disposed off.

Issues Involved:
1. Time-barred refund claims
2. Eligibility of service recipient for refund
3. Doctrine of unjust enrichment
4. Accumulated CENVAT Credit refund
5. Compliance with GST Law for re-credit

Detailed Analysis:

1. Time-barred refund claims:
The Assistant Commissioner rejected the refund claims on the grounds that the claims for the period 01.04.2015 to 29.02.2016 were time-barred under Section 103 of the Finance Act, 1994, as they were not filed within six months from the date of the Finance Bill, 2016 receiving the President's assent, i.e., by 13.11.2016. The Tribunal upheld this reasoning, noting that the appellant's refund applications were not filed within the stipulated period.

2. Eligibility of service recipient for refund:
The Assistant Commissioner also rejected the refund claims on the basis that the refund was eligible only for the service provider and not the service recipient. The Tribunal agreed, stating that the service provider had assessed the service tax due and filed self-assessed ST-3 returns, which were not challenged by any appeal. The Tribunal cited the Supreme Court's decision in ITC Ltd., which held that refund applications are not maintainable if the duty has been paid as per an assessment order that has not been challenged.

3. Doctrine of unjust enrichment:
The Assistant Commissioner found that the doctrine of unjust enrichment was not applicable as the claimant (service recipient) had borne the ultimate tax burden. The Tribunal noted that the service providers had paid the collected service tax to the government, and the claimant had submitted undertakings from major vendors stating they would not claim any refund for the service tax amount charged.

4. Accumulated CENVAT Credit refund:
The appellant argued for a refund of accumulated CENVAT Credit, claiming it was due to the erroneous payment of service tax. The Tribunal rejected this argument, stating that refund of accumulated CENVAT Credit is permitted only under Rule 5 of the CENVAT Credit Rules, 2004, which was not applicable in this case. The Tribunal emphasized that the appellant had taken CENVAT Credit of the service tax paid and carried it forward to the GST regime.

5. Compliance with GST Law for re-credit:
The Tribunal noted that the appellant had reversed the entire amount claimed as refund from their Input Tax Credit Ledger under the GST regime. Since the refund applications were not maintainable, the Tribunal directed the Assistant Commissioner to consider restoring the input tax credit debited by the appellant if permissible under the GST Law. The Tribunal referenced its previous decisions in Wave Mechanics Pvt Ltd and Alumatic Cans Pvt. Ltd., which held that the re-credit of CENVAT for which refund claims were filed should not lapse under Section 142 of the Central Goods and Services Tax Act, 2017.

Conclusion:
The appeals were disposed of with the Tribunal holding that the refund claims were not maintainable. The matter was remitted back to the original authority to consider allowing the re-credit of the amounts of ITC Credit debited by the appellant for the processing of these refund applications, if permissible under the GST Law.

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