Muthoot Finance Limited Vs Union of India (Kerala High Court)
The case before the Kerala High Court concerned a writ petition filed by a public limited company engaged in financing activities against the rejection of its refund claim relating to unutilized cess credits.
The petitioner had paid Service Tax along with Education Cess (EC), Secondary and Higher Education Cess (SHEC), and Krishi Kalyan Cess (KKC) for the period April 2017 to June 2017. Following the introduction of the GST regime after the 101st Constitutional Amendment, the petitioner believed that unutilized credits relating to these cesses could be transitioned into GST under Section 140 of the CGST Act.
However, a retrospective amendment to Section 140 introduced the concept of “CENVAT credit of eligible duties,” effectively excluding cess amounts such as EC, SHEC, and KKC from being carried forward. The petitioner, relying on judicial precedent, reversed the transitional credit earlier claimed and subsequently filed a refund claim under Section 142(3) of the CGST Act, amounting to ₹1,57,53,287.
This refund application was rejected by the competent authority as time-barred under Section 11B of the Central Excise Act, 1944, as applicable to Service Tax. The petitioner also filed an alternative refund application under Section 54 of the CGST Act, to be considered if the earlier claim failed.
