Bombay High Court
Karanja Terminal And Logistics Pvt Ltd vs The Assistant Commissioner Of Cgst And ... on 13 January, 2023
Bench: Nitin Jamdar, Abhay Ahuja
2023:BHC-OS:452-DB
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IN THE HIGH COURT OF JUDICATURE AT BOMBAY
ORDINARY SIDE
CENTRAL EXCISE APPEAL NO. 2 OF 2022
WITH
INTERIM APPLICATION NO. 2326 OF 2022
Karanja Terminal & Logistics Pvt.Ltd ... Petitioner.
V/s.
The Assistant Commissioner of CGST
and Central Excise, Division- VIII. ... Respondent.
Mr.Vikram Nankani, Senior Advocate with Mr.Prithwiraj
Choudhari i/b. Mr.Virendra Pandey for the Appellant.
Mr.Satyaprakash Sharma with Ms.Neeta Masurkar
for the Respondents.
CORAM : NITIN JAMDAR AND
ABHAY AHUJA, JJ.
DATE : 13 January 2023.
P.C. :
By this appeal under section 35-G of the Central Excise Act, 1994, the Appellant has challenged the Final Order dated 13 January 2021 passed by the Customs, Excise and Service Tax Appellate Tribunal in Service Tax Appeal Nos.85110/2020 and 85457/2020, both arising out of Order-in-Appeal dated 30 August 2019/27 October 2019 passed by the Commissioner (Appeals).
2. The facts of the case enumerated in the impugned order are as follows. The Appellant is a Private Limited Company engaged ::: Uploaded on - 31/01/2023 ::: Downloaded on - 29/05/2023 09:04:33 ::: skn 2 3-CEXA-2.2022.doc in the business of developing and operating Ports and Terminals. The Appellant had entered into a deed of confirmation with Maharashtra Maritime Board to develop a port near Karanja Creek, Uran, District Raigad on lease for 30 years on build, own, operate and transfer basis. The Appellant had availed services of construction from one ITD Cementation India Ltd. and Sahara Dredging Ltd., and had entered into contract agreements with ITD Cementation India Ltd and Sahara Dredging Ltd. According to the Appellant, construction, erection, commissioning or installation of original works contract of port were exempt from the whole of service tax leviable, as per CBEC Notification No.25/2012-ST dated 20 June 2012 and Notification No.09/2016-ST dated 01 March 2016. It was also the case of the Appellant that exemptions from Service Tax for the period from 1 April 2015 to 29 February 2016 were allowed vide Section 103 of the Finance Act 1994 inserted vide Section 158 of the Finance Act 2016. The Appellant paid service tax on the bills raised by the service providers and took CENVAT Credit of the input services.
3. The Appellant filed two refund applications in respect of service tax paid to ITD Cementation India Ltd, Sahara Dredging Ltd and other such service providers against the invoices received from them, one towards service tax paid to ITD India Ltd. and other towards services received from Sahara Dredging Ltd. The Respondent issued letter dated 29 January 2018 seeking reversal of Cenvat Credit availed on invoices of ITD Cementation India Ltd ::: Uploaded on - 31/01/2023 ::: Downloaded on - 29/05/2023 09:04:33 ::: skn 3 3-CEXA-2.2022.doc and Sahara Dredging Ltd. The Respondent vide letter dated 17 May 2018 granted personal hearing. The Appellant filed two refund claims summing up to Rs.12,04,76,770/- before the Respondent on 25 September 2017 and 27 December 2017, which were then rejected in its entirety.
4. Being aggrieved by the order-in-original dated 31 March 2019, the Appellant filed an Appeal before the Commissioner (Appeals) who partially allowed the refund claim amounting to Rs.5,90,99,124/- with consequential relief in favour of the Appellant. Against the above-said order-in-appeal, the Appellant filed an appeal on 27 January 2020 for the prior period to 27 October 2016 for the rejected amount of Rs.6,13,77,646/- before the Appellate Tribunal.
5. The Respondent also being aggrieved against the above- mentioned order-in-appeal granting refund of Rs.5,90,99,124/-, filed an appeal on 17 March 2020 before learned Appellate Tribunal against the said order along with stay application. The learned Appellate Tribunal on hearing the stay application of the Respondent, dismissed the same on 07 September 2020. Thereafter the Respondent granted refund amount of Rs.5,90,99,124/- on 12 November 2020 without interest thereon. The Appellant filed an appeal against the order-in-original dated 4 November 2020 on 20 January 2021 before the Commissioner (Appeals) which was dismissed vide order-in-appeal dated 08 March 2021. The Respondent also issued a show cause notice dated 11 January 2021 ::: Uploaded on - 31/01/2023 ::: Downloaded on - 29/05/2023 09:04:33 ::: skn 4 3-CEXA-2.2022.doc for recovery of the refund of Rs.5,90,99,124/- already granted, along with interest. The appeal of the Appellant was rejected and the appeal of the Respondent was allowed by the learned Appellate Tribunal on 13 January 2021 Hence the Appellant is before us.
6. Appeal is admitted on the following substantial question of law:
"Whether the Tribunal could have given an opportunity to the parties before coming to the conclusion that in the event refund of service tax was not due, the Appellant was entitled to restoration of Cenvat Credit/ Input Tax Credit for transition under section 140 of the Central Goods & Services Tax Act, 2017 and when this case was not put before the Tribunal by either of the parties whether remand to the Tribunal on this count is necessary."
7. The appeal is taken up for hearing forthwith by consent of parties. In light of the order proposed to be passed, record and proceedings are dispensed with.
8. The primary grievance of the Appellant is the lack of opportunity given by the Tribunal when the Tribunal had taken up an issue of law suo moto, which was also not the case of the Respondents before the Tribunal and the Appellant had no opportunity to deal with the same. In that context, we refer to the arguments made by the parties before the Tribunal.
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9. Before the Tribunal, the Appellant submitted that the amount which they claimed as refund was paid by them to their service providers, and they had also claimed the credit of the amount paid as service tax to their sub-contractors. It was contended that after the introduction of the GST regime, they had transferred this CENVAT Credit as ITC credit to their GST Input Tax Credit Ledger, for which claim through Trans-1 was made and Input Tax Credit (ITC) was allowed. It was contended that when it was found that the payment of service tax was erroneously made by them to their sub- contractors, they had filed these refund applications claiming the refund of the service tax. It was contended that in these circumstances, it was not an application for refund as per the Notification No.9/2016-ST dated 1 March 2016, read with Section 103 of the Finance Act, 2016, which was to be filed within six months from the date of assent, but it had to be treated as per Section 11B of the Central Excise Act read with Section 83 of the Finance Act, 1994. Further it was contended that the Appellant had reversed the ITC Credit to the extent of amount claimed as refund in cash in terms of section 11B, and out of the total credit reversed by them, part cash refund of the credit has been allowed and part has been rejected. The arguments on behalf of the Revenue were that the special provisions were incorporated by the Finance Act, 2016 while giving retrospective effect to the Notification No.09/2016-ST, prescribing that all the refund applications for the tax paid should be made within six months from the date of assent of Finance Act, 2016 ::: Uploaded on - 31/01/2023 ::: Downloaded on - 29/05/2023 09:04:33 ::: skn 6 3-CEXA-2.2022.doc and section 11B of the Central Excise Act is not pari materia with the Section 103 and therefore the appellant is bound to comply with and/ or satisfy the compliance of sub-section (3) of Section 103 of the Finance Act, 1994 and was bound to make an application within six months from the date of assent of President. It was contended that the condition under which the exemption or the benefit is given needs to be strictly construed. It was further contended by the Revenue that the definition in Section 11B of Central Excise Act is not unreasonable just because it does not include the time of knowledge on the part of the assessee. These were the rival contentions before the Tribunal.
10. The Tribunal, however, proceeded on a different footing with reference to the decision of the Supreme Court in the case of ITC Ltd. V. Commissioner of Central Excise 1 and made following observations:
"4.5 Counsel for the Appellant submitted that what they are claiming is the refund of the accumulated CENVAT Credit which pas accumulated in their credit account for the reason of the payment of service tax which was not due from them. The argument of the counsel though appears attractive but needs to be rejected at the first instant itself, because as per the CENVAT credit rule the refund of accumulated CENVAT Credit is permitted only as per the Rule 5 of the CENVAT Credit Rules, 2004 and definitely the case under consideration cannot be said to be the case in terms of Rule 5.
4.6 Appellant submitted for getting the refund applications processed they had reversed the entire amount claimed as refund by them from their Input Tax Credit Ledger under 1 2019 (368) ELT 216 (SC) ::: Uploaded on - 31/01/2023 ::: Downloaded on - 29/05/2023 09:04:33 ::: skn 7 3-CEXA-2.2022.doc GST regime. This fact is not in dispute. In fact the details of the debits made by the appellants from their ITC Ledger, have been recorded by the Assistant Commissioner in his order. Since we hold that the refund applications as such are not maintainable, Assistant Commissioner should consider restoring the input tax credit so debited by the appellant to them if permissible in the GST Law. This tribunal has held in case of Wave Mechanics Pvt Ltd [2019-TIOL-3178-CESTAT- BANG], as following in case of such debit entries made by the claimant for making the refund applications,-
"6.1 Further, I find that as far as rejection of cash refund by both the authorities is concerned, there is no infirmity and I uphold that said findings. Further, the findings of the original authority that the amount of refund claim would lapse under Section 142 of Central Goods and Services Tax Act, 2017 is not tenable in law, since there was no dispute about the fact that at the time of filing of refund claim, the appellant had debited the whole amount in their Cenvat account as required by the then Notification No.27/2012, dated 18-6-2012 and when the GST was introduced, there was no amount lying in the balance in the appellant's record. Further, provision to sub-section (3) of Section 142 of Central Goods and Services Tax Act, 2017 is not applicable in the present case. The appellants are entitled to take the re-credit of the Cenvat for which they had filed the refund claims and the said amount will not lapse as per Section 142 of the Central Goods and Services Tax Act, 2017."
4.7. The decision of Bangalore Bench in the case of Wave Mechanics, supra was followed by us in the case of Alumatic Cans Pvt. Ltd. [Final Order No A/85937/2020 dated 02.12.2020].
4.8 In the additional submissions filed, Appellant have relied upon the following decisions to argue that the amount of the CENVAT credit should be refunded to them in cash, Thermax Ltd [2019 (31) GSTL 60 (GUJ)];
::: Uploaded on - 31/01/2023 ::: Downloaded on - 29/05/2023 09:04:33 :::skn 8 3-CEXA-2.2022.doc Toshiba Machine (Chennai) Pvt Ltd [2019 (27) GSTL 216 (T-Chennai)] Rawatwasia Ispat Udyog Pvt Ltd [2019 (26) GSTL 196 (T- Chandigarh)] Oswal Castings Pvt Ltd [2019 (24) GSTL 649 (T-
Chandigarh)] SMG International [2019 (21) GSTL 446 (T-Chandigarh)] We do not find any merits in the submissions made by the Appellants, as the cases, which are referred above are the cases in which dispute with regards to the CENVAT Credit has been adjudged subsequent to changeover from the previous regime of Central Excise and Service Tax to the regime of GST. In all the Cases the refund application or the rebate claim was filed before 01.07.2017 and determined subsequent to that date. It is not so in the present case. In the case of the appellant the CENVAT credit was available in the book of accounts of the appellant and had been carried forward by them to the GST regime, in manner as provided under the GST Law. The appellants for the processing of the refund claims have not debited the CENVAT account, but have debited the amounts from their Input Tax Credit Ledger. Hence in our view there is no case for cash refund of the amounts debited from the Input Tax Credit Ledger.
5.1 In view of the discussions we dispose of the appeals holding that refund claims are not maintainable, the matter is remitted back to the original authority for considering allowing the re-credit of the amounts of ITC Credit debited by the Appellant for the processing of these refund applications, if permissible under the GST Law."
11. From the facts and the arguments before the Tribunal and the reasoning given by the Tribunal, it is clear that the ground on which the Tribunal has remanded the proceeding was neither the case of the Appellant nor of the Respondent nor any opportunity was ::: Uploaded on - 31/01/2023 ::: Downloaded on - 29/05/2023 09:04:33 ::: skn 9 3-CEXA-2.2022.doc given to the parties to meet this case. This assertion of the learned counsel for the Appellant is not denied by the learned counsel for the Respondent.
12. Therefore, before us there is a consensus that a new ground is made out by the Tribunal while passing the impugned order. The grievance of the Appellant, that when on the completely new ground order was to be passed then the Appellant should have been given an opportunity of being heard, is not merit-less. In view of the admitted position before us that the ground on which the Tribunal has passed the impugned order was not the case of the Appellant or the Respondent and both were not given an opportunity of hearing, we have no option but to set aside the impugned order and restore the matters to the file of the Tribunal to decide it as per law.
13. The question of law framed in paragraph-6 as above is answered in favour of the Appellant.
14. Accordingly, in the light of the above discussion, the impugned order is quashed and set aside and the appeal is allowed. The appeals disposed of by the impugned order are restored to the file of the Tribunal. The Tribunal will decide the same on merits as per law.
15. We make it clear that by this order we have not ::: Uploaded on - 31/01/2023 ::: Downloaded on - 29/05/2023 09:04:33 ::: skn 10 3-CEXA-2.2022.doc concluded that the reasoning of the Tribunal in the impugned order was incorrect or otherwise and the discussion is in the context of the need for remand.
16. In view of disposal of appeal, interim application does not survive and stands disposed of accordingly.
(ABHAY AHUJA, J.) (NITIN JAMDAR, J.)
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