Appeal for Refund lies to CESTAT against order passed u/s 142 of CGST Act

Bosch Electrical Drive India Private Limited Vs Commissioner of Central Tax (CESTAT Chennai)

Conclusion: Even if the service tax had been deposited by the appellant after 01.01.2017, nonetheless the refund of any amount of the CENVAT credit could be claimed only under sub­section (3) of section 142 of the CGST Act and against this order an appeal will lie to the Tribunal.

Held: Appellant was served with an audit objection that it had short paid service tax under reverse charge mechanism on the import of services. It had paid an amount of Rs. 39,18,672/- towards service tax with interest under reverse charge for import of services on 08.12.2017. Appellant claimed that it was eligible to claim input credit under the CENVAT Rules on the aforesaid amount, but it was disabled from taking such credit as the Central Goods and Services Tax Act, 2017 had come into force w.e.f. 01.07.2017 and the CENVAT Rules stood repealed. Appellant, therefore, filed a refund claim under section 142(3) of the CGST Act read with section 11B of the Central Excise Act, 1944 contending that the tax paid should be refunded to the appellant as it would have been eligible as credit under the CENVAT Rules. A show cause notice was however issued to the appellant seeking to reject the claim as there was no provision under the CGST Act to process such claims. Appellant filed a reply to the show cause notice reiterating that it was entitled to refund in cash in view of the provisions of section 142(3) of the CGST Act. Deputy Commissioner rejected the refund claim filed by the appellant for the reason that after the implementation of CGST Act on 01.07.2017, the CENVAT Rules ceased to be in force and the claim under section 142(3) of CGST Act could not be considered to be under the ‘existing law’ as the service tax was not paid in time but on 08.12.2017 after the CGST Act had come into force. It was held that the service tax was paid under the provisions of Chapter V of the Finance Act and refund was claimed under sub-section (3) of section 142 of the CGST Act, under which the claim was required to be disposed of in accordance with the provisions of the existing law. Therefore, even if the service tax had been deposited by the appellant after 01.01.2017, nonetheless the refund of any amount of the CENVAT credit could be claimed only under sub­section (3) of section 142 of the CGST Act and against this order an appeal will lie to the Tribunal.  An appeal would lie to the Customs, Excise & Service Tax Appellate Tribunal against an order passed under section 142 of the Central Goods and Services Tax Act, 2017.

FULL TEXT OF THE CESTAT CHENNAI ORDER

A Division Bench of the Tribunal has referred the following issue for determination by a Larger Bench of the Tribunal:

“Whether a refund order passed under Section 142 of the Central Goods and Services Tax Act, 2017 is appealable before the Customs, Excise and Service Tax Appellate Tribunal or otherwise?”

2.It needs to be noted that earlier when the appeal had come up for hearing before a learned Member of the Tribunal, the learned Member referred the matter to the Division Bench for deciding:

“Whether the CESTAT, having been constituted under the Customs Act, 1962, can look into and decide refund claim under C.G.S.T. upon the introduction the Central Goods and Services Tax Act, 2017, which is a self-contained code having its own appellate mechanisms?”

3. It would be appropriate to first briefly narrate the dispute that had led to the filing of this appeal before the Tribunal.

4. M/s. Bosch Electrical Drive India Private Limited ¹ discharged service tax under the provisions of Chapter V of the Finance Act, 1994² and availed CENVAT credit of the tax paid under the provisions of the CENVAT Credit Rules, 2004³.

5. Pursuant to an audit conducted by the department in November 2017, the appellant was served with an audit objection that it had short paid service tax under reverse charge mechanism on the import of services. The appellant paid an amount of Rs. 39,18,672/- towards service tax with interest under reverse charge for import of services on 08.12.2017. The appellant claims that it was eligible to claim input credit under the CENVAT Rules on the aforesaid amount, but it was disabled from taking such credit as the Central Goods and Services Tax Act, 2017⁴ had come into force w.e.f. 01.07.2017 and the CENVAT Rules stood repealed. The appellant, therefore, filed a refund claim under section 142(3) of the CGST Act read with section 11B of the Central Excise Act, 1944 ⁵ contending that the tax paid should be refunded to the appellant as it would have been eligible as credit under the CENVAT Rules. The application filed by the appellant is reproduced below:

“January 19, 2018
*****

Sub: Refund of Service Tax paid u/s 142(3) of CGST Act 2017 against EA 2000 findings –

With reference to the above, we wish to submit that EA 2000 audit has been held in our factory on 25.11.2017 & 26.11.2017 for the period upto June 2017 and observed certain short payments of Service tax against the import of services viz. Consulting Engineer and Intellectual Property Services other than copyright. (refer table below).

We also wish to inform you that we have accepted the observation made by the EA 2000 and we have remitted the service tax through e-Receipt on 08.12.2017 (copy enclosed).

In this connection, we also wish to inform you that the service tax paid against the import of services are eligible as input credit under the erstwhile law i.e. Rule 4(7) and Rule 9(e) of Cenvat Credit Rules 2004 In respect of credit eligibility on tax liability assessed and paid under the erstwhile law, refund is allowed under Section 142(3) of the CGST Act 2017. We have reproduced the above mentioned rules for your ready reference.

*****

In view of the above, we request your goodselves to grant us the refund of Rs. 39,18,672/- for the Service tax amount paid against the import services and we seek your permission to represent before your goodselves for any clarifications required in this regard.”

6. A show cause notice dated 31.07.2018 was, however, issued to the appellant seeking to reject the claim as there was no provision under the CGST Act to process such claims.

7. The appellant filed a reply to the show cause notice reiterating that it was entitled to refund in cash in view of the provisions of section 142(3) of the CGST Act.

8. The Deputy Commissioner, by order dated 24.04.2019, rejected the refund claim filed by the appellant for the reason that after the implementation of CGST Act on 01.07.2017, the CENVAT Rules ceased to be in force and the claim under section 142(3) of CGST Act cannot be considered to be under the ‘existing law’ as the service tax was not paid in time but on 08.12.2017 after the CGST Act had come into force. The operative part of the order passed by the Deputy Commissioner is reproduced below:

“6.3  The assessee in their refund application claimed the refund of Rs. 39,18,672/- citing that they were eligible to take credit of this amount under the erstwhile law i.e. Rule 4(7) and Rule 9(e) of the Cenvat Credit Rules, 2004 and now after change in taxation system, they are not in position to take the cenvat credit as cenvat scheme is no more and hence requested for cash refund. I find that consequent upon implementation of GST w.e.f. 01.07.2017, the Cenvat Credit Rules, 2004 ceased to be in force with effect from 01.07.2017. The Audit Para was settled by the assessee as they paid the Service Tax liability of Rs.41,48,834/-(Incl. of Cesses) along with the interest of Rs.6,49,550/- vide challan no.00303 & 00304 both dated 08.12.2017. The assessee having committed a lapse of not paying the impugned Service Tax at the appropriate time, now having paid the same after audit observation, they preferred to take rescue in the Cenvat Credit Rules, 2004 which is not in force. Since the Cenvat Credit Rules, 2004 ceased to be in force with effect from 01.07.2017, there is only option to the assessee to pay all the dues under the erstwhile act through cash. Section 142(3) talks about claim of refund filed before, on or after the appointed day i.e. 01.7.2017 under the existing law. The assessee’s submissions cannot be considered as the refund filed under existing law just because they failed to pay the service tax on time. Further, Section 142 (7)(a) of CGST Act 2017 states that “reference relating to any output duty or tax liability initiated whether before, on or after the appointed day under the existing law, shall be disposed of in accordance with the provisions of the existing law and if any amount became recoverable as a result of such appeal, review of reference, the same shall, unless recovered under the existing law, be recovered as an arrear of duty or tax under this Act and the amount so recovered shall not be admissible as input tax credit this Act;”. It implies that the amount payable under the existing law has to be recovered as arrear of duty and the input credit is not admissible for this amount. Once it is established that the amount in question is not admissible as input credit under cenvat credit rules’ 2004 as on the date of audit observations after implementation of GST, the question of refund of such amount does not arise.

7. Under the above circumstances, I hold that the assessee’s claim cannot be sanctioned and is liable for rejection.”

(emphasis supplied)

9. Feeling aggrieved by the said order, the appellant filed an appeal before the Commissioner (Appeals), which appeal was dismissed by order dated 21.09.2019 and the relevant portions of the order are reproduced below:

“9.  The respondent has found that the amount paid by the appellant is not eligible to him as refund as the appellant has made the payments on being detected by audit, on 8.12.2017, which is much later than the date from which the CENVAT Credit Rules, 2004 ceased to be in force. Payment of the amount on such a later date for the earlier periods i.e. 2015-16 onwards could only be treated as tax arrears. Delayed payment on the part of the appellant has resulted in a situation where there is no provision under the rules to be eligible for the credit. For these reasons, the case laws cited by the appellant are not applicable to the present case. Claiming refund on this score has rightly been rejected by the respondent.

10. In fact, Section 142(8) of the CGST Act, 2017 states that where in pursuance of an assessment or adjudication proceedings initiated, whether before, on or after the appointed day under the existing law, any amount of tax, interest fine or penalty becomes recoverable the same shall unless, recovered under the existing law, be recovered as an arrear of tax under this Act and the amount so recovered shall not be admissible as Input Tax Credit.

11. I am therefore in agreement with the findings of the respondent that in as much as the amount has been paid by them only on 8.12.2017, it is not available as CENVAT Credit after the designated date. Therefore the question of eligibility of the amount as credit and subsequent refund of the same does not arise.”

(emphasis supplied)

10. It is against the aforesaid order dated 21.09.2019 that the present appeal was filed by the appellant. The appeal was initially listed before a learned Member of the Tribunal before whom learned counsel for the appellant had placed two decisions, each delivered by a learned Member of the Tribunal, in M/s. Fine Automotive and Industrial Radiators Pvt. Ltd. vs. The Commissioner of G.S.T. & Central Excise, Puducherry ⁶ and M/s. Nilkamal Ltd. vs. The Commissioner of G.S.T. and Central Excise, Puducherry ⁷ to contend that the appellant would be entitled to refund under section 142 (3) of the CGST Act. The learned Member, however, noticed that there was yet another decision of a learned Member of the Hyderabad Bench of the Tribunal in M/s. United Seamless Tubular Pvt. Ltd. vs. Commissioner of Central Tax, Rangareddy⁸ in which it was held that the Customs, Excise and Service Tax Appellate Tribunal⁹ would not have the jurisdiction to hear an appeal on issues relating to refund claims under the CGST Act. However, as two learned Members of the Tribunal in Fine Automotive and Nilkamal, had held that the Tribunal would have the jurisdiction to hear the appeal against the order passed under section 142 of the CGST Act, the learned Member referred the matter to a Division Bench of the Tribunal to decide the issue as to whether the Tribunal would have the jurisdiction to hear the appeal.

11. The Division Bench of the Tribunal, on the matter being placed, noticed that:

“12. As per Section 142(3), only those claims in which the amount of CENVAT Credit, duty, interest was paid in the existing law, i.e., the Central Excise Act, 1944 and the Finance Act, 1994, shall be disposed of in accordance with the same Acts. In the present case, the appellant had paid the Service Tax subsequent to the introduction of the C.G.S.T. Act and thereby, the CENVAT Credit got accrued to the appellant. In this case, it is not the refund of Service Tax paid under the existing law whereas the refund sought for by the appellant is in respect of the CENVAT Credit which accrued after the introduction of the C.G.S.T. Act, 2017.

13. Moreover, there is no provision either in the Central Excise Act or the Finance Act for refund of CENVAT Credit. The refund of CENVAT Credit was provided under the C.G.S.T. Act only. Therefore, the present claim is not arising out of the existing law and hence, the same cannot be disposed of under the existing law.

14.1 There is a specific provision for refund of CENVAT Credit under the C.G.S.T. Act. The refund of CENVAT Credit is required to be disposed of under the C.G.S.T. Act only and any order passed under the C.G.S.T. Act is appealable before the GST Appellate Tribunal in terms of Section 112(1) of the Act, which is reproduced below:

“SECTION 112. Appeals to Appellate Tribunal. — (1) Any person aggrieved by an order passed against him under section 107 or section 108 of this Act or the State Goods and Services Tax Act or the Union Territory Goods and Services Tax Act may appeal to the Appellate Tribunal against such order within three months from the date on which the order sought to be appealed against is communicated to the person preferring the appeal.”

14.2 From the above appeal provision under the C.G.S.T. Act, it is absolutely clear that any orders passed under the C.G.S.T. Act are appealable to the G.S.T. Appellate Tribunal. No exception was provided for any matter passed under the C.G.S.T. Act for filing appeal before the CESTAT. Therefore, we are of the clear view that the refund order passed under Section 142 of the C.G.S.T. Act, 2017 is appealable to the GST Appellate Tribunal. Hence, the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) has no jurisdiction to entertain any appeal against an order passed under the C.G.S.T. Act.”

(emphasis supplied)

12. After having made the aforesaid observations, the Division Bench noticed that in M/s. Toshiba Machine (Chennai) P. Ltd. Commr. of Central Tax, Chennai¹⁰, a contrary view had been taken by another Division Bench of the Tribunal.

13. The Division Bench of the Tribunal in Toshiba Machine, after noticing the provisions of section 142(3) of the CGST Act, made the following observations:

“7. In our view, once the GST regime is in force, the pending refund claim, if sanctioned, will necessarily have to be paid in cash irrespective of the fact whether the refund amount pertains to that emanating from Cenvat account or from account current. Any other interpretation would lead to a situation where the assessee, who is otherwise undisputedly entitled to the refund amount of Rs. 5,20,800/- is left high and dry only because that amount emanated from their erstwhile Cenvat account. For these reasons, we find merit in the appeal filed by the assessee, in consequence, the impugned order cannot be sustained and is set aside. This will have the effect of restoration of Order No. 81/2016-17, dated 12-7-2016 of the original authority. Appeal allowed on above terms.”

14. The Division Bench, accordingly, referred the matter to Larger Bench of the Tribunal to decide whether a refund order passed under Section 142 (3) of the CGST Act, would be appealable before the Tribunal. The relevant paragraphs of the order are reproduced below:

“15. However, this Tribunal in various cases, as cited by the Learned Counsel for the appellant, entertained the appeal and disposed of in respect of refund claim under Section 142(3). One of the decisions is of the Division Bench in the case of M/s. Toshiba Machine (Chennai) P. Ltd. v. Commr. of Central Tax, Chennai [2019 (27) G.S.T.L. 216 (Tri. – Chennai)] wherein the Tribunal has entertained the appeal in the case of refund under Section 142(3) of the C.G.S.T. Act, 2017.

16. In this position, we are of the view that to have a consistent view and uniform legal position, in the interests of justice, this matter must be decided by a Larger Bench.”

(emphasis supplied)

15. Shri Raghavan Ramabadran, learned counsel made submissions on behalf of the appellant, while Shri V.S. Jayakumar, learned senior counsel assisted by Shri Mudit Bohara made submissions on behalf of the intervener. Shri M. Ambe, learned authorized representative made submissions on behalf of the department.

16. In the present case, the appellant had deposited the short payment of service tax under the reverse charge mechanism in respect of import of service on 08.12.2017, after the time period prescribed for filing the last ST-3 Return had expired. This amount was, therefore, not reflected in the ST-3 Return. The CGST Act came into force w.e.f. 01.07.2017. The appellant, therefore, could not claim the transition of the input credit under section 140 of the CGST Act. The appellant could not also avail CENVAT credit under the CENVAT Rules as they were no longer in force after the introduction of the CGST Act.

17. It is for this reason that the appellant filed an application under section 142(3) of the CGST Act claiming refund of the amount of CENVAT credit paid by the appellant. This claim of the appellant was rejected by the Deputy Commissioner by the order dated 24.04.2019 and the appeal filed by the appellant before the Commissioner (Appeals) was also rejected by the order dated 21.09.2019.

18. As the appellant was denied refund of the CENVAT credit that was claimed under section 142(3) of the CGST Act, the present appeal was filed by the appellant before the Tribunal.

19. The issue that has been referred to the Larger Bench of the Tribunal is as to whether the order passed under section 142 of the CGST Act is appealable before the Tribunal.

20. In order to appreciate this issue that has been referred, it would be appropriate to refer to the relevant provisions.

21. The term ‘assessment’ has been defined in section 2(11) of the CGST Act and it is as follows:

“2(11) “assessment” means determination of tax liability under this Act and includes self-assessment, re-assessment, provisional assessment, summary assessment and best judgment assessment”

22. The term ‘existing law’ is defined in section 2(48) of the CGST Act and it is as follows:

“2(48) “existing law” means any law, notification, order rule or regulation relating to levy and collection of duty or tax on goods or services or both passed or made before the commencement of this Act by Parliament or any Authority or person having the power to make such law, notification, order, rule or regulation.”

23. The Goods and Service Tax Appellate Tribunal has been constituted under section 109 of the CGST Act. Section 112 provides that any person aggrieved by an order passed against him under section 107 or section 108 of the CGST Act may appeal to the GST Appellate Tribunal. Section 107 provides that any person aggrieved by any decision passed under the CGST Act by an adjudicating authority may appeal to the GST Appellate Tribunal. Section 108 of the CGST Act deals with powers of the Revisional Authority and provides that the Revisional Authority may on its own motion or upon information received, call for and examine the record of any proceeding and if he considers that any decision or order passed under the CGST Act by any officer sub-ordinate to him is erroneous he may pass such order as he thinks just and proper.

24. Chapter XX of the CGST Act deals with ‘Transitional Provisions’. It contains, amongst others, sections 139, 140 and 142.

25. Section 139 of the CGST Act, which came into force on 22.06.2017, deals with ‘migration of existing taxpayers’. Sub-section (1) of section 139 is reproduced below:

“139 (1) On and from the appointed day, every person registered under any of the existing laws and having a valid Permanent Account Number shall be issued a certificate of registration on provisional basis, subject to such conditions and in such form and manner as may be prescribed, which unless replaced by a final certificate of registration under sub-section (2), shall be liable to be cancelled if the conditions so prescribed are not complied with.”

26. Section 140 of the CGST Act came into force on 01.07.2017. Sub-section (1) of section 140 is reproduced below:

“140 (1) A registered person, other than a person opting to pay tax under section 10 shall be entitled to take, in his electronic credit ledger, the amount of CENVAT credit of eligible duties carried forward in the return relating to the period ending with the day immediately 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.”

27. Section 142 of the CGST Act came into force on 01.07.2017. Sub-sections (3), (6)(a) and (6)(b), which are relevant for the purpose of this reference, are reproduced below:

“142 (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.

*****

(6) (a) every proceeding of appeal, review or reference relating to a claim for CENVAT credit initiated whether before, on or after the appointed day under the existing law shall be disposed of in accordance with the provisions of existing law, and any amount of credit found to be admissible to the claimant shall be refunded to him 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) and the amount rejected, if any, shall not be admissible as input tax credit under this Act:

Provided 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;

(b)   every proceeding of appeal, review or reference relating to recovery of CENVAT credit initiated whether before, on or after the appointed day under the existing law shall be disposed of in accordance with the provisions of existing law and if any amount of credit becomes recoverable as a result of such appeal, review or reference, the same shall, unless recovered under the existing law, be recovered as an arrear of tax under this Act and the amount so recovered shall not be admissible as input tax credit under this Act.”

28. Chapter XXI of the CGST Act deals with Miscellaneous matters. Section 173, which is contained in Chapter XXI, deals with amendment of the Finance Act. It came into force on 01.07.2017 and is reproduced below:

“173. Amendment of Act 32 of 1994

Save as otherwise provided in this Act, Chapter V of the Finance Act, 1994 shall be omitted.”

29. Section 174, which also came into on 01.07.2017, deals with repeal and saving. Sub-section (1) and clause (f) of sub-section (2) are reproduced below:

“174. Repeal and Saving

(1) Save as otherwise provided in this Act, on and from the date of commencement of this Act, the Central Excise Act, 1944 (1 of 1944) (except as respects goods included in entry 84 of the Union List of the Seventh Schedule to the Constitution), the Medicinal and Toilet Preparations (Excise Duties) Act, 1955 (16 of 1955), the Additional Duties of Excise (Goods of Special Importance) Act, 1957 (58 of 1957), the Additional Duties of Excise (Textiles and Textile Articles) Act, 1978, and the Central Excise Tariff Act, 1985 (5 of 1986 (hereafter referred to as the repealed Acts) are hereby repealed.

(2) The repeal of the said Acts and the amendment of the Finance Act, 1994 (hereafter referred to as “such amendment” or “amended Act”, as the case may be) to the extent mentioned in the sub-section (1) or section 173 shall not —

(a) *****

(b) *****

(c) *****

(d) *****

(e) *****

(f) affect any proceedings including that relating to an appeal, review or reference, instituted before on, or after the appointed day under the said amended Act or repealed Acts and such proceedings shall be continued under the said amended Act or repealed Acts as if this Act had not come into force and the said Acts had not been amended or repealed.”

30. The CENVAT Rules were made under section 37 of the Excise Act and section 94 of the Finance Act. Under rule 4(7), CENVAT credit in respect of input service was allowed, on or after the day on which the invoice, bill or, as the case may be, challan referred to in rule 9 was received. Under rule 9(1)(e) of the CENVAT Rules, credit can be taken on the basis of a challan evidencing payment of service tax, by the service recipient as the person liable to pay service tax. Section 173 of the CGST Act provides that save as otherwise provided in this Act, Chapter V of the Finance Act shall be omitted. Section 174(1) of the CGST Act further provides that save as otherwise provided in this Act, on and from the date of commencement of this Act i.e. 01.07.2017, the Excise Act and some other Acts referred to are repealed. As the CENVAT Rules were framed under the Excise Act, the appellant could not have claimed CENVAT credit in respect of the input service under the provisions of the CENVAT Credit Rules after 01.07.2017 as they ceased to exist. The appellant could also not have carried forward the amount of CENVAT credit in the return under section 140(1) of the CGST Act as the return had been filed before the deposit of the service tax on 08.12.2017.

31. The factual position and the relevant provisions of the CGST Act and the CENVAT Rules have been examined. The submissions made by the learned counsel for the appellant, the learned senior counsel for the intervener and the learned authorized representative appearing for the department can now be considered.

32. The submissions advanced by the learned counsel for the appellant are:

(i) The refund claims of amount paid under the existing laws have to be considered under section 142(3) of the CGST Act, in accordance with the existing law. The appeal would, therefore, lie before the Tribunal since it relates to refund of CENVAT credit eligible under the existing law, though such refund is enabled and routed through section 142(3) of the CGST Act;

(ii) The Tribunal has been constituted under section 129 of the Customs Act, 1962 to hear appeals against the orders of the adjudicating authority. The refund in the present appeal emnates from existing law and, therefore, the Tribunal would have the jurisdiction to decide the eligibility of the refund claimed;

(iii) Under section 112 of the CGST Act, appeal can be filed before Goods and Services Tax Appellate Tribunal by any person aggrieved by an order passed against him under section 107 or section 108 of the CGST Act. As the order was passed under section 142 of the CGST Act, appeal could not have been filed before the Appellate Tribunal constituted under the CGST Act. If it is assumed that an appeal would not lie before the Tribunal against an order passed under section 142(3) of the CGST Act, an assessee or the Revenue would be left remediless in such a situation as no appeal can be filed before the Goods and Service Tax Appellate Tribunal under section 112 of the CGST Act;

(iv) Section 142(6)(a) of the CGST Act provides that every proceeding of appeal, review or reference relating to a claim for CENVAT credit initiated whether before, on or after the appointed day under the existing law shall be disposed off in accordance with the provisions of the existing laws. Section 142(6)(b) of the CGST Act provides that every proceeding of appeal, review or reference relating to recovery of CENVAT credit initiated whether before, on or after the appointed day under the existing law shall be disposed of in accordance with the provisions of existing law. Thus, an appeal can be filed before the Tribunal;

(v) In view of the provisions of section 174(2)(e) and section 174(2)(f) of the CGST Act, the adjudication and appellate proceedings under existing law is to be continued after introduction of CGST Act as if the CGST Act had not come into force and as if Finance Act had not been amended and Excise Act repealed. Thus, proceedings are saved by virtue of section 174(2) of the CGST Act and must be continued under the existing law; and

(vi) In the present case, the proceedings had been initiated under the ‘existing law’ by the officers of the Service Tax Department exercising powers under the Finance Act and the refund was filed under section 11B of the Excise Act read with section 142(3) of the CGST Act.

33. Learned senior counsel for the intervener submitted that in view of the Transitional Provisions contained in the Chapter XX of the CGST Act, the Tribunal would have the jurisdiction to decide appeals as per the existing law.

34. Learned authorized representative appearing for the department, however, submitted that since the refund was made in accordance with section 142(3) of the CGST Act, the officers who were appointed as per section 3 of the CGST Act, the first Appellate Authority defined under section 2(8) of the CGST Act, and the Appellate Authority defined under section 2(9) of the CGST Act are empowered to dispose of the refund claim and the Tribunal would not have the jurisdiction to entertain the appeal. Learned authorized representative also contended that the appellant is not justified in placing reliance upon section 174(2)(e) and section 174(2)(f) of the CGST Act.

35. The submissions advanced by learned counsel for the appellant, the learned senior counsel appearing for the intervener, and the learned authorized representative appearing for the department have been considered.

36. The issue that has been referred to the Larger Bench of the Tribunal is whether a refund order passed under section 142 of the CGST Act is appealable before the Tribunal.

37. Section 142, as noticed above, deals with Miscellaneous Transitional Provisions. Sub-section (3) provides that every claim for refund filed by any person before, on or after the appointed day, for refund of any amount of CENVAT credit or any other amount paid under the existing law, shall be disposed of in accordance with the provisions of the 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. However, 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.

38. Thus, under sub-section (3) of section 142, the claim for refund of any amount of CENVAT credit has to be disposed of in accordance with the provisions of the existing law. ‘Existing law’ under section 2(48) of the CGST Act means any law relating to levy and collection of duty or tax on goods or services or both passed or made before the commencement of the CGST Act. The existing law, therefore, would be Chapter V of the Finance Act and the Central Excise Act.

39. The appellant had deposited the short payment of service tax under Chapter V of the Finance Act in respect of import of service on 08.12.2017. Refund of CENVAT credit could have been claimed under rule 4(7) of the CENVAT Rules, which had been framed under section 37 of the Excise Act and section 94 of the Finance Act.

40. Section 173 of the CGST Act provides that save as otherwise provided in the CGST Act, Chapter V of the Finance Act, shall be omitted. Section 174(1) of the CGST Act provides that save as otherwise provided in the CGST Act, on or from the date of commencement of the CGST Act i.e. 01.07.2017, the Excise Act shall stand repealed. Upon repeal of the Excise Act, the CENVAT Rules automatically stood repealed. The appellant, therefore, could not have claimed refund under rule 4(7) of the CENVAT Rules. The appellant could also not have taken in his electronic credit ledger the amount of the CENVAT credit under section 140(1) of the CGST Act because the service tax return had been filed before the deposit of the service tax. It is for this reason that the appellant had filed an application under sub­section (3) of the section 142 of the CGST Act, which application was rejected and the appeal filed by the appellant before the Commissioner (Appeals) was also rejected.

41. Before examining whether an appeal would lie to the Tribunal against an order passed under section 142 of the CGST Act, it would be appropriate to examine whether an appeal would lie to the Appellate Tribunal constituted under the CGST Act.

42. Under section 112 of the CGST Act, an appeal would lie before the Appellate Tribunal constituted under the CGST Act against an order passed under section 107 or section 108 of the CGST Act. It is, therefore, clear that against an order passed under sub-section (3) of section 142 of the CGST Act an appeal would not lie before the Appellate Tribunal constituted under the CGST Act.

43. It now needs to be examined whether the Tribunal would have the jurisdiction to entertain an appeal filed against an order passed under sub-section (3) of section 142 of the CGST Act.

44. Under sub-section (3) of section 142 of the CGST Act, the claim for refund of any amount of CENVAT credit has to be disposed of in accordance with the provisions of the existing law. The existing law would be Chapter V of the Finance Act and the Central Excise Act. If an application for refund of CENVAT credit had been filed at a point of time when the CGST Act had not been enacted, an appeal would lie before the Tribunal against an order passed on the application filed for refund of CENVAT credit. What has to be seen is whether an appeal can be filed before the Tribunal after the coming into force of the CGST Act against an order passed under sub-section (3) of section 142 of the CGST Act. In view of the specific provisions of sub-section (3) of section 142 of the CGST Act, every claim for refund after 01.07.2017 has to be disposed of in accordance with the provisions of the existing law i.e. Chapter V of the Finance Act and the Central Excise Act. This would mean that the appellate provisions would continue to remain the same. This position is also explicit from the provisions of sub-section (6)(b) of section 142 of the CGST Act, wherein it has been provided that every proceeding of appeal, review or reference relating to recovery of CENVAT credit initiated whether before, on or after the appointed day under the existing law shall be disposed of in accordance with the provisions of the existing law.

45. Section 174(2)(f) of the CGST Act also provides that the repeal of the Central Excise Act under section 174(1) and amendment of the Finance Act under section 173 shall not affect any proceedings including that relating to an appeal instituted before, on or after the appointed day under the said amended Act or repealed Acts and such proceedings shall be continued under the said amended Act or the repealed Acts as if the CGST Act had not come into force and the said Acts had not been amended or repealed.

46. There is, therefore, no manner of doubt that an appeal against an order passed under section 142 of the CGST Act would lie to the Tribunal.

47. This view also gains support from the fact the legislative intent could not have been to deprive either an assessee or the Revenue from the right of an appeal since an appeal against an order passed under section 142 of the CGST Act would not lie to the Appellate Tribunal constituted under the CGST Act.

48. The Division Bench of the Tribunal, while referring the matter to the Larger Bench had observed in paragraph 14.1 that an appeal would lie under section 112 of the CGST Act to the Appellate Tribunal constituted under the provisions of the CGST Act against an order passed under sub-section (3) of section 142 of the CGST Act. As noticed above, an appeal would not lie before the Appellate Tribunal constituted under the provisions of the CGST Act because an appeal lies only against an order passed either under section 107 or section 108 of the CGST Act.

49. In the present case, the service tax was paid under the provisions of Chapter V of the Finance Act and refund was claimed under sub-section (3) of section 142 of the CGST Act, under which the claim was required to be disposed of in accordance with the provisions of the existing law. Therefore, even if the service tax had been deposited by the appellant after 01.01.2017, nonetheless the refund of any amount of the CENVAT credit could be claimed only under sub­section (3) of section 142 of the CGST Act and against this order an appeal will lie to the Tribunal.

50. The reference is, accordingly, answered in the following manner:

An appeal would lie to the Customs, Excise & Service Tax Appellate Tribunal against an order passed under section 142 of the Central Goods and Services Tax Act, 2017.

51. The papers may now be placed before the Division Bench of the Tribunal for deciding the appeal.

(Order pronounced on 21.12.2023)

Notes:

1. the appellant

2. the Finance Act

3. the CENVAT Rules

4. the CGST Act

5. the Excise Act

6. Excise Appeal No. 40630 of 2019 decided on 20.11.2019

7. Service Tax Appeal No. 40147 of 2020

8. 2019 (28) G.S.T.L. 244 (Tri.- Hyd)

9. the Tribunal

10.  2019 (27) G.S.T.L. 216 (Tri.-Chennai)