2024 (8) TMI 311 - AT - Central Excise

Refund in cash of service tax paid under reverse charge mechanism post 01.07.2017 under the existing law - Section 142 (3) of CGST Act, 2017 - HELD THAT - Reliance placed by DR on the judgment of Hon ble High Court of Jharkhand in the case of M/S RUNGTA MINES LIMITED VERSUS THE COMMISSIONER OF CENTRAL GOODS SERVICE S TAX AND CENTRAL EXCISE, THE COMMISSIONER (APPEALS) , CENTRAL GOODS SERVICES TAX AND CENTRAL EXCISE, 2, THE ASST. COMMISSIONER, CENTRAL GOODS SERVICES TAX AND CENTRAL EXCISE, DIVISION I, JHARKHAND 2022 (2) TMI 934 - JHARKHAND HIGH COURT is appropriate to appreciate the applicability and the scope of Section 142(3). A plain reading of Section 142(3) evidences that Section 142(3) does not confer a new right, which never existed under the existing law, if the person is not entitled for any right including refund under the existing law. The ratio of the above judgement squarely applicable to the facts of the instant case as regards Section 142(3) of the Act. In the above judgement it was held that provisions of CGST Act do not cover any such situation relating to any consequences due to inter parte acts and omissions. It was also held that in that case as per the petitioner, the entire problem has cropped up due to non-receipt of invoice in original from port authorities although the port services were availed and payments for the same were made. In the present case also i.e. JSW Cement Pvt Ltd., the issue has cropped up because of late receipt of invoices bills in the last week of July 2017 in respect of input services received during the period March 2017 to June 2017 as admitted by the appellant. Therefore, as held in the Rungta Mines the late receipt of invoices is essentially between the appellant and its service provider and the tax collecting authorities had nothing to do in the matter. It was also held in Rungta Mines, that appellant never had a right to claim refund under the existing law. Thus, the Rungta Mines decision is exactly applicable to the instant case. 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 - the appeal filed by the appellant is liable to be dismissed - Appeal dismissed.

Summary

Issues Involved:
1. Entitlement to refund of service tax paid under reverse charge mechanism post-GST transition.
2. Interpretation and application of Section 142(3) of the CGST Act, 2017.
3. Applicability of existing laws and provisions for refund claims.
4. Relevance of cited case laws and judicial precedents.

Detailed Analysis:

1. Entitlement to Refund of Service Tax Paid under Reverse Charge Mechanism Post-GST Transition:
The appellant sought a refund of Rs. 12,98,114/- paid as service tax under the reverse charge mechanism on GTA services availed, which they could not claim under Tran-1 form for transition into GST. The Original Authority and the Commissioner (Appeals) both rejected the refund claim, stating that there is no provision under the existing law to refund such an amount of service tax paid under the reverse charge mechanism. Section 142(3) of the CGST Act does not independently provide any right to claim a refund of unutilized CENVAT credit without fulfilling conditions prescribed under the existing law.

2. Interpretation and Application of Section 142(3) of the CGST Act, 2017:
Section 142(3) stipulates that any claim for refund of CENVAT credit, duty, tax, interest, or any other amount paid under the existing law must be disposed of in accordance with the provisions of the existing law. The section does not confer a new right to claim a refund but maintains the existing rights as they were under the old regime. The provision indicates that if CENVAT credit were otherwise eligible for a refund under the erstwhile Central Excise Act, it needs to be processed accordingly. The section does not provide for an independent statutory provision to examine and allow the eligibility of a refund without reference to the existing law.

3. Applicability of Existing Laws and Provisions for Refund Claims:
The existing law, including the CENVAT Credit Rules (CCR) 2004, does not provide for a refund of unutilized or accumulated CENVAT credit except in the case of export. The refund of CENVAT credit can only be made under specific circumstances as prescribed under Rule 5, 5A, and 5B of the CCR 2004, subject to certain procedures, conditions, and limitations. The appellant's case does not fall under these specific circumstances. Judicial precedents such as Banswara Syntex Vs CCE and Rani Plastic Pipe Industries have held that there is no provision under the Central Excise Act or the CCR 2004 to allow a cash refund of unclaimed/accumulated credit.

4. Relevance of Cited Case Laws and Judicial Precedents:
The appellant relied on several case laws to support their claim, including decisions from the CESTAT and High Courts. However, the tribunal found that these cases did not directly address the issue at hand or were not applicable due to different factual circumstances. For instance, the Ganges International Pvt Ltd. decision of the Madras High Court was a remand order and did not decide the issue on merits. The Bosch Electrical Drive India Pvt Ltd. decision from the CESTAT Chennai Larger Bench was limited to the maintainability of an appeal before the CESTAT and did not address the substantive issue of refund entitlement under Section 142(3). The tribunal also noted that the decision in JSW Steel Ltd. was not applicable as it did not consider relevant judgments such as the Jharkhand High Court's decision in Rungta Mines, which held that refunds under the existing law are governed by Section 11B of the Central Excise Act and do not sanction any refund where the assessee failed to claim CENVAT credit within the prescribed time.

Conclusion:
The tribunal concluded that Section 142(3) of the CGST Act does not provide an independent entitlement for granting a refund of CENVAT credit which could not be utilized or transitioned. The appellant's claim for a refund of service tax paid under the reverse charge mechanism post-GST transition was not supported by the existing law or judicial precedents. Thus, the appeal filed by the appellant was dismissed, upholding the orders of the Original Authority and the Commissioner (Appeals).