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TMI Blog2024 (10) TMI 1070X X X X Extracts X X X X X X X X Extracts X X X X ..... referring to Section 142(3) of the CGST Act. The petitioner never had a right to claim refund under the existing law and had failed to exercise their right to claim CENVAT Credit as per law and wrongly claimed the impugned amount as credit in Service Tax Return (S.T. 3 return).' Appellant placed reliance on the decision of Hon'ble Bombay High Court in case of Combitic Global Caplet Pvt Ltd [ 2024 (6) TMI 498 - BOMBAY HIGH COURT] and Simbhaoli Sugar Ltd.[ 2024 (8) TMI 7 - CESTAT ALLAHABAD] - these decisions have not been rendered in respect of the amounts which became due to the concerned parties prior 30.06.2017. Thus these decisions are clearly distinguishable and do not support the case of the appellant. There are no merits in the appeal - appeal dismissed. - MR. SANJIV SRIVASTAVA, MEMBER (TECHNICAL) Shri Priyanka Singla, Advocate for the Appellant Shri Santosh Kumar, Authorised Representative for the Respondent ORDER This appeal is directed against Order-in-Appeal No. NOI-EXCUS-002-APP-562 -20-21 dated: 9.0.2020 of the Commissioner, CGST (Appeals), Noida. By the impugned order the order in original No. 438-R/AC/D-I/GBN/19-20 dated 14/02/2020, in which the Assistant Co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g for the Appellant learned counsel submits: Cenvat Credit is a substantive right of the appellant as have been held by Hon'ble Supreme Court in case of Eicher Motors [1999-VI-04-SC-CE]; The appellant is entitled to claim the refund in cash or service tax paid by it under RCM as has been held by various authoritative pronouncements as follows: Bharat Heavy Electrical Ltd. [2021-VIL-715-CESTAT-CHI-CE] Srichakra Poly Plast India Pvt. Ltd. [2024-VIL-141-CESTAT-HYD-CE] Aculife Healthcare Pvt. Ltd. [2024-VIL-474-CESTAT-AHM-CE] o Terex India Pvt. Ltd. [2021-VIL-522-CESTAT-CHE-ST] Brose India Automotive Sysetm Pvt. Ltd. [2022-VIL-328-CESTAT-MUM-ST] Circor Flow Technologies India Pvt. Ltd. [2022-VIL-15-CESTAT-CHE-ST] Monochem Graphics Pvt. Ltd. [2022-VIL-760-CESTAT-DEL-CE] ITCO Industries Ltd. [2022-VIL-456-CESTAT-CHE-CE] Hindustan Equipments Pvt. Ltd. [2024-VIL-598-CESTAT-AHM-CE] Ashima Ltd. [2024-VIL-365-CESTAT-AHM-CE] Combitic Global Caplet Pvt. Ltd. [2024-VIL-570-BOM] Simbhaoli Sugar Ltd [2024-VIL-490-CESTAT-ALH-CE] Decision of Hon'ble Bombay High Court in the case of Gauri Plasticulture referred in the impugned order is not applicable to their case as at the time when said dec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t Section 142 of the GST Act, 2017 allows refund of the amount that was already accrued to person or persons under the erstwhile Central Excise Law or the Service Tax Law, as the case may be. But in this case, the refund was never earned by the appellant, nor was it permissible under the law. The provision of Section 11B of Central Excise Act, 1944 is very clear as Clause (C) of Sub Section 2 clearly provided for refund of credit of duty paid on excisable goods which may be made in accordance with the rules made, or any notification issued under the Act. It is not the case of the appellant that there was any rule made for the refund of such credit under the erstwhile Central Excise Rules and also no authorization existed for the refund of such credit under the Rules. There was also no notification issued under the Central Excise Act for refund of such credit, and therefore, the contention of the appellant is not supported by law. 5. The case laws relied upon by the appellant as indicated above pertains to cash refund of CENVAT Credit on surrender of registration certificate or on the issue of export refund by way of rebate, and therefore, the decision is not squarely applicable to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tted within a period of forty five days from the date of submission of the return under rule 7. However they chose deliberately not to pay the same till that date and reflect in the ST-3 return or by filing the revised return. They paid the service tax subsequently. They filed the refund claim of the amount so paid on 03.05.2018. 4.4 It is not provided in law that the all the amounts paid undr RCM should be admissible as refund to the appellant. The scheme of CENVAT Credit as per CENVAT Credit Rules, 2004 had extinguished on 30.06.2017, and the amounts of CENVAT Cedit available as balance with the manufacturer/ service providers was allowed to be transited into newly introduce GST Regime in the manner as provide under Section 140 of the CGST Act, 2017. The phrase CENVAT Credit also got erased from the law from that date and the claim made by the appellant that this amount was available as CENVAT Credit cannot have any sanctity in law on the date when the appellant paid these amounts claimed as refund under the name of un-utilized CENVAT Credit. The credit which was never taken in the book of accounts or was not due during the prevalence of the said scheme could not be claimed as th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ; (ii) The refund of taxes is neither a fundamental right nor a constitutional right. The Constitution only guarantees that the levy should be legal and that the collection should be in accordance with law. There is no constitutional right to refund. Refund is always a matter of a statutory prescription and can be regulated by the statute subject to conditions and limitations; (iii) Even in the case of an illegal levy or a levy which is unconstitutional, the decision of the nine judges Bench in Mafatlal Industries Limited vs Union of India held that the right of refund is not automatic. The burden of proof lies on the claimant to establish that it would not cause unjust enrichment; (iv) Though tax enactments are subject to Articles 14 and 19(1)(g) of the Constitution, this is subject to two well-settled principles: (a) Discriminatory treatment under tax laws is not per se invalid. It is invalid only when equals are treated unequally or unequals are treated equally. Both under the Constitution and the CGST Act, goods, services, input (goods) and input services are not one and the same. These are distinct species, though covered by a common code; and (b) The legislature is entitled t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... legislature to define the circumstances in which a refund can be claimed. The proviso to Section 54(3) is not a condition of eligibility (as the assessees' Counsel submitted) but a restriction which must govern the grant of refund under Section 54(3). We therefore, accept the submission which has been urged by Mr. N Venkataraman, learned ASG. 93. Parliament engrafted a provision for refund Section 54(3). In enacting such a provision, Parliament is entitled to make policy choices and adopt appropriate classifications, given the latitude which our constitutional jurisprudence allows it in matters involving tax legislation and to provide for exemptions, concessions and benefits on terms, as it considers appropriate. The consistent line of precedent of this Court emphasises certain basic precepts which govern both judicial review and judicial interpretation of tax legislation. These precepts are...... 94. The principles governing a benefit, by way of a refund of tax paid, may well be construed on an analogous frame with an exemption from the payment of tax or a reduction in liability [Assistant Commissioner of Commercial Tax (Asst.) vs Dharmendra Trading Company reported in (1988) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cts and circumstances of this case. Legal proposition on the point of interpretation of transitional provisions, vested rights etc with reference to the judgements relied upon by the learned counsel of the petitioner. 10. The learned counsel for the petitioner has also referred to the judgment passed in the case of Union of India vs Filip Tiago De Gama of Vedam De Gama (supra) on the point that the transitional provisions are to be purposefully construed and the paramount object in statutory interpretation is to discover what the legislature intended and this intention is primarily to be ascertained from the text of the enactment in question. This principle of statutory interpretation is well settled. 11. So far as the case of K. S. Paripoornan (supra) is concerned, the Hon'ble Supreme Court has considered the role of Transitional Provision and the learned counsel for the petitioner has referred to Para-71 of the said judgment, which is quoted as under: - 71. Section 30 of the amending Act bears the heading Transitional provisions . Explaining the role of transitional provisions in a statute, Bennion has stated: Where an Act contains substantive, amending or repealing enactment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hold that Cl. 5(a) has no application in a case where the special provisions of Cl. 23 are applicable. The aforesaid judgment does not help the petitioner in any manner in view of the fact that there is no conflict amongst the various provisions of CGST Act referred to by the learned counsel for the petitioner during the course of argument, particularly with reference to Sections 140, 142 and 174 of the CGST Act. The provisions have been interpreted in later portion of this judgement. 14. The learned counsel has further referred to the judgment in the case of CIT vs J. H. Gotla reported in (1985) 4 SCC 343 = 2002-TIOL-131-SC-IT-LB to submit that even in taxation, if strict literal construction leads to absurdity, construction which results in equity rather than injustice, should be preferred. However, during the course of argument, the learned counsel has failed to demonstrate as to how any of the provisions of CGST Act which have been referred to by the petitioner has led to any absurdity. The interpretation of the provisions of CGST Act particularly with reference to refund as contemplated in the Act itself is required to be seen in the light of the principles as has been laid d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f Glaxo Smith Kline PLC and Others (supra), the Hon'ble Supreme Court has upheld the view of the learned single judge of the High Court and held at Para-17 as under: - 17. The learned Single Judge's view that the provisions of Section 78 of the Amendment Act have no application to the proceedings which stood concluded before the appointed day appears to be the correct view governing the issue. Since Chapter IV-A in question was merely repealed, the situation has to be dealt with in line with Section 6 of the General Clauses Act. The provisions of Section 78 are conditional provisions and are not intended to cover cases where the application for EMR had been rejected with reference to Section 21 of the amending enactment. As noted above, Chapter IV-A was repealed. The effect of the repeal has to be ascertained in the background of Section 6 of the General Clauses Act. That being so, the order of the Division Bench cannot be sustained and that of the learned Single Judge has to operate. The appeal is allowed but in the circumstances without any order as to costs. 18. In the case of Eicher Motors Ltd. vs Union of India (supra), it has been held that the rights of credit facili ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... utilised in the manufacture of further products as inputs thereto then the tax on these goods gets adjusted which are finished subsequently. Thus, a right accrued to the assessee on the date when they paid the tax on the raw materials or the inputs and that right would continue until the facility available thereto gets worked out or until those goods existed. Therefore, it becomes clear that Section 37 of the Act does not enable the authorities concerned to make a rule which is impugned herein and, therefore, we may have no hesitation to hold that the Rule cannot be applied to the goods manufactured prior to 16-3-1995 on which duty had been paid and credit facility thereto has been availed of for the purpose of manufacture of further goods. 19. The learned counsel has also referred to the judgment passed in the case of CCE vs Grasim Industries Ltd. (supra) to submit that excise duty/CENVAT is value added tax. There is no doubt about the aforesaid proposition, as it is not in dispute in the instant case that the petitioner was entitled to take credit of the service tax paid to the port authorities for the port services by way of CENVAT Credit as per the provisions of the rules. 20. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 24. The petitioner was having Central Excise Registration for manufacture of sponge iron, billet and TMT Bar. The petitioner was also registered under Service tax only as a person liable to pay service tax under Reverse Charge Mechanism. Admittedly, the port services involved in this case is not covered under Reverse Charge Mechanism and therefore the same was not includable in the service tax return filed by the petitioner under ST-3. Accordingly, the petitioner was not entitled to avail credit of the impugned service tax paid on the port services in its service tax ST-3 return. 25. It is not in dispute that the petitioner was entitled to claim CENVAT Credit on the service tax paid on port services if used in the manufacturing activity for which the petitioner was registered under the Central Excise Act, 1944. 26. The petitioner had imported coal through Bill of entry dated 27.04.2017 for using the same in or in relation to manufacture of dutiable final products. In course of the import, they received a bundle of services from M/s Kolkata Port Trust during 26.04.2017 to 29.04.2017 in the nature of port services who issued Bill dated 23.05.2017 for Rs. 89,36,836/- which included s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed to export goods or services, which is not the case in the present case. It is not the case of the petitioner that the impugned services were used for export of goods or services. Thus, under the existing law the claim of refund of service tax paid by the petitioner on port services was not admissible. 30. The case of the petitioner is that since they received the original copy of the Bill dated 23.05.2017 as late as on 20.09.2017, they could not take CENVAT Credit in their last ER-1 return for June, 2017 filed on 30.07.2017. However, the petitioner took the credit of Rs. 10,88,328/- in their ST-3 return for April-June, 2017 filed on 22.09.2017 with a view to keep the said transaction above board so that their claim was not lost. It is also not in dispute that the last date for filing TRAN-1 was extended up to 31.10.2017. 31. From the entire records of the case this court does not find any explanation from the side of the petitioner as to under what circumstances the Bill dated 23.05.2017 was received by them as late as on 20.09.2017 (although as per the petitioner the port services were availed and the payment including service tax was made to the port authorities in the month o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rues to them which is the heart and soul of Section 142(3) of the CGST Act, 2017 and under Section 142(3) there is no statutory precondition that in order to claim the transitional credit, the claim must be disclosed in the ER-1 return; (iv) Section 142(3) of the CGST Act, 2017 provides for refund of CENVAT Credit in cash accruing to the assessee under CENVAT Credit Rules, 2004. Section 142 is a residuary provision which deals with cases/contingencies which are not specifically covered or contemplated under Section 140 or 141. Since, in the instant case the provision of Section 140(5) or any other sub-Section does not cover the contingencies as in the present case, it would be covered by the residuary provision of Section 142(3); (v) Section 142(3) specifically saves Section 11B(2)(c) of Central Excise Act which deals with refund of CENVAT Credit which remained un-utilized for one or another reason; (vi) Referring to the second proviso to Section 142(3) of the CGST Act, 2017 which provides that if carry forward of the transitional credit is claimed (under Section 140), then refund of such CENVAT Credit would not be admissible. Therefore, from a plain reading of section 142(3) it is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ved in September, 2017. They were left with no option than to file refund Application vide their letter dated 29.06.2018 under residuary provision of Section 142(3) read with Section 174(2)(c) of the CGST Act and Section 11B(2)(c) of the Central Excise Act, 1944; iii. There is no requirement under Section 142(3) of the CGST Act of disclosure of the CENVAT Credit in the ER-1 return like Section 140(5) and unlike Section 140(1). 38. The appellate authority rejected the appeal with the following findings: a. The transitional provisions contained in Section 140 of the CGST Act, 2017 provide for carrying forward of closing balance of the amount lying in CENVAT Credit account as reflected in the statutory returns for the period immediately preceding the appointed day i.e. 01.07.2017. b. The Appellant could not carry forward the credit of Rs. 10,88,328/- of service tax, paid to Kolkata Port Trust for procurement of a raw material used in manufacture of excisable goods, is not under dispute nor is the eligibility of CENVAT Credit under input service under dispute. c. The transitional provisions under the CGST Act, 2017 provides specifically transition of credit through TRAN-1. The appellan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e measure to the exporter. The provisions and particularly Section 11B of the Central Excise Act provides for payment of amount of refund to the applicant only in situations specified in proviso to sub-section (2) of Section 11B of the Central Excise Act, 1944. The appellate authority held that the petitioner has attempted to claim something which the law does not permit at all. g. The appellate authority also held that the claim of refund is not a matter of right unless vested by law. The plea of injustice or hardship cannot be raised to claim refund in the absence of statutory mandate. In this regard, a reference was made to the judgment of the Hon'ble Supreme Court setting out the fundamental legal principles that in a fiscal statute, nothing can be read into its provisions and rather should not be read, which is expressly not there. In other words, an implied meaning cannot be given. Para 20 of the judgement passed by the Hon'ble Supreme Court, Union of India and Ors. vs Ind-Swift Laboratories Limited - (2011) 4 SSC 635 = 2011-TIOL-21-SC-CX was referred as under: - 20. A taxing statute must be interpreted in the light of what is clearly expressed. It is not permissible ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ately preceding the appointed day, furnished by him under the existing law within such time and in such manner as may be prescribed: PROVIDED that the registered person shall not be allowed to take credit in the following circumstances, namely: - (i) where the said amount of credit is not admissible as input tax credit under this Act; or (ii) where he has not furnished all the returns required under the existing law for the period of six months immediately preceding the appointed date; or (iii) where the said amount of credit relates to goods manufactured and cleared under such exemption notifications as are notified by the Government. 140 (5) A registered person shall be entitled to take, in his electronic credit ledger, credit of eligible duties and taxes in respect of inputs or input services received on or after the appointed day but the duty or tax in respect of which has been paid by the supplier under the existing law, within such time and in such manner as may be prescribed, subject to the condition that the invoice or any other duty or tax paying document of the same was recorded in the books of account of such person within a period of thirty days from the appointed day: ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion of the amended Act or repealed Acts and orders or anything duly done or suffered thereunder; or (c) affect any right, privilege, obligation, or liability acquired, accrued or incurred under the amended Act or repealed Acts or orders under such repealed or amended Acts: PROVIDED that any tax exemption granted as an incentive against investment through a notification shall not continue as privilege if the said notification is rescinded on or after the appointed day; or (d) affect any duty, tax, surcharge, fine, penalty, interest as are due or may become due or any forfeiture or punishment incurred or inflicted in respect of any offence or violation committed against the provisions of the amended Act or repealed Acts; or (e) affect any investigation, inquiry, verification (including scrutiny and audit), assessment proceedings, adjudication and any other legal proceedings or recovery of arrears or remedy in respect of any such duty, tax, surcharge, penalty, fine, interest, right, privilege, obligation, liability, forfeiture or punishment, as aforesaid, and any such investigation, inquiry, verification (including scrutiny and audit), assessment proceedings, adjudication and other le ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... disposed of in accordance with the provisions of existing law and if any such amount accrues the same shall be paid in cash. Such right to refund in cash has been conferred notwithstanding anything to the contrary contained under the provisions of existing law other than the provisions of sub-section (2) of section 11-B of the Central Excise Act, 1944. 42. It is not in dispute that the refunds under the existing law of Service Tax as well as Central Excise Act, 1944 are governed by section 11B of the Central Excise Act, 1944 and subsection 2 of section 11 B also refers to application for refund made under section 11 B(1) of Central Excise Act, 1944. Further section 11B(3) of Central Excise Act, 1944 clearly provides that all kinds of refunds including those arising out of judgement , decree or orders of court or tribunal are to be dealt with in accordance with the provisions of section 11B (2) of Central Excise Act, 1944 . It is also important to note that section 11B(2) of Central Excise Act, 1944 deals with the manner in which applications for refund under section 11B (1) are to be dealt with as it uses the word such application which is clearly referrable to section 11B (1) of C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s issued. Meaning thereby, section 142(3) does not confer a new right which never existed under the old regime except to the manner of giving relief by refund in cash if the person is found entitled under the existing law in terms of the existing law. Section 142(3) does not create any new right on any person but it saves the existing right which existed on the appointed day and provides the modalities for refund in cash if found entitled under the existing law as the entire claim is mandated to be dealt with as per the existing law. It neither revive any right which stood extinguished in terms of the existing law nor does it create a new right by virtue of coming into force of CGST, Act. 46. Section 174 of the CGST Act read with section 6 of the General Clauses Act saves the right acquired, accrued or vested under the existing law and does not create any new right which never existed on the appointed day i.e on 01.07.2017 under the existing law. 47. The argument of the petitioner by referring to second proviso to section 142(3) of CGST Act that it indicates that section 142(3) would apply to the situations where the assessee has failed to take transitional credit under section 140 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd accordingly was neither entitled to include nor included the same as transitional credit in TRAN-1 under CGST Act. As per the notification (Annexure-5) extending the date of filing TRAN-1 to 31.10.2017, the same was in relation to certain service tax issues which were paid after 30.06.2017 under reverse charge basis to cover instances of bills raised on 30.06.2017 since credit is available only if the payment is made and the payment in such cases could be made only after 30.06.2017. However, in the instant case the bill was admittedly generated on 23.05.2017, services availed and bill amount including service tax was paid in April 2017 but the original bill did not reach the petitioner for unknown/undisclosed reasons. 51. It is apparent from the impugned orders that the specific case of the respondent is that the petitioner had claimed CENVAT Credit under ST-3 return thereby treating the services involved in the present case as their input services used for providing output service, whereas they are not output service provider and the same cannot be used for providing output services. Therefore, it cannot be their input services under Rule 2 (l) of CENVAT Credit Rules, 2004. I a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rned counsel of the petitioner do not entitle a person like the petitioner to any relief in the circumstances of acts and omissions of the service provider (port authority) or the service recipient (the petitioner) who have failed to comply the provision of law, both under the existing law and also under the CGST Act. The relied upon provisions of CGST Act do not cover any such situation relating to any consequences due to inter parte acts and omissions. In the instant case, as per the case of the petitioner, the entire problem has cropped up due to non-receipt of the invoice in original from the port authorities although the port services were availed and payments for the same to the port authorities were made by the petitioner in the month of April 2017, the invoice was generated by the port authorities in the month of May 2017 but the original invoice was received by the petitioner only on 20.09.2017 i.e after coming into force of CGST Act. The late receipt of the invoice is essentially between the petitioner and the port authorities and the tax collecting authorities had nothing to do in the matter. Certainly, the delay in receipt of original invoice is not attributable to the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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