2024 (10) TMI 324 - AT - Service Tax

Denial of cash refund of accumulated cenvat credit, paid post introduction of GST, towards Service Tax on Reverse Charge Mechanism - period from April 2016 to June 2017 - HELD THAT - While accepting contention of the learned counsel for the Appellant that refund of such Cenvat Credit under section 142(3) in cash is admissible, as for the Judicial President of this Tribunal including that of the Larger Bench constituted on the issue in case of M/s. Brose India Automotives Systems Private Limited 2022 (5) TMI 480 - CESTAT MUMBAI , there is no express contrary finding available in those two judgments referred by learned authorised representatives for the Department as in both the cases, the findings were to the effect that express provision though was not available in the existing Act (Now erstwhile Excise Act and Cenvat Credit Rules, 2004) for cash refund, Assessee is eligible to take cenvat credit amount so paid under the Service Tax Rules and even in the Ganges International Pvt. Ltd judgments 2022 (3) TMI 544 - MADRAS HIGH COURT it was also directed that such provision as available under section 142(3) could be treated as a dire necessity and by invoking Doctrine of Necessity relief can be granted to the Appellant in such kind of quasi-judicial/administrative matter. In the existing (now-pre-existing) law, whether refund in cash provision is available or not, this non-abstanate clause permitted refund admissible to the assesse in respect of Cenvat Credit only through payment of cash after expiry of transitional provision. Appellant is therefore, entitled to get the refund in cash as claimed with applicable interest as per law. The order passed by the Commissioner (Appeals), Central Tax, Central Excise Service Tax, Raigad is hereby set aside - Appeal allowed.

Summary

Issues:
Denial of cash refund of accumulated cenvat credit post introduction of GST; Interpretation of section 142(3) of the CGST Act, 2017 for refund eligibility.

Analysis:
The judgment deals with the denial of a cash refund of Rs. 30,38,426/- as accumulated cenvat credit paid post the introduction of GST. The Appellant sought a refund of the cenvat credit in cash under section 142(3) of the CGST Act, 2017, after paying certain Service Taxes on Reverse Charge Mechanism for the period from April 2016 to June 2017. The Respondent issued a show cause notice proposing rejection of the refund under section 142(8)(a) of the CGST Act, 2017, leading to an adjudication process where the Appellant's claim was rejected by the Adjudicating Authority and Commissioner (Appeals).

The Appellant argued that previous judgments by the Tribunal had held that payment of service tax under Reverse Charge Mechanism after the implementation of the CGST Act is refundable by cash under section 142(3) of the Act. The Appellant relied on various precedents to support their claim for a cash refund. On the contrary, the Authorised Representative for the respondent department cited judgments from the Jharkhand High Court and Madras High Court, stating that in the absence of a specific statutory provision, such a refund is not admissible.

The Tribunal analyzed the case record and previous judgments. It noted that there was no express contrary finding in the judgments cited by the respondent's representative. The Tribunal emphasized that section 142(6) of the CGST Act mandated the disposal of cenvat credit claims in accordance with the provisions of the pre-existing law, allowing for cash refunds. The Tribunal also highlighted the non-obstante clause in section 142(3) of the CGST Act, which permitted cash refunds for cenvat credit even in the absence of specific provisions in the pre-existing law.

Based on the analysis, the Tribunal allowed the appeal, setting aside the order passed by the Commissioner (Appeals). The Respondent Department was directed to pay the Appellant Rs. 30,38,426/- with applicable interest in cash within two months from the date of the order. The judgment clarified the interpretation of section 142(3) of the CGST Act, 2017, regarding the eligibility of cash refunds for accumulated cenvat credit post-GST implementation.