Custom, Excise & Service Tax Tribunal
Aragen Life Sciences Ltd vs Commissioner Of Central Goods & Service ... on 30 April, 2024
(1)
E/30307/2021
CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL
REGIONAL BENCH AT HYDERABAD
Single Member Bench
Court - I
Excise Appeal No. 30307 of 2021
(Arising out of Order-in-Appeal No.HYD-EXCUS-SC-AP2-0083-19-20-ST dt.30.03.2020
passed by CCE (Appeals-II), Hyderabad)
Aragen Life Sciences Ltd
28A, IDA Nacharam, Hyderabad ......Appellant
Telangana - 502 319
VERSUS
Commissioner of Central Tax
Secunderabad - GST
GST Bhavan, LB Stadium Road, Basheerbagh,
......Respondent
Hyderabad, Telangana - 500 004 Appearance Shri S. Thirumalai, Advocate for the Appellant.
Shri V.R. Pavan Kumar, Authorized Representative for the Respondent.
Coram:
HON'BLE MR. A.K. JYOTISHI, MEMBER (TECHNICAL) FINAL ORDER No. A/30288/2024 Date of Hearing: 16.04.2024 Date of Decision: 30.04.2024 [Order per: A.K. JYOTISHI] M/s Aragen Life Sciences Ltd (formerly known as GVK Biosciences Pvt Ltd/GVK Biosciences Ltd), (hereinafter referred to as appellant) filed this appeal against the Order of the Commissioner (Appeals) dt.30.03.2020. In their grounds of Appeal, they have prayed for setting aside the impugned order of the Commissioner (Appeals), in so far as it relates to rejection of refund of Rs.14,40,627/-.
2. The issue, in brief, is that the appellants were engaged in the manufacture of pharmaceutical products and were availing Cenvat credit on account of inputs/input services. Consequent to transition from Central Excise to GST, they filed for refund in cash for an amount of Rs.49,14,215/-, (2) E/30307/2021 which they could not carry forward in TRAN-1 filed by them under Section 140 of the CGST Act, 2017 (herein after referred to as 'the Act'). However, they disclosed said input service credit in their revised service tax return for the quarter April to June, 2017 filed by them on 22.09.2017. The refund was filed in terms of provision under Section 142(9)(b) of the Act. On going through the refund claim filed, the department felt that the refund consists of two components viz., the Central Excise input credit amounting to Rs.14,40,627/- and the Service Tax credit component amounting to Rs.34,73,588/-. In so far as the Central Excise credit component was concerned, the department, primarily on the ground that since no revised ER-1 return has been filed, as is required under provisions of Section 142(9)(b) of the Act, held that they were not entitled for refund of the same. In so far as the Service Tax credit component was concerned, the department felt that the said refund does not fit into the provisions under Section 142(9)(b) of the Act. Additionally, they felt that this component is also hit by time bar as well as unjust enrichment as required under Section 11B(2) of the Central Excise Act, 1944.
3. On adjudication, the Original Authority held that the appellants were not entitled for refund of Central Excise component of credit under the provisions of Section 142(3) of the Act (though they had initially claimed the same under Section 142(9)(b) of the Act). Primarily, the Adjudicating Authority felt that there is no relevant provision or statute under the Central Excise Act or Rules made thereunder in terms of which the Cenvat credit of Rs.14,40,627/- becomes refundable. According to him, such refund of credit was permissible under Rule 5 or 5B of erstwhile Cenvat Credit Rules. Therefore, on this count alone that there was neither any provision for granting such refund nor the assessee had transferred the said amount through TRAN-1, the same was considered not admissible under provisions of Section 142(3) of the Act. In so far as the Service Tax component of credit was concerned, the Adjudicating Authority was of the opinion that the revised ST3 return was not genuine and therefore, refund is ineligible under Section 142(9)(b) of the Act. Further, it was also held that the appellants have failed to produce the document evidencing payment of duty and also did not prove the element of unjust enrichment and therefore, clearly have not cleared the bar of unjust enrichment applicable to such refunds in accordance with Section 11B(2)(c) of the Central Excise Act. The (3) E/30307/2021 Adjudicating Authority has also held that the refunds are required to be filed within the time limit prescribed under Section 11B and in the present case, the same was clearly not filed within the time limit and hence, it is also hit by time bar. Therefore, the entire refund claim of Rs.49,14,215/- was rejected.
4. On appeal, the Commissioner (Appeals), inter alia, after going through the submissions of the appellant and examining the statutory provisions under Section 142(3) and Section 142(9)(b) of the Act, came to the conclusion that refund amounting to Rs.14,40,627/-, being Central Excise component of credit, is not due to the appellant under any of the provisions of the existing law as there was no provision under existing law under which the appellant could have claimed refund amounting to Rs.14,40,627/-. He, therefore, upheld the rejection of refund claim amounting to Rs.14,40,627/-. In so far as refund of service tax component, he found them entitled to refund under Section 142(9)(b) and neither Revenue nor appellants have come in appeal against this part of refund.
5. In so far as the claim of refund under Section 142(9)(b) of the Act was concerned, the Commissioner (Appeals), after going through the provisions of Section 142(9)(b), came to the conclusion that the appellants were eligible for cash refund of the entire Cenvat credit of Rs.34,73,588/- under the existing law subject to the provisions of Section 11B(2) of Central Excise Act. In his order, he examined this aspect in the light of the provisions under Section 142(9)(b) of the Act and came to the conclusion that time limit, as specified under Section 11B(1) of the Central Excise Act, cannot be applied to the refunds claimed under Section 142(3) and Section 142(9)(b) of the Act. Similarly, in respect of unjust enrichment also, relying on various judgments and statutory provisions under Section 11B(2) of Central Excise Act as made applicable to Service Tax, Commissioner (Appeals) came to the conclusion that principle of unjust enrichment was not applicable in the present case.
6. The appellants have come in Appeal against this impugned OIA rejecting the refund claim of Rs.14,40,627/-, relying mainly on the grounds that in absence of any specific provisions under GST law regarding Cenvat credit either not availed in the revised return filed or not transitioned to (4) E/30307/2021 GST, in view of substantive provisions under Section 174 of the Act, they are entitled for refund in cash under Section 142(3) of the Act. They have also relied on plethora of judgments in support of their contention that if the appellants are not in a position to utilize Cenvat credit, cash refund can be made and granted. Learned Advocate for the appellant, in his argument has pointed out that though they had neither filed any revised ER-1 nor have carried forward the said amount of input credit in accordance with provisions under Section 140 of the Act, due to certain omissions/inadvertence, they are still eligible for refund in cash in view of the following judgments, wherein cash refund under Section 142(3) has been granted.
a) Assistant Commissoner of GST & CE, Puducherry vs Ganges International Pvt Ltd [2022 (8) TMI 1143 - Madras High Court]
b) Bharat Heavy Electricals Ltd vs CGST & CE, Chennai [2021 (12) TMI 671 - CESTAT Chennai]
c) Pujan Builders Engineers & Contractors vs CCE & ST, Vadodara-II [2021 (2) TMI 512 - CESTAT Ahmedabad]
d) Terex India Ltd vs CGST & CE, Chennai [2021-TIOL-696-CESTAT-
MAD]
e) Bosch Electrical Drive India Pvt Ltd vs CCT, Chennai [2023 (12) TMI 1145 - CESTAT Chennai - LB]
f) Gauri Plasticulture Pvt Ltd, Bombay Dyeing & Manufacturing Co. Ltd, Simplex Mills Co. Ltd vs CCE, Indore, CCE, Mumbai-IV, The UOI through CCE, Mumbai-I [2019 (6) TMI 820 - Bombay High Court]
g) Emami Cement Ltd, Nu Vista Ltd vs CCGST, CE, Raipur [2022 (3) TMI 1254 - CESTAT New Delhi]
h) Bharat Heavy Electricals Ltd vs CCE, Bhopal [2019 (4) TMI 1896 - CESTAT New Delhi)]
7. He also points out that the legitimacy of the impugned credit has not been challenged and in fact, in order to claim cash refund, the important conditions which are required to be fulfilled as per Section 142(3) of the Act are as follows:
a) The CENVAT/Duty has been paid under existing law.
b) The eligibility of credit/duty has not been challenged/ disputed by the department.
c) The claimed credit has not been carried forward in Form GST TRAN-1.(5)
E/30307/2021
8. They have also argued that credit cannot be denied for a procedural lapse, relying on the case of Jagdamba Polymers Ltd vs CCE, Ahmedabad [2010 (1) TMI 404 - CESTAT Ahmedabad]. Another ground taken by the learned Advocate is that since credit is a vested right and therefore, Cenvat credit earned in erstwhile regime cannot be denied by the department.
9. On the other hand, learned AR for Revenue has primarily argued that the cash refund in respect of input Cenvat credit can be only examined in terms of Section 142(3) or Section 142(9)(b) of the Act and it is not merely procedural law rather it is substantive Act, the provisions are to be construed strictly. He supports the Order of the Commissioner (Appeals) to the extent that there was no explicit provision for grant of cash refund under the existing law i.e., Central Excise Act and Rules made thereunder, for a situation as existing in the present case of refund and therefore, since it was not eligible for cash refund under the erstwhile Central Excise Act, it would not get covered within the provisions of Section 142(3) of the Act. Further, admittedly, Section 142(9)(b) is not applicable in the facts of the case. In so far as case laws cited by the appellants are concerned, learned DR has rebutted their claim by pointing out as to why such cases cannot be relied upon in support of the contentions of the appellant for grant of cash refund under Section 142(3) of the Act.
10. According to DR, in the case of Ganges International Pvt Ltd (supra), the Hon'ble Madras High Court has not decided any issue on the legality or scope of Section 142(3) but has remanded the matter back for decision on merit under Section 142(3). In the case of BHEL vs CGST & CE, Chennai (supra), the Chennai Bench of the Tribunal has not considered some of the judgments like the judgment by the Hon'ble Supreme Court in the case of UOI & Ors. Vs Cosmo Films Ltd [2023 (5) TMI 42-SC] and Hon'ble Bombay High Court's judgment in the case of Nelco Ltd vs UOI [2020-TIOL-641-HC- MUM-GST] and therefore, the judgment passed by the Single Member Bench by ignoring all the relevant judgments and holding that the decision of the Tribunal to the effect that the accounting practice of the appellant prevails over the law of the land and therefore, allowing the appeal is not applicable. Further, in the case of Pujan Builders, Engineers & Contractors (supra), this is only a remand order. In the case of Terex India Pvt Ltd (supra), again the Single Member Bench of this Tribunal at Chennai held that when the short (6) E/30307/2021 payment of service tax was paid post transition, it did not tantamount to payment of service tax along with interest in pursuance of Section 73(3) of the Finance Act and therefore, even this case law is not relevant to the issue on hand. As far as the judgment of Chennai Bench of Tribunal in the case of Bosch Electrical Drive India Pvt Ltd (supra) is concerned, it is observed that only the reference was answered in so far as the issue of jurisdiction of the CESTAT was concerned and it does not lay any law on the grant of cash refund under Section 142(3). In the case of Gauri Plasticulture Pvt Ltd, Bombay Dyeing & Manufacturing Co. Ltd, Simplex Mills Co. Ltd (supra), in fact, the Hon'ble High Court of Bombay held that assessee is not entitled for cash refund when they are unable to avail Cenvat credit on inputs. In the case of Emami Cement Ltd (supra), the decision of the Tribunal relying heavily on the decision of the Hon'ble Karnataka High Court in Slovak India Trading Co. Pvt Ltd [2006 (201) ELT 559 (Kar)], which was later on affirmed by the Hon'ble Supreme Court allowing the appellants to the refund of the balance amount of credit of cess, is also not correct as the Hon'ble Bombay High Court, by way of Larger Bench decision in the case of Gauri Plasticulture (supra), has inter alia held that the decision by the Hon'ble Supreme Court for affirming the judgment in the case of Slovak India Trading Co. Pvt Ltd (supra), cannot be held to be a declaration of law under Article 141 of the Constitution of India. He further pointed out that even if the Slovak India decision of Karnataka High Court is taken into consideration, the facts are different, in as much as Rule 5 of CCR, 2004 was omitted w.e.f. 01.04.2012, whereas, the period of refund in the present case is post 01.04.2012 and therefore, the said decision of Slovak India (supra) is also not applicable otherwise. In so far as the judgment in the case of BHEL vs CCE, Bhopal (supra) is concerned, the said judgment has been stayed by the jurisdictional High Court at Bhopal.
11. On the other hand, Learned DR relies on the following case laws in support of their contention that cash refund is not permissible in the facts of the case under Section 142(3) of the Act.
(i) BHEL vs CCE, Secunderabad [Final Order No. A/31159/2019 dt.23.12.2019]
(ii) Mylan Laboratories Ltd vs CCE, Secunderabad [Final Order No. A/30689/2020 dt.25.02.2020] (7) E/30307/2021
(iii) Banswara Syntex Ltd vs CCE & ST, Udaipur [2019 (365) ELT 773 (Raj.)]
(iv) Tecumseh Products India Pvt Ltd vs CCT, Hyderabad [Final Order No. A/30018/2023 dt.17.03.2023]
(v) CCE, C & ST, Tirupati vs Rani Plastic Pipe Industries [2020 (6) TMI 356 - CESTAT Hyderabad]
(vi) Phoenix Industries Pvt Ltd vs CCE, Raigad [2014 (10) TMI 677 -
CESTAT Mumbai]
(vii) Idol Textile Ltd, Balaji Prints Ltd vs CCE [2019 (9) TMI 16 -
CESTAT Mumbai]
(viii) Mahavir Metal Manufacturing Co. vs CCE & CGST, Rajasthan [Final Order No. 50591/2023 dt.23.05.2023]
(ix) Lata Hydrocarbon Resources Pvt Ltd vs CCT, Rangareddy [2019 (12) TMI 1060 - CESTAT Hyderabad]
(x) Saera Electric Auto Pvt Ltd vs CCE & ST, Gurgaon-I [2020 (372) ELT 452 (Tri-Chan.)]
(xi) RHEC INC vs CCE, Alwar, Rajasthan [2024 (4) TMI 169 - CESTAT New Delhi]
(xii) Servo Packaging Ltd vs CCE, Puducherry [2020 (373) ELT 550 (Tri-
Chennai)]
(xiii) Rungta Mines Ltd vs CCE, Bistpur, Jamshedpur [2022-TIOL-252- HC-Jharkhand-GST]
12. Learned Advocate for the Appellant rebutted the citations by the DR. According to learned Advocate for appellant, the reliance placed by learned DR on cases of BHEL (supra), Mylan Laboratories (supra), Banswara Syntex Ltd (supra) & Tecumseh Products India (supra), not correct in view of the case of Bosch Electrical Drive India Pvt Ltd (supra) and Emami Cement Ltd (supra) and reiterated that Coordinate Benches have been consistently holding that the appellants would be eligible for cash refund of Cenvat credit. He also distinguished the case laws relied upon by the learned DR in the cases of Rani Plastic Pipe Industries (supra), Phoenix Industries Pvt Ltd (supra), Idol Textile Ltd, Balaji Prints Ltd (supra), Mahavir Metal Manufacturing Co. (supra), Lata Hydrocarbon Resources Pvt Ltd (supra) & Saera Electric Auto Pvt Ltd (supra) by emphasizing that the issues covered in such cases and the facts are quite different than the case in hand. In the present case, the refund claim is under Section 142(3), which has never (8) E/30307/2021 been the subject matter in respect of cases cited by the department. His main argument is that there is no such limitation under Section 142(3) to restrict to cases only when they are falling under Rule 5, 5A or 5B of CCR as it existed pre 01.07.2017. Similarly, in the case of RHEC Inc (supra) and Servo Packaging Ltd (supra), they have said these cases are not relevant on the other hand, further submits that Tribunals in the recent cases like Granules India Ltd vs Commissioner, Hyderabad [Final Order No. A/30182/2024 dt.20.02.2024] & Flexi Caps & Polymers Pvt Ltd vs CCGST & CE, Indore [2021 (9) TMI 971 - CESTAT New Delhi], etc., have been holding that tax payer is eligible for refund of CVD & SAD paid on regularization of Advance Authorization/ EPCG Licenses. In so far as the Order of Hon'ble High Court of Jharkhand in the case of Rungta Mines Ltd (supra) relied upon by the department is concerned, learned Advocate has tried to distinguish that there the credit itself was taken illegally in the ST-3 return though they were not entitled to avail such credit, whereas, in the present case, admissibility of the credit is not under challenge and therefore, the same is not applicable in their case where they have actually sought refund under Section 142(3) of the Act.
13. Heard both the parties and perused the record.
14. The crux of the issue is whether the appellants are entitled for refund of input credit, which was neither transitioned in accordance with TRAN-1 procedure into the new regime nor got reflected in the ER-1 or revised ER-1 return post 01.07.2017. The admitted fact is that the appellants, on reconciliation of their financial accounts, found that they had not taken the credit of Rs.14,40,627/-. They also agreed that they had not filed any revised ER-1/ER-2 for taking this credit. Their main line of argument is that this is their substantive right and therefore, they are entitled for that credit and since the credit could not be taken on record before 01.07.2017, the only option left is to get the refund of this credit in cash, as provided under Section 142(3) of the Act. On the other hand, the department's argument is that on strict construction of the provisions made in the GST laws for getting such refunds in cash in respect of certain input/input service credit, provisions stipulated therein has to be complied with. Since the refund of this credit in cash for which the refund has been claimed was otherwise not reimbursable under any of the provisions under the erstwhile Central Excise (9) E/30307/2021 Act or Rules made thereunder including Cenvat Credit Rules, 2004, therefore, in view of the wordings of Section 142(3), they would also not be eligible for grant of refund in cash in accordance with Section 142(3) of the Act.
15. In order to appreciate the issue at hand, the provisions under Section 142(3) of the Act need to be examined. Section 142 covers certain miscellaneous transitional provisions under the Act, in view of the introduction of GST w.e.f. 01.07.2017. In terms of Section 142(3), which deals with the issue of refunds, including refund of any amount of Cenvat credit, the provision is reproduced below:
"(3) Every claim for refund filed by any person before, on or after the appointed day, for refund of any amount of CENVAT credit, duty, tax, interest or any other amount paid under the existing law, shall be disposed of in accordance with the provisions of existing law and any amount eventually accruing to him shall be paid 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 (1 of 1944):
Provided that where any claim for refund of CENVAT credit is fully or partially rejected, the amount so rejected shall lapse:
Provided further 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 this Act."
16. A plain reading of Section 142(3) would indicate that any claim for refund of any amount of Cenvat credit has to be disposed of in accordance with the provisions of existing law and if any amount eventually becomes due, the same is required to be paid in cash, notwithstanding anything to the contrary contained under the provisions of existing law. Therefore, what needs to be examined is whether the said refund could have been granted in accordance with the provisions of existing law or otherwise, except to the extent that the refund, if eligible, will still be admissible irrespective of any provisions contrary to this provision contained under the provisions of existing law, other than unjust enrichment. The entire Section 142 is to take care of different eventualities arising out of transition from erstwhile Central Excise Act and Finance Act to the GST regime.
17. In this case, admittedly, appellants have neither filed revised ER-1 nor carried forward this credit in TRAN-1 in accordance with the procedure (10) E/30307/2021 prescribed under Section 140 read with the relevant Rules and Notifications made thereunder. The appellants have mainly relied on certain judgments like Adfert Technologies Pvt Ltd vs UOI [2019-TIOL-2519-HC-P&H-GST), which has been affirmed by the Apex Court in UOI vs Adfert Technologies Pvt Ltd [2020-TIOL-64-SC-GST], wherein it was held that transitional credit is a vested right. They also relied on the decision of Tribunal in case of Jagdamba Polymers Ltd vs CCE, Ahmedabad (supra) in support of their argument that failure to reflect Cenvat credit balance in ER-1 return is only a procedural omission and credit should not be denied on this ground. They have mainly emphasized that the department has not challenged the legitimacy of impugned credit.
18. I have perused the judgments relied upon by the appellant and I find that reliance is being placed on such judgments without appreciating the fact that in this case, the entire issue is regarding refund of input credit in cash in accordance with the statutory provision under the Act viz., Section 142(3). The wordings are quite unambiguous and a plain reading would essentially indicate that if such input credit were otherwise eligible for refund in cash or credit under the erstwhile Central Excise Act, then the same needs to be processed and allowed in accordance with the provisions of Section 142(3) but it does not provide for any independent statutory provision to examine and allow the eligibility of refund on its own without having any reference to the existing law. Moreover, in this case, admittedly, they have neither availed the provisions under Section 140 for carrying forward under TRAN-1 nor they have availed the provisions under Section 142(9)(b). The issue of eligibility or otherwise of this credit in accordance with Section 140 read with Rule 117 is not the subject matter for this appeal as in this case, the appeal is to be decided within the narrow compass of provisions of Section 142(3). Moreover, one has to note that most of these judgments quoted regarding substantive right on the credit have been in relation to the provisions under the existing law and not under the provisions of the Act and hence they are not applicable in the facts of the case. In fact, the provision under Section 142(3), is being part of the Act enacted by Legislature has to be interpreted strictly.
19. The appellant's reliance on the case of UOI vs Intercontinental Consultants & Technocrats Pvt Ltd [2008 (226) ELT 16 (SC)] in support of (11) E/30307/2021 their argument that no new conditions can be imposed to restrict the scope of the provisions or benefits available under existing notification/circular is also not applicable in the sense that the Act is clearly distinct from the existing laws and cannot be made subservient or contingent to the existing laws, if not otherwise clearly intended or indicated in the Act itself. The relevant provisions of the Act has to be read in the context of the Act itself, except to the extent it provides for reference to the existing laws. Thus, I find that the case laws, relied upon by the appellants, are not of much help to support their contention that Section 142(3) is an omnibus kind of provision to provide refund of all kinds of input credit, whether they are otherwise not having any explicit provisions under the Act or have failed to avail the explicit provisions under the Act for carrying forward such credit or for claiming refund of such credit in cash.
20. I have also gone through some of the judgments relied upon by the Department in support of their contention that if there is no specific provisions under the existing law then the refund cannot be granted under the GST provisions, as held by Hyderabad Bench of this Tribunal in the case of Bharat Heavy Electricals Ltd vs CCE, Secunderabad [Final Order No. A/31159/2019 dt.23.12.2019]. The same Bench in the case of Mylan Laboratories Ltd vs CCE, Secunderabad [Final Order No. A/30689/2020 dt.25.02.2020] also held that such refunds are not admissible relying on the judgment of Larger Bench of Hon'ble High Court of Bombay in the case of Gouri Plasticulture Pvt Ltd vs CCE, Indore [2019-TIOL-1248-HC-Mum-CX- LB]. I find that the appellants have also relied on the judgment in the case of OSI Systems Pvt Ltd vs CCT, Rangareddy [2022 (9) TMI 801 - CESTAT Hyderabad] and also in the case of NCL Industries vs CCT, Hyderabad [2024 (1) TMI 1254 - CESTAT Hyderabad]. While the subject matter of appeal in case of OSI Systems Pvt Ltd (supra) was applicability of principle of unjust enrichment under Section 142(3) of the Act, the matter before the Tribunal in the case of NCL Industries (supra) was Section 142(3) of the Act. In this case, the Tribunal examined the case laws viz., Bosch Electrical Drive India Pvt Ltd vs CCT, Chennai [2023 (12) TMI 1145 - CESTAT Chennai], wherein the Larger Bench of this Tribunal has held that any amount of Cenvat credit could be claimed only under Section 142(3) of the CGST Act and against this Order, the appeal will lie to the Tribunal. The Tribunal also distinguished the judgment of Mumbai Bench in the case of East West Seeds Pvt Ltd [2023 (3) (12) E/30307/2021 TMI 237 - CESTAT Mumbai], as canvassed by the Revenue in support of their claim that refund was not admissible.
21. In the case of Bosch Electrical Drive India Pvt Ltd (supra), the Larger Bench examined the proposition whether the appeal would lie to this Tribunal against an order passed under Section 142(3) of the CGST Act or otherwise. After going through the statutory provisions under the Act, it came to the conclusion that appeal against any order passed against Section 142(3) of the CGST Act would lie in this Tribunal. Therefore, this judgment is primarily for deciding as to whether the present Tribunal is the correct forum before which the appeal would lie or otherwise. There is no dispute that post this, Larger Bench's judgment, the appeal for refund filed under Section 142(3) would lie in this Tribunal. This judgment, however, has not laid down any law to the effect that the refund has to be given in cash under Section 142(3) even if it is otherwise not in accordance with the provisions of the existing law. Therefore, it is clearly distinguishable in so far as reliance is placed for grant of refund.
22. Further, it is to be understood that after the introduction of GST Laws with effect from 01.07.2017, certain transitional provisions were made so as to ensure that certain provisions of the existing law are further carried forward and claims, liability etc., under the existing laws were to be disposed off in terms of provisions made in the Act. In so far as it relates to refund of Cenvat credit, there are apparently three options available post introduction of GST Laws. Firstly, under Section 140, where specific and eligible Cenvat credits under existing law were entitled for being carried forward under the new regime and to be taken as credit in their electronic ledger under the Act, subject to provisions under the relevant Rules and procedures. The second provision was in terms of Section 142(3) and third under Section 142(9)(b). A plain reading of the provisions would indicate that, inter alia, refund of any amount of tax or Cenvat credit has to be disposed off in accordance with the provisions of the existing law and any amount eventually accruing to him shall be refunded to be paid in cash only, notwithstanding anything to the contrary contained under the provisions of existing law other than the provisions of Sub-section (2) of Section 11B. Therefore, it is obvious that refund has to be examined first in terms of the (13) E/30307/2021 relevant provisions, as it existed under the existing law, in this case Cenvat Credit Rules, 2004 or the Finance Act, 1994.
23. The perusal of CCR, 2004 under the existing law clearly brings out that the refund of unutilized Cenvat credit can be made only for specific purpose covered under Rule 5, 5A and 5B, subject to certain prescribed/notified procedure, conditions and limitations etc., as may be specified or notified by notification in this regard. They have also admittedly not filed any revised ST-3 within the specified tax limit as would have been otherwise required under Section 142(9)(b).
24. Therefore, essentially when there is no provision in the law either under the Cenvat Credit Rules, 2004 or in Central Excise Act to allow cash refund, for such unclaimed/accumulated credit, Section 142(3), per se, cannot make it an eligible refund, merely, because the appellant has not been able to utilize on the ground of not having filed the revised return or was not able to take the TRAN-1 route etc., within specified time. I also observe that in the case of Banswara Syntex Vs CCE [2018 (91) TMI 1064], the Hon'ble Division Bench of Rajasthan High Court held that refund of accumulated unutilized credit on account of education cess and secondary and higher education cess was not entitled for cash refund, in view of there being no provision under the Act of 1944.
25. Reliance placed by Revenue on the judgment of Hon'ble High Court of Jharkhand in the case of Rungta Mines vs CCE, Jamshedpur [2022-TIOL- 252-HC-Jharkhand-GST] is quite relevant to appreciate the scope of Section 142(3) of the Act. In this case, it was held that the provision of Section 142(3) does not entitle a person to seek refund where no such right occurs under the existing law or under new CGST regime in terms of provision of CGST Act and the rules framed and notification issued thereunder. Meaning thereby, Section 142(3) does not confer a new right, which never existed under the old regime to the manner of giving relief, if the person is not entitled under the existing law. The relevant portion of the judgment is reproduced below for ease of reference:
"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 (14) E/30307/2021 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 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(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 "port services" were received by the petitioner in the month of April 2017 and invoice was also generated in the month of May 2017."
The ratio of the aforesaid judgment is squarely applicable to the facts of the case, in so far as the interpretation of Section 142(3) of the Act is concerned. It must also be noted that a plain reading of this provision under the Act clearly supports this interpretation.
26. Relying on the judgment of Hon'ble High Court of Jharkhand in the case of Rungta Mines (supra), I find that when there was no provision for grant of refund in cash in respect of tax paid/credit taken in respect of such input in the existing law, i.e., the Central Excise Act and Cenvat Credit Rules, 2004, then the refund cannot be granted in cash in respect of such (15) E/30307/2021 unclaimed/unutilized credit on input. The options available for getting cash refund are clearly covered within the different provisions under the Act viz., Section 140, 142(3) & 142(9)(b). In the instant case, admittedly, neither Section 140 was followed nor Section 142(9)(b) was availed. Therefore, the cash refund, by virtue of Section 142(3) would not be admissible in the facts of the case.
27. Therefore, having regard to rival contentions and case laws cited by both the sides, I do not find any infirmity in the Order passed by the Commissioner (Appeals), upholding the rejection of refund in cash, amounting to Rs.14,40,627/- by the Original Authority.
28. Appeal dismissed.
(Pronounced in the Open Court on 30.04.2024) (A.K. JYOTISHI) MEMBER (TECHNICAL) Veda