Custom, Excise & Service Tax Tribunal
Good Luck Educational And Welfare ... vs Ludhiana on 20 February, 2025
CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL
CHANDIGARH
REGIONAL BENCH - COURT NO. I
Service Tax Appeal No. 60254 of 2023
[Arising out of Order-in-Appeal No. LUD-EXCUS-001-APP-89-2023 dated
08.02.2023 passed by the Commissioner (Appeals), CGST, Ludhiana]
Good Luck Educational And Welfare ......Appellant
Society
OAKRIFGE International School,
Sirhind Road Near Thunder Zone,
Amusement Park, Landran,
S.A.S. Nagar, Punjab 140307
VERSUS
Commissioner of Central Excise and ......Respondent
Service Tax, Ludhiana Central Excise House, F Block, Rishi Nagar, Ludhiana, Punjab 141001 APPEARANCE:
Shri Naveen Bindal, Advocate for the Appellant Shri Yashpal Singh and Shri Raman Mittal, Authorized Representatives for the Respondent CORAM: HON'BLE MR. S. S. GARG, MEMBER (JUDICIAL) FINAL ORDER NO. 60144/2025 DATE OF HEARING: 22.10.2024 DATE OF DECISION: 20.02.2025 The present appeal is directed against the impugned order dated 08.02.2023 passed by the Commissioner (Appeals), CGST, Ludhiana, whereby the learned Commissioner (Appeals) has upheld
2 ST/60254/2023 the order passed by the Adjudicating Authority and rejected the appeal of the appellant.
2. Briefly stated facts of the present case are that the appellant is a society registered under the Society Registration Act, 1860 and is engaged in the business of providing services of renting of immovable property to M/s Orange Educational Society, Village Swara, Sirhind, Punjab. Earlier, the appellant was registered under the provisions of Finance Act, 1994 read with Service Tax Rules, 1994 and presently, the appellant is registered under the GST Act, 2017. The appellant filed ST-3 returns for the financial year ending March 2017 whereby there was an excess credit for Rs.11,01,642/-
and quarterly return for the period April-June 2017 showing excess credit for Rs.2,38,080/-. For such excess amount of credit, the appellant applied for two separate refund claims on 09.07.2017 for Rs.11,01,642/- and on 15.09.2017 for Rs.2,38,080/- respectively.
Thereafter, the appellant received a notice dated 16.03.2018 asking the appellant to reply as to why the claim of refund of balance Cenvat Credit should not be rejected as there exists no provision of refund of the balance Cenvat Credit in the Cenvat Credit Rules, 2004. The appellant filed its reply on 09.04.2018 relying upon various judgments of the High Courts and the Supreme Court whereby the refund applications were allowed in specified circumstances. Thereafter, the Original Authority rejected the refund claim vide its order dated 15.04.2018. Aggrieved by the said order, the appellant approached the Hon'ble Punjab & Haryana High Court vide CWP No. 15024 of 2018 and contested on the ground that 3 ST/60254/2023 during the pendency of refund application, upto March 2018, the appellant was prevented by the relevant clause i.e. second proviso to Section 142(3) of CGST Act, 2017 which prohibits the carrying forward of the amount into GST regime by filing the relevant Transitional Form TRANS-1, if such amount had already been applied for refund under existing law. The Hon'ble Punjab & Haryana High Court vide its order dated 13.11.2018 set aside the original authority's order dated 15.04.2018 and remitted the matter to the original authority for fresh consideration and directed the appellant to appear before the adjudicating authority on 06.12.2018.
Thereafter, the adjudicating authority vide its Order-in-Original dated 04.01.2019 rejected the refund claim on the same lines.
Aggrieved by the order dated 04.01.2019, the appellant filed appeal before the Commissioner (Appeals) who rejected the appeal of the appellant. Hence, the present appeal.
3. Heard both the parties and perused the material on record.
4.1 The learned Counsel appearing for the appellant submits that the impugned order is not sustainable in law as the same has been passed without properly appreciating the facts and the law.
4.2 He further submits that the learned Commissioner (Appeals) has rejected the appeal of the appellant completely on the basis of judgment passed by the Hon'ble Jharkhand High Court in the case of M/s Rungta Mines Limited vs. Commissioner - 2022-TIOL-
252-HC-JHARKHAND-GST which is not applicable in the present case and distinguishable on facts.
4 ST/60254/2023 4.3 He further submits that the learned Commissioner did not consider the judgments relied upon by the appellant which are applicable in the present facts and circumstances of the case.
4.4 He further submits that there exists no provision under the erstwhile law which prohibits the grant of refund of the unutilized credit amount to the manufacturer or service provider. He also submits that the genesis of the decisions on refund under Rule 5 of the Cenvat Credit Rules, 2004 has been that if an assessee closes down the business or unable to utilize the credit, then refund of Cenvat Credit should be allowed.
4.5 He further submits that in the present case, the appellant, due to GST coming into force, was unable to utilize the available credit and therefore, the appellant is duly entitled to refund under Rule 5 of the Cenvat Credit Rules, 2004.
4.6 He further submits that the Cenvat Credit in the present case has not been questioned and there is no possibility of utilizing the credit and the appellant is unable to carry forward the same for future or to transfer the same to others and therefore, it should be allowed as refund in cash in terms of Section 142(3) of the CGST Act, 2017. He also prays for interest on delayed refund.
4.7 In support of his submissions, he relies on the following decisions:
Nu Vista Ltd vs. Commissioner, Raipur - 2022 (381) ELT 681 (Tri. Del.)
5 ST/60254/2023 Tata Telecommunications Transformation Services Ltd vs. Commissioner, Mumbai Central - 2024 (80) GSTL 104 (Tri. Mumbai) Shree Krishna Paper Mills & Industries Ltd vs. Commissioner - 2019 (365) ELT 594 (Tri. Chan.) Commissioner vs. Shree Krishna Paper Mills & Industries Ltd & Ors - Order dated 11.12.2019 in CEA No. 36 of 2019 - High Court P&H M/s Rama Industries Ltd vs. CCE, Chandigarh - Order dated 10.02.2009 in CEA No. 15 of 2009 - High Court P&H Monochem Graphics Pvt Ltd vs. Commissioner, Delhi West - 2022 (67) GSTL 249 (Tri. Del.) Sri Chakra Poly Plast India Pvt Ltd vs. Commissioner, Medchal - Final Order No. 30030/2024 in Excise Appeal No. 30372 of 2022 - CESTAT Hyderabad Rakon India Pvt Ltd vs. Commissioner, Bangalore North - 2021-VIL-254-CESTAT-BLR-ST Veer-O-Metals Pvt Ltd vs. Commissioner, Bangalore South - 2021 (51) GSTL 315 (Tri. Bang.) Great India Steel Fabricators vs. Commissioner, Panchkula - 2019 (28) GSTL 279 (Tri. Chan.) 5.1 On the other hand, the learned Authorized Representative for the Revenue defends the impugned order and submits that the learned Commissioner (Appeals) has considered the provisions of Cenvat Credit Rules, 2004 as well as the judgment of the Hon'ble Jharkhand High Court in the case of M/s Rungta Mines Limited (supra). He further submits that the judgments relied upon by the appellant are not directly on the issue involved in the present case and those are mainly on the refund filed on closure of the unit under Rule 5 of Cenvat Credit Rules, 2004. He also submits that the judgment of Hon'ble Jharkhand High Court is exactly on the issue which is involved in the present case.
6 ST/60254/2023 5.2 The learned AR further submits that Rule 5 ibid provides for refund of Cenvat Credit to a service provider who provides an output service which is exported without payment of service tax and the same is not applicable in the instant case as the appellant in this case is seeking refund of balance of Cenvat Credit as shown in their ST-3 returns and has not exported any output service.
5.3 The learned AR further submits that the appellant, on coming into force of GST from the appointed day i.e. from 01.07.2017, was required to transition the Cenvat Credit by filing the TRANS-1. The period of filing the TRANS-1 was further extended to 17.12.2017 vide CBIC's Order No. 9 of 2017 dated 15.11.2017, but despite that, the appellant did not transition the Cenvat Credit of unutilized balance of Cenvat Credit lying in their ST-3 returns.
5.4 In support of his submissions, the learned AR relies on the following decisions:
M/s Rungta Mines Limited vs. Commissioner - 2022- TIOL-252-HC-JHARKHAND-GST M/s Cyient Limited vs. Commissioner, Rangareddy - 2024 (5) TMI 523 CESTAT HYDERABAD Systems Advisors Software Services Pvt Ltd vs. Commissioner, Bangalore East - 2023 (5) TMI 96 CESTAT BANGALORE
6. I have considered the rival submissions made by both the parties and perused the material on record as well as the various decisions relied upon by both the sides. I find that the main issue arising in the present case is whether the appellant is entitled to get the refund under Section 142(3) of the CGST Act, 2017 read with 7 ST/60254/2023 Rule 5 of the Cenvat Credit Rules, 2004 and Section 11B of the Central Excise Act, 1944 by virtue of Section 83 of the Finance Act, 1994.
7. I find that the appellant filed the refund claim on the basis of Cenvat Credit as shown in their ST-3 returns for two quarters instead of transferring it to the new regime on coming into force of GST w.e.f. 01.07.2017. I do not find any reason why the appellant did not file TRANS-1 when there was sufficient time for them to file the same; instead of filing TRANS-1, the appellant chose to file the refund claim which was not permissible at that time as per the various provisions provided in Section 142 of the CGST Act regarding transitional credit.
8. Further, I find that the decisions relied upon by the appellant, as cited above, are on different aspects and are directly on the issue of refund of Cenvat Credit under Rule 5 of the Cenvat Credit Rules, 2004. Rule 5 ibid, in fact, does not apply to the appellant's case because the same is available when there is an export of goods or services; whereas, in this case, there is no export of goods or services.
9. Further, I find that the decision of the Hon'ble Jharkhand High Court in the case of M/s Rungta Mines Limited (supra) is exactly on the issue which is involved in the present case. The Hon'ble High Court after analyzing all the decisions cited before it, has come to the conclusion that under the existing law, cash refund cannot be granted of Cenvat Credit which is available on the appointed day i.e. 8 ST/60254/2023 01.07.2017. Here, it is pertinent to reproduce the relevant findings of the Hon'ble Jharkhand High Court in the case of M/s Rungta Mines Limited (supra), which is reproduced herein below:
"40. Section 142 of the CGST Act, 2017 provides for Miscellaneous Transitional Provisions. The following are the pre-conditions of refund in cash under Section 142(3):-
(a) Sub-section (3) deals with claim for refund filed before, on or after the appointed day. Thus it, inter alia, deals with applications for refund filed before the appointed date and pending on the appointed date apart from the refund applications filed on or after the appointed date.
(b) Further the refund application should be for refund of any amount of Cenvat credit, duty, tax, interest or any other amount paid under the existing law.
(c) Such application filed before, on or after the appointed day is to be disposed of in accordance with the provisions of existing law.
(d) If any amount eventually accrues the same is to be refunded in cash, notwithstanding anything to the contrary contained under the provisions of existing law other than the provisions of sub-section (2) of Section 11B of the Central Excise Act, 1944.
(e) It also provides that where any claim for refund of Cenvat credit is fully or even partially rejected, the amount so rejected shall lapse.
(f) The second proviso provides that no refund shall be allowed of any amount of Cenvat credit where the balance of the said amount as on the appointed day has been carried forward under the CGST Act.
41. Thus, Section 142(3) of CGST Act clearly provides that refund application with respect of any amount relating to Cenvat credit, duty, tax, interest or any other amount paid under the existing law is to be 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 11B of the Central Excise Act, 1944.
9 ST/60254/2023
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 sub-section (2) of Section 11B also refers to application for refund made under Section 11B(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 judgment, 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 words "such application" which is clearly referrable to Section 11B(1) of Central Excise Act, 1944. Further, the proviso to Section 11B(2) deals with situations of rebate of duty; unspent advance deposits; principles of unjust enrichment in cases where duty of excise is paid by manufacturer or borne by buyer and who have not passed on the incidence of such duty to any other person; and also where duty of excise is borne by any other class of applicant as the central government may notify in official gazette with a further proviso regarding unjust enrichment.
43. The entire Section 11B of Central Excise Act, 1944, as it stood immediately before the appointed date, does not sanction any refund where the assessee has failed to claim Cenvat credit as per Cenvat Credit Rules, 2004 and has lost its right to claim such credit by not claiming it within the time prescribed. Further Section 11B also has its own strict time lines for claiming refund. Rule 5 of the Cenvat Credit Rules provides for refund only when the inputs are used in relation to export, which is not the case here. These aspects of the matter have been rightly considered and decided against the petitioner while passing the impugned orders whose details have already been stated above.
44. Under the provisions of Section 11B the right to claim refund was conferred not only to the assessee but also to such classes of applicants as notified by the Central Government and also covers situations arising out of judgments of Courts and Tribunals. On the appointed date there could be claims of refund of any amount of Cenvat credit, duty, tax, interest or any other amount paid under the existing law in connection with which the applications for refunds were pending or time limit for claiming refund was yet to expire or may crystalize on account of any judgment of Courts or Tribunals in relation to pending litigations. These are some of the situations which would be covered by the miscellaneous transitional provisions as contained in Section 142(3) of CGST Act which would 10 ST/60254/2023 continue to be governed by Section 11B(2) of Central Excise Act, 1944.
45. The provision of Section 142(3) does not entitle a person to seek refund who has no such right under the existing law or where the right under the existing law has extinguished or where right under the new CGST regime with respect to such claim has not been exercised in terms of the provision of CGST Act and the rules framed and notifications 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 1-7-2017 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(1), is also devoid of any merits. The second proviso only indicates that if the assessee has taken transitional credit he will not be entitled to refund. Certainly, an assessee cannot simultaneously claim transitional credit as well as refund of the same amount. The second proviso to Section 143(2) cannot be said to be an eligibility condition to claim refund but is only a condition which governs refund as an assessee cannot be permitted to have transitional credit as well as refund of the same tax amount.
48. Section 140(5) applies under the circumstances where input services are received after the appointed day but the tax has been paid by the supplier under the existing law within the time and in the manner prescribed with a further condition that the invoice etc. are recorded in the books of account of the such person within a period of 30 days from the appointed day. Section 140(5) also does not help the petitioner. Section 140(5) has no applicability to the facts and circumstances of this case. In the instant case, admittedly the services in the nature of 11 ST/60254/2023 "port services" were received by the petitioner in the month of April, 2017 and invoice was also generated in the month of May, 2017.
49. In the peculiar facts of this case, the petitioner did not claim transitional credit but claimed the impugned amount of service tax on "port services" as credit in their ST-3 return which they were admittedly not entitled as they were assessee under service tax only on reverse charge mechanism and admittedly the "port services"
availed by the petitioner was not covered under reverse charge mechanism. Thus, the petitioner on the one hand illegally took credit of service tax on "port services" as credit in their ST-3 return and on the other hand filed application for refund of the same amount under Section 142(3) of the CGST Act which is certainly not permissible in law. The authorities have rightly considered these aspects of the matter also while rejecting the application for refund filed by the petitioner.
50. It is not in dispute that the petitioner has claimed the credit of service tax involved in the present case paid on "port services" as "input service" in ST-3 return filed on 22-9-2017, though they were not entitled to claim such a credit. It is further not in dispute that the petitioner did not include the impugned service tax paid on "port services" in its ER-1 return and 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 30-6-2017 under reverse charge basis to cover instances of bills raised on 30-6- 2017 since credit is available only if the payment is made and the payment in such cases could be made only after 30-6-2017. However, in the instant case the bill was admittedly generated on 23-5-2017, 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 am also of the considered view that the petitioner could not have claimed the impugned service tax on port services in ST-3 return as they were registered for discharging their liability under the service tax only on reverse charge mechanism. Rather it is the 12 ST/60254/2023 case of the petitioner that they had included the impugned service tax in ST-3 Return under compelling circumstances of non-receipt of original invoice dated 23- 5-2017 and this was done only attempting to save their credit which they had failed to claim through ER-1 return and then as transitional credit through TRAN-1 under Section 140(1) of the CGST Act. Thus, the authority has rightly held that petitioner had wrongly claimed Credit of the impugned service tax under ST-3 return and omitted to claim the impugned service tax as Cenvat credit in ER- 1 Return.
52. Further case of the respondent is that the petitioner as a manufacturer was eligible to claim Cenvat credit on impugned service i.e. "port services" and should have claimed the credit in their ER-1 Return within the prescribed time and accordingly could have claimed transitional credit through TRAN-1 under Section 140 of CGST Act. Thus, late receipt of the original invoice which has been cited as the reason for failure to claim Cenvat credit under the existing law and transitional credit under Section 140(1) of the CGST Act was wholly attributable to acts and omissions of the petitioner and its service provider of the "port services" and the respondent authorities had no role to play. The petitioner had failed to avail the opportunity to claim Cenvat credit of service tax on port services in terms of the existing law read with Section 140 of CGST Act and had no existing right of refund on the date of coming into force of CGST Act. The petitioner having not used the port services for export was not entitled to claim refund under the existing law. The petitioner was also not entitled to refund on account of the fact that the petitioner had already taken credit of the service tax paid on port services in ST-3 Return of service tax although admittedly the petitioner was not entitled to take such credit in ST-3 Return. On account of aforesaid three distinct reasons the petitioner was rightly held to be not entitled to refund under Section 142(3) of CGST Act by the impugned orders.
53. All the aforesaid provisions referred to and relied upon by the Learned 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 13 ST/60254/2023 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 20-9-2017 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 respondent authorities under the existing law or under the new law.
54. The authorities have held in the impugned orders that in the instance case, the timeline for claiming Cenvat credit qua the service tax paid on port services was not followed by the petitioner, although the services were availed, the entire payment was made and the bill was also generated in the month of April/May, 2017. Further, it has also been held in the impugned orders that the petitioner not only failed to claim the Cenvat credit as per law, but illegally claimed the credit of the same while filing service tax return although the petitioner was not entitled to do so as the petitioner was not registered as a service provider. The authorities have also held that the service tax paid on port service was not eligible for refund under the existing law as the said services were not utilised for export. Thus, the petitioner on the one hand did not claim Cenvat credit as per the procedure established by law under the existing law and on the other hand violated the provisions of law while filing his service tax returns and claimed the amount as input service and thereafter filed his petition for refund on 28- 6-2018 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).
55. In view of the aforesaid findings, I do not find any reason to interfere with the findings and reasons assigned by the adjudicating authority as well as the appellate authority rejecting the application for refund filed by the petitioner under Section 11B of Central Excise Act read with Sections 142(3) and 174 of CGST Act. The impugned orders are well reasoned orders calling for no interference. Accordingly, this writ petition is dismissed."
9. In view of above analysis and by following the ratio of the judgment of the Hon'ble Jharkhand High Court in the case of M/s Rungta Mines Limited (supra) which is on identical issue as 14 ST/60254/2023 involved in the present case, I am of the considered opinion that there is no infirmity in the impugned order, accordingly, I uphold the same and dismiss the appeal of the appellant.
(Order pronounced in the open court on 20.02.2025) (S. S. GARG) MEMBER (JUDICIAL) RA_Saifi