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December 10, 2022

For services supplied prior to the implementation of the GST, the appellant will be given a refund of the CENVAT credit that was paid

by CA Shivam Jaiswal in GST, Legal Court Judgement

For services supplied prior to the implementation of the GST, the appellant will be given a refund of the CENVAT credit that was paid

Facts and Issue of the case

The facts of the case that Appellant is undisputedly covered under Rule 7 of Point of Taxation Rules, 2011, i.e. meant for “associated enterprises” and it was required to pay service tax under Reverse Charge Mechanism in terms of the provisions of Section 68(2) of the Finance Act, 1994 read with Notification No. 30/2012-ST dated 20.06.2012 as “receiver of service” from the date of debit in the books of account as “receiver of service” or from the date of making payment, whichever is earlier. Appellant-manufacturer made the final booking in terms of provision of Service Tax during the finalisation of its balance sheet on 30.11.2017 and 31.12.2017 for the period ending on 31.03.2017 and on June, 2017 against which Service Tax of Rs.9,01,368/- and Rs.9,42,054/- were paid respectively alogwith interest in the month of November, 2017 and January, 2018. Refund application was filed on 27.03.2011 within the limitation period of one year in terms of Section 11B of Central Excise Act, 1944 seeking refund of Service Tax, as after the onset of GST regime w.e.f. 01.07.2017, it could not avail the credit and sought cash refund by invoking protection granted under Section 174 and 142 of the CGST Act, 2017. Learned adjudicating authority rejected the refund application on the ground that GST was payable on the recorded transactions since final booking was made in the books of account on 30.11.2017 and 31.12.2017 though service had been rendered during pre GST regime i.e. prior to July, 2017.

Observation of court

The Adjudicating Authority rejected the refund claim on the ground that GST was payable since the  booking was made in books of accounts in GST regime though the service was rendered in pre-GST regime .

The Commissioner Appeal also rejected the appellant refund claim .Being aggrieved by such rejection , the appellant preferred an appeal before the Tribunal.

Tribunal has gone through the submissions, judicial decisions, relevant provisions of law guiding the issue and the case record. It is noteworthy to mention here that Section 142(3) clearly stipulated that refund of any amount of CENVAT credit, duty etc. paid under the existing law (means the law prevailing then i.e. Central Excise Act) shall be dealt in accordance with the provisions of existing law and any amount eventually accruing to him shall be paid in cash.

The  issue before this Tribunal is to scrutinise as to if only existing law  would govern the refund or else the procedure available under existing law for ultimate redressal /disposal of the refund application would extend to the Appellate stage available in the existing law too. . In contrast to the decisions cited by the learned Authorized Representative in Aditya Steel Rolling Mills Pvt. Ltd. (supra), which state that the GST Appellate Tribunal is to hear such appeals against decisions of the adjudicating authority, namely the officers of the GST, the decisions cited by the learned Counsel for the appellant in the aforementioned decisions clearly indicate that the Tribunal setup under the existing law, namely CESTAT, had dealt and disposed of such dispute. The Circular No. 132/2/2020-GST dated 18.03.2020 by CBEC clarified that the Central Goods and Service Tax (ninth removal of difficulties) order 2019 dated 03.12.2019 provides that within 3 months of the President of GST Tribunal entering   office, appeals can be filed when no such Tribunal  is firmed and in case of existence of such GST Tribunal it is to be  filed within 3 months of communication of the order. Be that as it may, our concern is to scrutinise the jurisdictional issue and the suggestions offered by the learned Counsel for the appellant that when the Tribunal had given divergent views, the matter should be referred to the President for constitution of a Larger Bench to settle the issue. I do not agree with his views in view of the fact that sub Section 6(a) of Section 142 of CGST Act and sub-Section 2(f) of Section 174 dealing with Repeal and saving Clauses have covered such issue and the same provision i.e. Section 174 2(f) has not been dealt in any of those referred judgements.

As per Section 142 of the CGST Act, 2017, refund of CENVAT Credit accruing under the Central Excise Law shall be decided as per the Central Excise Law and be paid in cash. Further, as per Section 174 of CGST Act, 2017, an appeal filed under Central Excise Law shall be continued as if GST Law had not come into forceIt would be clearly that any proceeding including an appeal if filed after the appointed day under the Repealed Act also, the same shall be continued under the said Act as if GST Act has not come into force and the previous Act has not been amended or Repealed.

The appeal is allowed and the order passed by the Commissioner of Central Tax (Appeals-I), Pune vide Order-in-Appeal No. PUN-EXCUS-001-APP-526/2018-19 dated 18.12.2018 is hereby set aside. Appellant is entitled to get refund of CENVAT credits against which payment of Service Tax was made during the GST regime and accepted by the Respondent-Department. The Respondent-Department is directed to pay the refund amount of Rs.18,43,422/- alongwith applicable interest within three months of receipt of this order.

Conclusion

The Appellant was eligible for a refund of CENVAT credit along with interest. Thus, the appeal was allowed in favour of the Appellant and the order rejecting the refund was set aside. The Respondent-Department is directed to pay the refund amount of Rs.18,43,422/- along with applicable interest within three months of receipt of this order.

The Case law is given below

Service Tax Appeal No. 85691 of 2019

M/s Brose India Automotive V.s Commissioner of CGST &Central Excise, Pune-I

Brose-India-Automotive-Systems-Pvt.-Ltd.-Vs-Commissioner-of-CGST-Central-Excise-CESTAT-Mumbai

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