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2024 (6) TMI 1111 - AT - Service TaxRefund of service tax paid under reverse charge mechanism, under the erstwhile law - Applicability of Section 11B of the Central Excise Act, 1944 and Section 142(3) of the CGST Act, 2017 - HELD THAT - Section 142(3) of CGST Act, 2017 provides that claim for refund under the erstwhile CENVAT Credit Rules or Central Excise Act, 1944 etc. must be disposed in accordance with the existing law and the amount has to be paid in cash. Section 2(48) of CGST Act, 2017 states that the existing law means any law, notification, order, rule or regulation etc. which is made or passed before the commencement of CGST Act, 2017 - Further Section 174(2)(c) of CGST Act, 2017, talks about rights and liabilities which have accrued or have been incurred under the erstwhile legislations. Thus, when this section provides for the department to issue Show Cause Notice for any violations of the erstwhile law, reciprocally the assessee can file refund claims for the rights accrued under the erstwhile legislations under the provision of section 142(3) of CGST Act, 2017. In the case of ADFERT TECHNOLOGIES PVT. LTD. VERSUS UNION OF INDIA AND ORS. 2019 (11) TMI 282 - PUNJAB AND HARYANA HIGH COURT , it is held that transitional credit being vested right cannot be taken away on procedural or technical ground. The appellant has paid the tax under the erstwhile law. In the present case, the claim is only for refund and not proceedings for assessment or adjudication. In such a scenario, sub-section (3) of section 142 gets attracted. Rejection of the refund claim is not legally valid and merits to be set aside. The impugned order is et aside - appeal allowed.
Issues:
1. Claim for refund of service tax paid under reverse charge mechanism during the transition to GST. 2. Applicability of Section 11B of the Central Excise Act, 1944 and Section 142(3) of the CGST Act, 2017. 3. Allegations of suppression of facts and intention to evade duty. 4. Eligibility of the appellant for CENVAT Credit and refund under transitional scenarios. 5. Interpretation of Section 142(3) and Section 174(2)(c) of the CGST Act, 2017. 6. Precedents related to the protection of vested rights and seamless flow of tax credit under GST law. Analysis: 1. The appellant, an IT services provider, filed a claim for refund of service tax paid under reverse charge mechanism during the transition to GST. The appellant had paid the service tax of Rs.82,38,366/- with interest in June 2018 for services received under the erstwhile service tax regime. The refund claim was rejected by the original authority and upheld by the Commissioner (Appeals), leading to the appeal before the tribunal. 2. The appellant argued that they were eligible for refund under Section 11B of the Central Excise Act, 1944 read with Section 142(3) of the CGST Act, 2017. They contended that CENVAT Credit is a right accrued under the repealed act, protected by Section 174(2) of the CGST Act, 2017. The appellant cited a judgment of a Larger Bench of the Tribunal to support their claim for refund even if the service tax was paid post-GST implementation. 3. The respondent alleged that the appellant suppressed facts and contravened provisions of the Finance Act, 1994 with an intention to evade duty. They argued that the appellant was not eligible for CENVAT Credit under Rule 9(1)(iv)(bb) of the CENVAT Credit Rules, 2004. The respondent also mentioned the initiation of separate action for penalty under Section 78 of the Finance Act, 1994. 4. The tribunal examined the issue in light of the decision in Bosch Electric case and found that delayed payment of tax with interest was permitted under the erstwhile Act. They highlighted Section 142(3) of the CGST Act, 2017, which mandates the disposal of refund claims in accordance with the existing law and payment in cash. The tribunal emphasized that the appellant had paid the tax under the erstwhile law and was only seeking a refund, not an assessment or adjudication. 5. The tribunal interpreted Section 142(3) and Section 174(2)(c) of the CGST Act, 2017 to support the appellant's right to file refund claims for amounts paid under the erstwhile legislations. They referred to precedents emphasizing the protection of vested rights and the seamless flow of tax credit under the GST law. 6. Ultimately, the tribunal set aside the impugned order and allowed the appeal, declaring the appellant eligible for consequential relief as per the law. The judgment was pronounced in open court on 25.06.2024.
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