2024 (10) TMI 1257 - AT - Service Tax

Refund in cash - non-acceptance of the documents submitted, for the claim as not sufficient - reverse charge mechanism - HELD THAT - Section 142(3) is only a provision which provides for entertaining and allowing refund of credit and in case any refund payable, then the same can be refunded in cash. However, whether the refund as such is otherwise eligible and admissible under the existing law would be the determining factor. On going through the judgments cited specially the case of M/s NACL Industries Ltd., 2024 (9) TMI 507 - CESTAT HYDERABAD , which has dealt with the same issue and held that refund was not permissible in certain situation where it was otherwise not eligible under existing law. It is found that in the Larger Bench decision of M/s Bosch Electrical Drive India Pvt Ltd. 2023 (12) TMI 1145 - CESTAT CHENNAI-LB , the issue referred to was not regarding the admissibility of refund under Section 142(3) in the given facts, rather it was with regard to maintainability of such appeal before CESTAT and which was decided by the Larger Bench by holding that such appeals are maintainable. This is not the issue in the present appeal as it has already admitted and is not being contested by the Revenue and therefore it does not help the grounds taken by the appellant. The order of Single Member Bench in M/s Jagannath Polymers Pvt Ltd. 2021 (12) TMI 736 - CESTAT NEW DELHI , has allowed appeal in a given factual matrix without addressing the various order of Hon ble High Courts and Tribunals on the interpretation of Section 142(3) of CGST Act 2017. In so far as the issue of credit being substantive right and therefore refund is required to be allowed in view of provisions under Section 174 of CGST, the issue is also no longer res integra and various Court s and Tribunals have held the credit is not a substantive right rather it is in the nature if concession. There are no infirmity in the order passed by the Commissioner (Appeals) - appeal dismissed.

Summary

Issues:
1. Entitlement to refund under Section 142(3) and (6) of CGST Act 2017.
2. Rejection of refund claim based on insufficiency of documents and non-admissibility under existing law.

Detailed Analysis:
The appeal in question revolves around the issue of whether the appellants were entitled to a refund under Section 142(3) and (6) of the CGST Act 2017. The Original Refund Sanctioning Authority rejected the claim citing insufficient documents and the inadmissibility of the refund under the existing law. The Commissioner (Appeals) upheld this decision, stating that there was no provision for claiming a refund on service tax paid under Reverse Charge Mechanism (RCM) or input services under the Cenvat Credit Rules 2004 or the Finance Act 1994. The Commissioner emphasized that the existing law did not allow for cash refund in such a situation, leading to the dismissal of the appellant's claim.

The appellant argued that they would have been entitled to take credit of the service tax paid under RCM post-01.07.2017, and thus claimed the refund under Sections 142(3) and (6) and Section 174. The appellant also cited judgments from previous cases to support their claim. However, the Authorized Representative contended that Section 142(3) does not provide for a separate provision for cash refund and that the claim must align with existing laws. The Authorized Representative relied on various judgments, including a recent one, to support this argument.

Upon hearing both sides and examining the records, the Tribunal found that the issue at hand was narrow. The Tribunal clarified that Section 142(3) does not automatically entitle all kinds of refunds of Cenvat Credit but rather allows for refund of credit subject to eligibility under existing law. The Tribunal referenced judgments and highlighted that refund in cash under Section 142(3) is only admissible if the refund is otherwise eligible under existing law, which was not the case in the present appeal. The Tribunal also discussed specific case laws and their implications on the current matter.

Regarding the issue of credit being a substantive right and the requirement for refund under Section 174 of the CGST Act, the Tribunal noted that various courts and tribunals have held that credit is not a substantive right but a concession. Citing specific judgments to support this stance, the Tribunal concluded that the credit issue was settled in legal precedent. Ultimately, the Tribunal dismissed the appeal, aligning with the judgments cited by the Authorized Representative and finding no fault in the Commissioner (Appeals)'s order, thus bringing the case to a close.