2022 (9) TMI 216 - AT - Service Tax

Refund claim - inability to carry forward the balance under CENVAT Credit Rules, 2004 into the substitute tax scheme under the transitional provisions of the new statute - HELD THAT - It would appear that the lower authorities had attempted to dispose off the claim without the benefit of decisions of the Tribunal or the constitutional courts. It is, therefore, appropriate that the matter be decided afresh by the original authority. The matter remanded back to the original authority. The appellant shall be granted opportunity to make their submissions following which the claim may be disposed off expeditiously - appeal allowed by way of remand.

Summary

Issues: Refund of CENVAT credit balance under transitional provisions of CGST Act, 2017.

Analysis:
1. Refund Claim Denied: The appeal was filed against the denial of a refund claim of Rs.15,28,524 by M/s Freudenberg Filtration Technologies (I) Pvt Ltd. The appellant sought to carry forward the balance under CENVAT Credit Rules, 2004 into the substitute tax scheme under the transitional provisions of the new statute. The lower authorities rejected the refund claim on the grounds that there was no specific mechanism in CENVAT Credit Rules for monetization of credit that had not been carried forward.

2. Submission and Claims: The appellant reported the carry forward of the credit balance in the original return and later claimed a refund of Rs.15,28,524 under section 142(9)(b) of the CGST Act, 2017. The claim included amounts for both 'inputs' and 'input services'. The appellant enhanced the balance amount in the revised return, leading to the differential amount claimed as a refund.

3. Legal Arguments: The appellant contended that section 142(9)(b) of the CGST Act, 2017 was not restricted to exports and should apply to their claim. The appellant also argued that the orders of the lower authorities did not align with the issues raised in the notice. Reference was made to a Tribunal decision in Punjab National Bank v. Commissioner of Central Tax, Benguluru North, which addressed the legality of similar claims.

4. Authority's Decision: The Authorized Representative argued that the provision cited by the appellant did not cover the CENVAT credit balance, and there was no other provision empowering the grant of a refund under the CENVAT Credit Rules, 2004. The lower authorities made their decision without considering relevant Tribunal decisions or constitutional court judgments.

5. Remand and Fresh Consideration: The Tribunal set aside the impugned order and remanded the matter back to the original authority. The appellant was granted the opportunity to make submissions, and it was directed that the claim should be disposed of expeditiously after considering any relevant orders or judgments in similar circumstances. The decision was pronounced in open court on 22/08/2022.