The Delhi Bench of Customs, Excise and Service Tax Appellate Tribunal (CESTAT) has held that action of the GST department in refund claim rejection citing limitation is harsh.
The bench of Binu Tamta (Judicial Member) has observed that the rejection of the refund claim on the ground of limitation is erroneous and is unsustainable also, where the appellant was eligible to carry forward/transit the Canvat Credit under the transitional provisions of Section 140 of CGST Act.
The appellant/assessee is engaged in the manufacture of Insecticides, Rodenticides, Fungicides, Herbicides, Anti-Sprouting products and Plant Growth Regulators, Disinfectant.
On the basis of reverse charge mechanism, they deposited the service tax amounting to Rs.2,67,659/- under the existing law of service tax and were entitled to avail the benefit of the Cenvat credit of the said amount under the Cenvat Credit Rules, 2004. Since the Credit Rules, 2004 were replaced by the Central Goods and Service Tax Act, 2017, the appellant could not take the Credit.
The remaining balance of the credit along with the tax paid on services received in June 2017, but accounted for in the month of July 2017, they carried forward the same through TRANS- I Form under section 140 of the CGST Act, 2017.
Scrutiny of the TRNS-I records, it was observed that the appellant had wrongly carried forward/transitioned the Cenvat Credit amount as an Input Tax Credit on the basis of GAR–7 challan of service tax deposited under reverse charge after 7.07.2017 in TRANS-I.
A Show cause notice was served on the appellant raising the demand of Rs.2,67,659/-. The appellant filed the refund claim of the said amount on 23.09.2021 under Section 11B of the Central Excise Act 1944, as the samount was available as a credit but could not be availed due to introduction of GST regime.
Both the Adjudicating Authority and the Appellate Authority rejected the refund claim on the ground of limitation under Section 11B as the service tax was deposited on 28.08.2017, whereas the refund claim has been filed on 23.09.2021 and also that the appellant has not submitted the documentary proof as regards unjust enrichment.
The tribunal held that the refund claim filed by the appellant has been rejected on the ground of limitation as prescribed under Section 11B of the Excise Act, which is unsustainable in view of the discussion above. The appellant had rightly availed the Input Tax Credit in the Tran-I Form, however, the benefit thereof was wrongly denied.
Case Details
Case Title: M/s. Advance Micro Fertilizers Pvt.Ltd. Versus Commissioner of Central Excise And CGST
Case No.: Excise Appeal No.55480 of 2023
Date: 10.01.2025
Counsel For Appellant: Priyanka Goel
Counsel For Respondent: M.K. Chawda
