2021 (8) TMI 123 - AT - Service Tax

Refund of unutilised cenvat credit of service tax - Requirement of debiting the amount of the refund in cenvat credit account - condition in terms of Rule 2(h) of N/N. 27/2012CE dt. 18/06/20212 satisfied or not - interest on delayed refund - HELD THAT - The statutory auditor of the appellant has issued a certificate which is on record and was also submitted before both the authorities below and as per this certificate, the appellant has reversed the amount of ₹ 7,41,538/- twice and has not reclaimed until June 2017 and has also not carried forward under GST regime and hence are eligible for refund in terms of Rule 5 of CCR, 2004 - also, the appellant has explained in detail in their grounds of appeal, reasons of the excess debit in their letter dt. 21/12/2018 but both the authorities did not consider the same. Also, same officer granted refund for immediate past period based on debit in ledger accounts but surprisingly failed to adopt the consistent stand for the impugned period - the original authority had erred in not appreciating the cenvat ledger account which showed a positive balance of ₹ 21,51,584/- at the time of filing the refund application for the subject period and erroneously concluded that the amount lying in balance is only ₹ 2,42,312/- - the appellant is entitled for refund of unutilised cenvat credit. Interest on delay in refund - HELD THAT - As per the decision in the case of RANBAXY LABORATORIES LTD. VERSUS UNION OF INDIA AND ORS. 2011 (10) TMI 16 - SUPREME COURT , appellant is also entitled for grant of interest on delayed refund claim beyond the period of three months. Appeal allowed - decided in favor of appellant.

Summary

Issues:
Refund of unutilised cenvat credit under Notification No.27/2012 CE - Debit condition compliance - Denial of refund on time bar grounds - Failure to appreciate documentary evidences - Excess debit and transition to GST regime - Substantive right to claim refund - Interest on delayed refund claim.

Analysis:
The appellant, registered for Business Auxiliary Services, filed a refund claim for unutilised cenvat credit of service tax. The Assistant Commissioner rejected the claim as time-barred, but the Commissioner(Appeals) allowed it on limitation grounds and remanded the matter. Despite resubmitting documents, the Assistant Commissioner summarily rejected the explanation, leading to the present appeal.

The consultant argued that the order lacked legal sustainability, as authorities failed to appreciate evidence and wrongly concluded on the debit condition. They highlighted the excess debit, non-transition to GST regime, and the denial of substantive right to claim refund. The consultant also sought interest on delayed refund citing relevant legal precedents.

The respondent reiterated the findings of the impugned order, emphasizing the appellant's non-compliance with Notification No.27/2012-CE.

Upon review, the Tribunal found the key issue was whether the appellant satisfied the debit condition under the notification. The appellant presented evidence, including cenvat ledger, ST3 returns, and CA certificate, to prove debit. The Tribunal noted the excess debit in the previous period, which authorities failed to consider. It held that the appellant had debited the refund amount and was eligible for refund under Rule 5 of CCR, 2004.

The Tribunal referenced a case holding that eligibility for rebate cannot be questioned without challenging the credit taken. It criticized the inconsistent approach of the officer and the erroneous calculation of the balance amount, ultimately ruling in favor of the appellant's refund claim.

Regarding interest on delayed refund, the Tribunal relied on legal precedents to support the appellant's entitlement to interest due to the delay beyond the stipulated period. Consequently, the impugned order was set aside, and the appeal was allowed in favor of the appellant.