2024 (7) TMI 63 - AT - Service Tax

Refund of service tax paid under reverse charge mechanism - job work activity falling under the category of supply of manpower and supply agency service - rejection of refund claim on the ground that there is no provision to allow credit or refund of the Service Tax paid on or after 01.07.2017 - unjust enrichment - HELD THAT - The issue is settled in favour of the Appellant. As per the decision of the Tribunal in matter of M/S BROSE INDIA AUTOMOTIVE SYSTEMS PVT. LTD. VERSUS COMMISSIONER OF CGST CENTRAL EXCISE, PUNE-I 2022 (5) TMI 480 - CESTAT MUMBAI , issue was considered by this Tribunal in the matter of M/S. JSW STEEL LTD. VERSUS COMMISSIONER OF CENTRAL TAX CENTRAL EXCISE, BELGAUM 2024 (6) TMI 906 - CESTAT BANGALORE , where the appeal was allowed. Bar of unjust and enrichment - HELD THAT - The appellant paid due amount on reverse charge mechanism as per the Audit objection on 18.09.2018 and thus the refund is not hit by bar of unjust and enrichment. Though the appellant was eligible for CENVAT Credit, they could not avail CENVAT credit due to introduction of GST from 01.07.2007. Thus appellant is eligible for refund in cash in terms of section 142(3) of CGST act 2017. The appellant is eligible for refund in cash in terms of section 142(3) of CGST act 2017 - appeal allowed.

Summary

Issues:
Refund of service tax paid under reverse charge mechanism for job work activity falling under supply of manpower and supply agency service.

Analysis:
1. The appellant, engaged in manufacturing, paid service tax of Rs. 11,51,676/- in 2018 under reverse charge mechanism. A refund claim was filed based on CENVAT credit Rules, 2004 and Section 142(3) of the CGST Act, 2017. However, the claim was rejected by the Adjudication Authority and the Commissioner (Appeals).

2. During the hearing, the appellant's counsel highlighted relevant provisions of the Central Excise Act and CGST Act, 2017. The counsel argued that refund of Cenvat Credit can be made in cash as per existing law. The counsel also cited various precedents to support the appellant's case.

3. The counsel further contended that Cenvat credit could only be availed after duty payment, which was done on 18.09.2018. The non-inclusion of this payment in the ER-1 Return for the period ending on 30.06.2017 was deemed unsustainable. The appellant's case involved service tax paid under reverse charge, making them eligible for a refund.

4. The Authorized Representative (AR) reiterated the previous authorities' findings, stating that there was no provision for the appellant's claimed refund. The AR argued that Circular No. 207/5/2017-CT rendered the appellant ineligible for a refund.

5. The Tribunal ruled in favor of the appellant, citing the decision in the case of M/s. Brose India Automotive Pvt. Ltd. The Tribunal noted that the appellant had paid the due amount under reverse charge mechanism and was eligible for a refund under Section 142(3) of the CGST Act, 2017. The Tribunal also addressed the issue of unjust enrichment, stating that the refund was not affected by it.

6. The appeal was allowed, granting the appellant the requested relief along with any consequential relief as per the law. The decision was dictated and pronounced in open court.