Madura Micro Finance Ltd. Vs Commissioner of GST & Central Excise (CESTAT Chennai)
Summary: The Customs, Excise & Service Tax Appellate Tribunal, Chennai allowed the appeal filed by Madura Micro Finance Ltd. against rejection of its refund claim concerning Service Tax paid under the Reverse Charge Mechanism. The appellant, a non-banking financial company, had paid Rs.40,13,483/- towards Service Tax following audit objections for April 2012 to June 2017, including Rs.20,11,196/- under reverse charge. It claimed 50% of the latter amount, i.e. Rs.10,05,598/-, as eligible CENVAT credit/refund after being unable to avail or carry forward the credit into the GST regime. The Department rejected the claim by invoking Rule 9(1)(bb) of the CENVAT Credit Rules, 2004. The Tribunal held that Rule 9(1)(e), and not Rule 9(1)(bb), was the relevant provision because the appellant had paid Service Tax under reverse charge and the prescribed document was a challan evidencing payment by the person liable to pay Service Tax. Relying on Polygenta Technologies Ltd., the Tribunal held that Rule 9(1)(bb) concerned supplementary invoices, bills or challans issued by a provider of output service and could not be applied to deny credit to a recipient paying tax under reverse charge. On transition into GST, the Tribunal found that Section 142 of the CGST Act, 2017 permitted the eligible amount to be refunded in cash where the credit could not be availed after the GST regime commenced. It noted that the Service Tax was paid on 18.12.2017, after GST came into force, and that the appellant had applied within the stipulated period for TRAN-1 credit. No fraud, collusion, wilful misstatement, suppression or intent to evade Service Tax had been alleged through a show cause notice. The Tribunal therefore held that the rejection on the ground of non-declaration in Service Tax returns was hyper-technical. It also relied on Adfert Technologies Pvt. Ltd. and the Supreme Court order concerning Adfert Technologies in support of the principle that transitional credit could not be denied on procedural or technical grounds. The impugned order was set aside and the appeal was allowed with consequential relief, as per law.
