Case Law Details
NIIT Limited Vs Commissioner, CGST (CESTAT Delhi)
Transitional provision of Section 142(3) of CGST Act provides that every claim of refund filed by the person after the appointed day (30.06.2017) 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 the existing law and any amount eventually accruing to assessee shall be paid in cash, subject to passing of the bar of unjust enrichment, the limitation under the existing law have been done away with.
CESTAT find that under the transitional provision Section 142 of CGST Act, limitation have been done away with for the purpose of refund arising under the existing law. I further find that appellant have demonstrated during the course of hearing by producing extracts from their accounts maintained on SAP system, wherein they have demonstrated that they have debited the invoices which were raised and no service was provided, and have also demonstrated the copies of credit notes issued to their customers. I further find that in the facts and circumstances, appellant have not taken any credit in their accounts, nor claiming transition refund by through Form TRAN-1 through GST regime. Further, I further find that appellant have passed the bar of unjust enrichment, as under the facts and circumstances they have not passed on any credit to their customers which is duly certified by their Chartered Accountant. Accordingly, I allow this appeal and set aside the impugned order. The Adjudicating Authority is directed to grant the refund within a period of 45 days from the date receipt of copy this order alongwith interest as per rules.
FULL TEXT OF THE CESTAT DELHI ORDER
This appeal has been filed against rejection of refund claim of Rs. 19,73,966/- of Service Tax.
2. The appellant NIIT Ltd. was registered with service tax department for providing the taxable services. During the period, January 2017 to June 2017, they issued certain invoices for services to be provided to their clients. The appellant had deposited the service tax as service tax was payable on accrued basis on raising of invoice. Thereafter, the conciliation of the accounts was done during the period October 2017 to December 2017 for the purpose of finalisation and filing of annual returns and/or periodical returns, the appellant found that although they raised the invoices and deposited the tax, but no actual services was provided to their clients. Accordingly, the appellant passed reverse entries in their books of accounts reversing the invoices raised alongwith the service tax. They, accordingly, issued credit notes to the clients and also refunded amount to the clients who had already paid though service was never provided to them. The appellant filed refund claim manually on 06.02.2018. In the said application, appellant mentioned that in spite of their best efforts, they could not file the refund application online during the previous few days due to malfunctioning or non-functioning of the portal of the department, claiming refund of Rs. 19,73,966/- relating to invoices raised during January 2017 to June 2017 which have been reversed during October 2017 to December 2017. Alongwith the refund application, the appellant enclosed copy of their service tax return for the period October 2016 to March 2017 and April 2017 to June 2017. The appellant also enclosed copy of challans by which they have deposited the service tax during January 2017 to June 2017 totalling Rs. 19,73,966/-, it was categorically mentioned that appellant have not recovered the service tax from their client, but the tax amount was deposited.
3. Pursuant to filing of refund application, show cause notice dated 16.10.2020 was issued proposing to disallow the refund claim on the ground of limitation and also directed to produce certain documents in support of the refund application. The appellant appeared before the Adjudicating Authority and filed their detailed reply dated July 30, 2021 and also enclosed their financial statements i.e. balance sheets alongwith the breakup of the amount of refund. They also submitted copies of Form 26AS and a copy of bank statement evidencing refund of amount to the clients from whom the amount were collected, details of invoices and credit notes, copy of the invoices and credit notes, reconciliation of service tax payable as per return and financial statement, also filed self certified copy of Annexure-A certifying that the amount of service tax refund claimed has not been passed on directly or indirectly to any other person. The appellant also certified that so far the invoices raised to business concerns, they had not accepted the invoice and as such there was no question of them taking any credit, and so far the individual consumers are concerned they were not entitled to take any service tax credit, appellant also enclosed copy of Chartered Accountant certificate, certifying that the amount refundable is in accordance with the books of accounts as per the records maintained and the appellant have not passed on any Cenvat credit in respect of such refundable amount.
4. The refund application was adjudicated on contest and the Assistant Commissioner was pleased to reject the refund claim of Rs. 1,23,255/- on the ground of limitation, observing that the refund claim is filed on 06.02.2018 and tax for the month of January 2017, which was deposited by challan on 06.02.2017 had become time barred on 05.02.2018. It was further observed that appellant have issued credit notes during financial year 2017-18 in respect of all invoices for which refund claim have been filed and have also submitted financial statements for the financial year 2017-18, 201819 & 2019-20, wherein the refund amount has been shown as amount receivable in the balance sheet. It was further observed that as the appellant have shown the amount refundable under the head “other liability schedule’ and it is not understandable and the refund is liable for rejection, further observed that credit notes have been issued in both cases after six months from the date of invoice during the GST regime. Hence, there is possibility that customer of appellant might have utilised service tax credit or passed on the same through TRAN-1. To avoid such possibility, the appellant customers should have issued debit notes against such refund receipts. Thus, there is doubt as to the bar of unjust enrichment and accordingly, the refund is liable for rejection. It was further observed that appellant have also claimed refund of Krishi Kalyan Cess (KKC) Rs. 65,799/- and Swachh Bharat Cess (SBC) Rs. 65,799/-. Further observed, as per returns for January 2017 to June 2017, Appellant have availed credit of KKC in the month of June 2017 and utilised the amount of KKC Rs. 9,28,343/- for payment of KKC liability in the month of June, 2017. There is restriction being credit of KKC and SBC can be utilised only for payment of KKC/SBC. Further observed that KKC & SBC are not being eligible under GST and transfer of such credit is also not allowed through TRAN-1 to GST regime. Thus, refund of KKC and SBC is not admissible and is liable for rejection.
5. Being aggrieved, the appellant preferred appeal before learned Commissioner (Appeals) who vide impugned order have been pleased to reject the appeal agreeing with the findings in the Order-in-Original.
6. Being aggrieved the appellant is before this Tribunal.
7. So far, the first issue of limitation is concerned, learned Counsel for the appellant urges that rejection of part of refund being tax deposit on 06.02.2017, on limitation is bad as the transitional provision of Section 142 (3) of CGST Act provides that every claim of refund filed by the person after the appointed day (30.06.2017) 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 the existing law and any amount eventually accruing to assessee shall be paid in cash, subject to passing of the bar of unjust enrichment, the limitation under the existing law have been done away with.
6. So far the issue of verification of duty receivable shown in financial statement/balance sheet, the same have been properly shown in the balance sheet as tax receivable and duly certified by Chartered Accountant and thus, rejection on this ground is basically due to misreading or failure on the part of the court below to read the statement properly.
7. So far, the ground of rejection on the issue of debit note is concerned, admittedly, appellant have not provided the service for which invoice was raised and then reversed. Further, appellant have admittedly reversed the invoice in their books of account, during the period of October to December 2017 and have also issued credit notes to the commercial concerns as well as to the individual customers. Further admittedly, appellant have also refunded the amount received from the customers who had already made payment for which no service was provided. Further, as the other business concerns on whom the invoice is raised had not accepted the invoice which was raised before providing service, they did not issue any debit note and there was no question of taking credit in their books under the circumstances. So far the individual customers are concerned, being not registered with the department, they are not entitled to take any Cenvat credit. Thus, the observations of court below that in absence of any documentary evidence (debit notes), it could not be ascertained if such customers have taken credit and/or utilised the same or may have taken benefit of transition to GST regime, is bad and without any basis.
8. Further, under facts and circumstances, appellant have passed the bar of unjust enrichment. Further, appellant was not entitled to take any transition credit by filing TRAN-1 of the output tax paid and declared in the returns, as no such credit on this account was existing in their Cenvat credit account on 30.06.2017. Accordingly, he prays for allowing the appeal with consequential benefits.
9. Learned AR for revenue relies on the impugned order.
10. Having considered the rival contentions, I find that under the transitional provision Section 142 of CGST Act, limitation have been done away with for the purpose of refund arising under the existing law. I further find that appellant have demonstrated during the course of hearing by producing extracts from their accounts maintained on SAP system, wherein they have demonstrated that they have debited the invoices which were raised and no service was provided, and have also demonstrated the copies of credit notes issued to their customers. I further find that in the facts and circumstances, appellant have not taken any credit in their accounts, nor claiming transition refund by through Form TRAN-1 through GST regime. Further, I further find that appellant have passed the bar of unjust enrichment, as under the facts and circumstances they have not passed on any credit to their customers which is duly certified by their Chartered Accountant. Accordingly, I allow this appeal and set aside the impugned order. The Adjudicating Authority is directed to grant the refund within a period of 45 days from the date receipt of copy this order alongwith interest as per rules.
(order dictated in the open Court)
