2021 (8) TMI 239 - AT - Service Tax

Refund of Service Tax paid under RCM - repeal of Finance Act and introduction of GST Act - rejection of refund on the ground that input tax credit can only be claimed under the GST/CGST Act, 2017 and not otherwise - applicability of sub-section 8(a) of Section 142 of the CGST Act, 2017 - HELD THAT - Insofar as the statutory provisions are concerned, it has been mandated that the assessed/adjudged amount of tax/interest/fine/penalty shall be recovered from the assessee as an arrear of tax under the CGST Act, 2017 - In the case in hand, the appellant is not falling under the scope and ambit of sub-section 8(a) of Section 142 of CGST Act, inasmuch as no assessment/adjudication orders were passed by the competent authorities in determining the tax liability, which the appellant was required to pay under the erstwhile statute. Rather, the case of the appellant is governed under the provisions of sub-section (3) of Section 144 ibid. An assessee can file the application, claiming refund of the amount of CENVAT credit after the appointed day and that the said application shall be disposed of by the authorities in accordance with the erstwhile statute. The authorities below have not questioned the issue regarding the entitlement of the appellant to the CENVAT credit under the erstwhile CENVAT statute - the refund claims filed by the appellants should merit consideration under the provisions of sub-section (3) of section 142 ibid, and as such, it should be entitled for the benefit of refund of service tax paid by it. Appeal allowed - decided in favor of appellant.

Summary

Issues:
Refund of service tax paid under Reverse Charge Mechanism under erstwhile CENVAT Credit Rules, 2004; Applicability of CGST Act, 2017 on refund claims; Interpretation of statutory provisions under Sections 142(3) and 144 of the CGST Act, 2017.

Analysis:
The appellant, engaged in manufacturing industrial valves, availed CENVAT credit under the erstwhile CENVAT Credit Rules, 2004. During the disputed period, the appellant availed various services under the Reverse Charge Mechanism but did not discharge the service tax liability promptly. The appellant later paid the service tax into the central government account belatedly. Following the repeal of the Finance Act, 1994, the appellant filed refund applications seeking a refund of the service tax paid under the Reverse Charge Mechanism. However, the jurisdictional service tax authorities rejected the refund applications, citing that input tax credit could only be claimed under the GST/CGST Act, 2017. The appellant appealed this decision before the Commissioner (Appeals), whose order was the subject of challenge before the Tribunal.

Upon hearing both sides and examining the records, the Tribunal noted that the Commissioner (Appeals) had relied on Section 142(8)(a) of the CGST Act, 2017 to reject the refund applications. However, the Tribunal found that the appellant's case fell under the purview of Section 144(3) of the same Act, rather than Section 142(8)(a). Section 144(3) provides for the disposal of refund claims in accordance with the provisions of the existing law, entitling the appellant to the benefit of refund of service tax paid under the erstwhile statute. The Tribunal concluded that the refund claims should be considered under Section 142(3) of the CGST Act, 2017, entitling the appellant to the refund of the service tax paid.

In light of the above analysis, the Tribunal found no merit in the impugned order that rejected the refund application. Consequently, the Tribunal set aside the impugned order and allowed the appeals filed by the appellants, granting them the benefit of the refund of service tax paid under the Reverse Charge Mechanism.