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credit as the Central Goods and Services Tax Act, 2017 had come into force w.e.f. 01.07.2017 and the CENVAT Rules stood repealed.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
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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).
