2023 (5) TMI 96 - AT - Service Tax

Cash Refund of the accumulated CENVAT credit - Reversal of credit migrated to GST (transitional credit) - rejection on the ground of non-compliance with the procedure laid down under Notification No.27/2012-CE(NT) and contravention of the provision of Section 142(3) of the CGST Act, 2017 - refund pertain to the quarters April 2017 to June 2017; October 2016 to December 2016 and January 2017 to March 2017; the claims have been filed during the CGST regime i.e. after 01/07/2017 - applicability of transitional provisions in terms of Section 142(3) of CGST Act, 2017. HELD THAT - It is not in dispute that all the cash refund claims of accumulated credit have been filed during July and August, 2017 i.e. after 01/07/2017. Also, it is not in dispute that the appellant had transitioned from the old CENVAT credit into input tax credit w.e.f. 01/07/2017 and shown the closing balance of CENVAT credit as on 30/06/2017 being the opening balance of Input Tax Credit under IGST as on 01/07/2017. A plain reading of the provision of of Section 142(3), makes it clear that under the second proviso, it is specifically stipulated that no refunds will be allowed of any amount of cenvat credit where the balance of the said amount as on the appointed day i.e. 01/07/2017 has been carried forward under the CGST Act, 2017. In the present case, the learned consultant for the appellant fairly accepted that the entire amount of cenvat credit laying in balance as on 30/06/2017 have been transitioned to CGST regime and shown as input tax credit opening balance in their books of account as on 01/07/2017. There are no merit in the said contention of the learned consultant for the appellant inasmuch as once the appellant has opted to make a transition from the existing cenvat credit into input tax credit, the second proviso to Section 142(3) of CGST Act, 2017 comes into play. In absence of any specific provision, subsequent debit under the IGST Act and rules made thereunder of the input tax credit, cannot be the circumstances to claim refund under Rule 5 of CENVAT Credit Rules, 2004 read with Notification No.27/2012-CE(NT). The judgments cited by the learned consultant does not deal with the present circumstances - The Punjab Haryana High Court in ADFERT TECHNOLOGIES PVT. LTD. VERSUS UNION OF INDIA AND ORS. 2019 (11) TMI 282 - PUNJAB AND HARYANA HIGH COURT was confronted with the question of denying of transition of cenvat credit to input tax credit because of delay in filing the relevant declarations with the Revenue department - it was not considered and neither held that after transition from the existing cenvat regime to CGST regime, the cash refund of the accumulated credit as was prior to 01/07/2017 could be considered for refund under Notification No.27/2012 read with Rule 5 of CENVAT Credit Rules, 2004. There is no reason to interfere with the order of the authorities below - Appeal of assessee dismissed.

Summary

Issues:
The issues involved in this case are the rejection of cash refund claims for accumulated CENVAT credit by the appellant and the compliance with the provisions of Notification No.27/2012-CE(NT) and Section 142(3) of the CGST Act, 2017.

Summary:
The appellant, engaged in providing taxable services under "Information Technology Software," filed three refund claims for different quarters after 01/07/2017. The claims were rejected by the authorities citing non-compliance with the mentioned provisions. The appellant contended that they had substantially complied with the conditions and cited relevant judgments in their favor.

The Revenue argued that the appellant, having transitioned their CENVAT credit to the CGST regime, lost the right to claim a refund. They stated that the judgments cited by the appellant were not applicable to the present case as they did not involve a similar transition scenario.

The Tribunal examined the case and noted that the appellant had transitioned their CENVAT credit to input tax credit under the CGST Act, 2017. The Tribunal referred to Section 142(3) of the CGST Act, which specifies that no refunds will be allowed for any amount of CENVAT credit carried forward under the CGST Act. The Tribunal found that subsequent debiting of the input tax credit under the IGST Act could not be a basis for claiming a refund under the CENVAT Credit Rules.

The Tribunal observed that the judgments cited by the appellant did not address the specific circumstances of the case. It was noted that none of the cases considered the scenario where cash refund of accumulated credit before 01/07/2017 could be claimed post-transition to the CGST regime. Consequently, the Tribunal upheld the orders of the authorities below, rejecting the appeals for lack of merit.

Conclusion:
The Tribunal held that the appellant was not entitled to cash refund of accumulated CENVAT credit after transitioning to the CGST regime, as per the provisions of Section 142(3) of the CGST Act, 2017. The appeals were rejected based on the lack of merit in the appellant's contentions and the inapplicability of cited judgments to the present case.