Follow Us :

Case Law Details

Case Name : Indo Tooling Pvt. Ltd. Vs Commissioner, Central Goods and Service Tax (CESTAT Delhi)
Appeal Number : Excise Appeal No. 50204 of 2020-SM
Date of Judgement/Order : 09/03/2022
Related Assessment Year :

Indo Tooling Pvt. Ltd. Vs Commissioner, Central Goods and Service Tax (CESTAT Delhi)

CESTAT finds that payment of service tax including the cess relating to the period prior to 30.06.2017, paid in the year 2018 during the GST regime, amounts to payment in accordance with law as the same has been paid on the insistence by the Department – audit objection. I further find that the demand pursuant to audit is also bad as the appellant was entitled to cenvat credit being a manufacturer of dutiable items, and as such the situation is revenue neutral. Further, the appellant under the erstwhile Cenvat Credit Rules was entitled to cenvat credit of the said amount. Further, in view of the provisions of Section 142(3) of CGST Act, 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, 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 (unjust enrichment). Further, Section 142(8)(a) provides that in pursuance of an assessment or adjudication proceedings instituted, whether before, on or after the appointed day, under the existing law, any amount of tax, interest, fine or penalty becomes recoverable from the person, the same shall, unless recovered under the existing law, be recovered as an arrear of tax under the CGST Act and the amount so recovered shall not be admissible as input tax credit under this Act. Further, sub-section (5) of Section 142 of the CGST Act provides that every claim filed by a person after the appointed day for refund of tax paid under the existing law in respect of services not provided 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 under the provisions of existing law other than the provisions of sub-section (2) of section 11B of the Central Excise Act, 1944 (unjust enrichment).

 Thus, from a conjoint reading of sub-section (3), (5) and (8)(a) of the CGST Act, it is evident that an assessee is entitled to claim refund of service tax under RCM paid after the appointed day under the existing law and such claim has to be disposed of according to the provisions of the existing law. As the appellant was entitled to cenvat credit of the said amount of Rs. 9,85,827/-, which is now no longer available due to GST regime, they are entitled to refund of the said amount.

FULL TEXT OF THE CESTAT DELHI ORDER

The issue in this appeal is whether the Court below have rightly rejected the refund claim filed by the appellant for Rs.9,85,827/- relating to the demand of service tax for the period 2012-13 to 2016-17, which was deposited under reverse charge mechanism, pursuant to audit objection, paid on 08.08.2018.

2. Brief facts of the case is that the appellant is having Central Excise Registration as they were engaged in the manufacture of ‘Dies and Tools, Doors and others’ falling under Chapter Heading No. 82073000 &73083000 of Central Excise Tariff Act, 1985. They are also having Service Tax registration for ‘works contract service’, Manpower supply service & Repair and maintenance services for payment of tax under Reverse Charge Mechanism (RCM).

3. An audit objection was raised relating to the period 2012-13 to 2016-17, it was pointed out that the appellant failed to include the amount of PF in the assessable value for the purpose of service tax payment on ‘Manpower Supply Agency Service’, which was payable under reverse charge mechanism and thus they have short paid the service tax. As the appellant was manufacturing and clearing dutiable finished goods they were entitled to taking of cenvat credit of the input service. However, the appellant deposited the tax amount of Rs. 9,85,827/-including cess as pointed out by the audit, and intimated to the Department by letter dated 28.03.2018. As the cenvat credit under Cenvat Credit Rules was no longer available to implementation of GST regime w.e.f. 01.07.2017, the appellant filed refund claim for the said amount of Rs. 9,85,827/- on 08.08.2018.

4. The refund claim was adjudicated vide order-in-original dated 20.08.2019 and the claim was rejected, it was held that in the instant case tax has been deposited correctly and not in excess. Therefore, refund of tax under Section 11B of the Act is not admissible.

5. Being aggrieved, the appellant appeared before the Commissioner (Appeals) who vide impugned order-in-appeal held that no proceeding of adjudication was initiated either before or after the appointed day. The case of the appellant is that they have paid the service tax under RCM after 01.07.2017, which was admissible to them as cenvat credit, however, becoming eligible for cenvat credit due to payment of duty on their own is different than cenvat credit becoming admissible in pursuant to proceeding of appeal review or reference. Accordingly, the provisions of Section 142(6)(a) of the CGST Act are not applicable for sanctioning of refund. Further, Section 142(8) of CGST provides for refund of amount becoming due in pursuance of an assessment or adjudication proceedings instituted before or after the appointed day. It was also held that the transitional provision of CGST Act do not provide for cenvat credit of cess and hence refund of Rs. 40,381/-is inadmissible.

6. Being aggrieved, the appellant is before this Tribunal.

7. Heard the parties and perused the record.

8. Having considered the rival contentions, I find that payment of service tax including the cess relating to the period prior to 30.06.2017, paid in the year 2018 during the GST regime, amounts to payment in accordance with law as the same has been paid on the insistence by the Department – audit objection. I further find that the demand pursuant to audit is also bad as the appellant was entitled to cenvat credit being a manufacturer of dutiable items, and as such the situation is revenue neutral. Further, the appellant under the erstwhile Cenvat Credit Rules was entitled to cenvat credit of the said amount. Further, in view of the provisions of Section 142(3) of CGST Act, 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, 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 (unjust enrichment). Further, Section 142(8)(a) provides that in pursuance of an assessment or adjudication proceedings instituted, whether before, on or after the appointed day, under the existing law, any amount of tax, interest, fine or penalty becomes recoverable from the person, the same shall, unless recovered under the existing law, be recovered as an arrear of tax under the CGST Act and the amount so recovered shall not be admissible as input tax credit under this Act. Further, sub-section (5) of Section 142 of the CGST Act provides that every claim filed by a person after the appointed day for refund of tax paid under the existing law in respect of services not provided 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 under the provisions of existing law other than the provisions of sub-section (2) of section 11B of the Central Excise Act, 1944 (unjust enrichment).

Assessee entitled to claim refund of service tax paid under RCM after 30.06.2017

9. Thus, from a conjoint reading of sub-section (3), (5) and (8)(a) of the CGST Act, it is evident that an assessee is entitled to claim refund of service tax under RCM paid after the appointed day under the existing law and such claim has to be disposed of according to the provisions of the existing law. As the appellant was entitled to cenvat credit of the said amount of Rs. 9,85,827/-, which is now no longer available due to GST regime, they are entitled to refund of the said amount.

10. In view of my findings hereinabove, I allow this appeal and set aside the impugned order. I further direct the Adjudicating Authority to grant refund of the said amount to the appellant within a period of 45 days from the date of receipt of copy of this order alongwith interest as specified under Section 11BB of the Central Excise Act. Thus, the appeal is allowed.

(Operative part of order pronounced in open Court)

Join Taxguru’s Network for Latest updates on Income Tax, GST, Company Law, Corporate Laws and other related subjects.

Leave a Comment

Your email address will not be published. Required fields are marked *

Search Post by Date
March 2024
M T W T F S S
 123
45678910
11121314151617
18192021222324
25262728293031