The Hyderabad bench of the Customs Excise and Service Tax Appellate Tribunal (CESTAT) has upheld the rejection of refund in cash for tax paid or credit taken on input, citing the absence of provision for such refunds.
The appellants were engaged in the manufacture of pharmaceutical products and were availing Cenvat credit on account of inputs/input services. Consequent to transition from Central Excise to GST, they filed for refund in cash for an amount of Rs.49, 14,215/-which they could not carry forward in TRAN-1 filed by them under Section 140 of the CGST Act, 2017.
However, they disclosed said input service credit in their revised service tax return for the quarter April to June, 2017 filed by them on 22.09.2017. The refund was filed in terms of provision under Section 142(9)(b) of the Act. Ongoing through the refund claim filed, the department felt that the refund consists of two components viz., the Central Excise input credit amounting to Rs.14,40,627/- and the Service Tax credit component amounting to Rs.34,73,588/-.
The bench found that reliance is being placed on such judgments without appreciating the fact that in this case, the entire issue is regarding refund of input credit in cash in accordance with the statutory provision under the Act viz., Section 142(3). The wordings are quite unambiguous and a plain reading would essentially indicate that if such input credit were otherwise eligible for refund in cash or credit under the erstwhile Central Excise Act, then the same needs to be processed and allowed in accordance with the provisions of Section 142(3) but it does not provide for any independent statutory provision to examine and allow the eligibility of refund on its own without having any reference to the existing law.
Further Relying on the judgment of High Court of Jharkhand in the case of Rungta Mines (supra), Further found that when there was no provision for grant of refund in cash in respect of tax paid/credit taken in respect of such input in the existing law, i.e., the Central Excise Act and Cenvat Credit Rules, 2004, then the refund cannot be granted in cash in respect of such unclaimed/unutilized credit on input. The options available for getting cash refund are clearly covered within the different provisions under the Act viz., Section 140, 142(3) & 142(9)(b). In the instant case, admittedly, neither Section 140 was followed nor Section 142(9)(b) was availed. Therefore, the cash refund, by virtue of Section 142(3) would not be admissible in the facts of the case.
The single member bench of the tribunal comprising A.K Jyotishi (Accountant member) did not find any infirmity in the Order passed by the Commissioner (Appeals), upholding the rejection of refund in cash, amounting to Rs.14,40,627/- by the Original Authority.
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