The Delhi High Court has directed the assessee to file transitional credit as their claim of cash refund of Cenvat Credit was rejected by the CESTAT and the GST department on ground that the same was barred by limitation.
A division bench comprising Justice Vibhu Bakhru and Justice Purushaindra Kumar Kaurav was considering a petition by Emerson Process Management Power & Water Solutions India Pvt. Ltd. the petitioner’s request was rejected for the reason that it had not filed the GST TRAN-1 within the stipulated period. The communication also mentioned that the petitioner’s request for cash refund of the input tax credit was rejected by Customs Excise and Service Tax Appellate Tribunal (CESTAT).
The department contended that the petitioner is not entitled for carrying forward its input tax credit in the GST regime for the reason that its claim for cash refund has been rejected. It was also argued that Section 142(3) of the Central Goods and Services Tax Act, 2017 expressly provides that where a claim for refund of CENVAT credit has been rejected, the amount so rejected would lapse.
Allowing the writ petition, the Court observed that “In the present case, the petitioner’s request for refund of CENVAT credit in cash was rejected for the reason that it was filed beyond the period of limitation. The petitioner submits that although it was no longer entitled to receive cash equivalent to the CENVAT credit in its account, it was nonetheless entitled to utilize the same for the specified purpose. He submits that in the circumstances, the proviso to Section 142(3) of the Act must be read in a restrictive manner, to only apply in cases where the claim for cash refund of CENVAT credit has been rejected on merits and not on the ground of limitation. He submits that it is well settled that limitation would bar a particular remedy but does not extinguish a right.”
“The period of two months was subsequently extended by another order dated 02.09.2022 and the window for filing the necessary forms is now open till 30.11.2022. A plain reading of the aforesaid directions also indicates that the concerned officer has been given 90 days to verify the veracity of the claims / transitional credit and to pass appropriate orders on merits after granting the reasonable opportunity to the parties concerned,” the Court said.
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