2024 (10) TMI 53 - AT - Service Tax

Cash Refund of Krishi Kalyan Cess - Rejection on the grounds that there is no provision for transition of said Cess in the GST regime and only eligible credits were to be transitioned and the rest were to be lapsed - HELD THAT - The entire provisions for transition under the Act, if read in totality, especially Section 141, Section 142 Section 174 of the Act are meant for allowing certain credits to be carried forward to the new regime for it s use in discharge of GST or refund of such certain categories which the Appellants would be otherwise entitled for under the existing law or which might accrue to him in due course on finalization of dispute, etc., but unable to utilize as such under GST. In this case, neither the cess is an eligible duty and therefore, eligible for transition and subsequent use nor they were entitled to claim refund under the existing law in accordance with prevailing rules governing refund of unutilized Cenvat credit under Rule 5. The Appellants would not be entitled for cash refund under Section 142(3) read with Section 174 of the Act. Therefore, there is no infirmity in the order passed by the Commissioner (Appeals). Appeal dismissed.

Issues Involved:
1. Eligibility of Krishi Kalyan Cess (KKC) for transition into the GST regime.
2. Entitlement to cash refund of unutilized KKC under Section 142(3) read with Section 174 of the CGST Act.
3. Interpretation of Cenvat credit as a vested right or a concession.

Detailed Analysis:

1. Eligibility of Krishi Kalyan Cess (KKC) for Transition into the GST Regime:
The Appellant, engaged in providing 'Scientific & Technical services,' carried forward the KKC into the GST regime as per Section 140(1) of the CGST Act. However, with the amendment effective from 01.02.2019, KKC was excluded from the category of "eligible duties," leading to the reversal of the credit. The Department rejected the transition of KKC, stating that only eligible credits could be transitioned, and others were to lapse. The Original Authority, supported by the Larger Bench decision in Gauri Plasticulture Pvt Ltd Vs CCE, Indore, upheld this view, confirming that KKC is not an eligible duty for transition.

2. Entitlement to Cash Refund of Unutilized KKC under Section 142(3) read with Section 174 of the CGST Act:
The Appellant claimed a cash refund of the unutilized KKC under Section 142(3) read with Section 174 of the Act, arguing it as their substantive right. The Department contended that the refund is not permissible as KKC is not covered under "eligible duties" per Explanation (1) and (2) to Section 140, and thus, not entitled for refund under Section 142(3). The Original Authority and Commissioner (Appeals) examined the eligibility under both Section 140 and Section 142(3), concluding that KKC, not being an eligible duty, would lapse and is not entitled for cash refund. The Tribunal's decision in NMDC Ltd Vs Commissioner of CGST, Raipur further supported this stance, holding that once the cess is not allowable, the question of refund does not arise.

3. Interpretation of Cenvat Credit as a Vested Right or a Concession:
The Appellant argued that the credit of KKC was a vested right, thus entitling them to a refund. The Original Authority countered this by referencing judgments from the Supreme Court, including ALD Automotive (P) Ltd Vs CTO, Osram Surya Pvt Ltd Vs CCE, Indore, and Jayam & Co. Vs Commissioner, which held that Cenvat credit is not an absolute right but a concession subject to statutory provisions. The Tribunal upheld this view, emphasizing that Cenvat credit cannot be considered a vested right.

Case Law Reliance:
The Appellant relied on several judgments, including Bank of Baroda Vs Asst. Commissioner, BHEL Vs Commissioner, CGST, CE & C, Bhopal, and Emami Cement Ltd, Nu Vista Ltd Vs Commissioner CGST, CE. However, the Tribunal noted that these cases were either stayed, based on the Slovak India Trading Company Pvt Ltd decision, or not directly applicable. The Tribunal found the judgments cited by the Revenue, including Rungta Mines Ltd Vs CCE, Jharkhand, and Cellular Operators Association of India and Others Vs UOI, more persuasive. These judgments clarified that Section 142(3) does not confer a new right for refund unless it existed under the old regime.

Conclusion:
The Tribunal concluded that the Appellant is not entitled to a cash refund of the unutilized KKC under Section 142(3) read with Section 174 of the CGST Act. The appeal was dismissed, affirming the order passed by the Commissioner (Appeals).

(Pronounced in the Open Court on 30.09.2024)

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