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2024 (5) TMI 72 - AT - Service TaxRefund in cash in respect of certain amount of service tax - appellant had not carry forward the credit of the said amount in accordance with the provisions under Section 140 of CGST Act 2017 and Rules made thereunder - reverse charge mechanism - Section 142(3) of the Act read with Section 11B of the Central Excise Act 1944 - HELD THAT - The perusal of CCR under the existing law clearly brings out that the refund of unutilized cenvat credit can be made only for specific purpose under Rule 5 5A and 5B subject to certain prescribed/notified procedure conditions and limitations etc. as may be specified or notified by notification. Also it is obvious that there is no provision for refund of CENVAT credit either under CCR 2004 or Finance Act 1994 for service tax paid correctly which in any case has not been disputed by the appellant. They have also admittedly not filed any revised ST-3 within the specified tax limit as would have been otherwise required under Section 142(9)(b). Essentially when there is no provision in the law either under the Cenvat Credit Rules 2004 or in the Finance Act 1994 to allow cash refund for such accumulated credit Section 142(3) per se cannot make it an eligible refund merely because the appellant have not been able to utilize on the ground of not having filed the revised return or were not able to take the TRAN-1 route etc. within specified time. It is observed that in the case of Banswara Syntex Vs CCE 2018 (10) TMI 1064 - RAJASTHAN HIGH COURT the Hon ble Division Bench of Rajastan High Court held that refund of accumulated unutilized credit on account of education cess and secondary and higher secondary education cess was not entitled for cash refund in view of their having no provision under the Act of 1944. There is no infirmity in the Order passed by the Commissioner (Appeals) upholding the Order of the Original Authority who had rejected the claim of refund in cash filed by the appellant. Accordingly the appeal filed by the appellant is liable to be dismissed. Appeal dismissed.
Issues Involved:
1. Entitlement of refund of service tax paid under reverse charge mechanism. 2. Applicability of Section 142(3) of the CGST Act, 2017. 3. Interpretation of transitional provisions under GST laws. Issue 1: Entitlement of Refund of Service Tax Paid Under Reverse Charge Mechanism The Original Authority denied the refund of service tax of Rs. 4,95,765/- paid on 06.12.2017 by the appellant under reverse charge mechanism, stating that the service tax was rightly paid in accordance with the law and there was no provision for refund in cash when a rightful amount was paid as per law. The Commissioner (Appeals) upheld this decision, noting that there is no provision under the Cenvat Credit Rules 2004 or Finance Act 1994 for refund of credit of service tax paid under reverse charge mechanism on input services. Issue 2: Applicability of Section 142(3) of the CGST Act, 2017The appellant argued that they were entitled to a refund of the service tax paid post-transition under Section 142(3) of the CGST Act, 2017. However, the Commissioner (Appeals) and the Learned DR contended that Section 142(3) does not independently provide any right to claim a refund of unutilized cenvat credit without fulfillment of conditions prescribed under the existing law. The Tribunal held that Section 142(3) is an enabling provision for grant of refund in cash, notwithstanding certain provisions to the contrary in Section 11B, but does not create a new right for refund that did not exist under the old regime. Issue 3: Interpretation of Transitional Provisions Under GST LawsThe Tribunal observed that transitional provisions were made to ensure the disposal of claims and liabilities under the existing laws in accordance with the new GST regime. The Tribunal noted that the refund of unutilized cenvat credit is only permissible under specific provisions (Rule 5, 5A, and 5B of CCR 2004) and that there was no provision for refund of service tax paid correctly under the existing law. The Tribunal also referenced several judgments, including the Hon'ble Jharkhand High Court's decision in M/s Rungta Mines Vs CCE, which held that Section 142(3) does not confer a new right for refund if such a right did not exist under the old regime. ConclusionThe Tribunal concluded that there was no provision in the law to allow cash refund for the accumulated credit, and Section 142(3) cannot make it an eligible refund merely because the appellant did not utilize the credit due to not filing a revised return or taking the TRAN-1 route within the specified time. The appeal filed by the appellant was dismissed, upholding the orders of the Commissioner (Appeals) and the Original Authority. Appeal dismissed. (Order pronounced in the open court on 30.04.2024)
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