Refund Denial Over Delayed Cenvat Reversal: CESTAT Terms It Procedural, Allows Claim [Read Order]

The Delhi Bench of Customs, Excise and Service Tax Appellate Tribunal(CESTAT) allowed refund claims filed by the assessee, holding that the delayed reversal of Cenvat credit after the Goods Service Tax(GST) transition was a procedural lapse and did not warrant the denial of the refund.

Forrester Research India Private Limited,appellant-assessee,filed refund claims for three periods,October to December 2016, January to March 2017, and April to June 2017,amounting to ₹14,33,076, ₹15,37,420, and ₹12,68,941.The claims were rejected on the ground that the company had not reversed the Cenvat credit before filing the refund, as required under Notification No. 27/2012-CE(NT) dated 18.06.2012.

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The assessee argued that after the introduction of GST, there was no provision to reverse credit in the Cenvat account, so the amounts were debited in their books instead. They also stated that the credit for January to June 2017 was transferred to TRAN-1 under GST, and they were no longer eligible for it.

The adjudicating authority rejected the claims, and the Commissioner (Appeals) upheld the decision, stating that the conditions of the notification were not met. The assessee then challenged the order before the tribunal.

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The assessee’s counsel stated that after GST was introduced, there was no system to reverse Cenvat credit in the credit ledger, so they reversed it in their books and informed the authorities. Although they had transferred credit to TRAN-1 for January to June 2017, they later reversed it in TRAN-1 as well in June 2018, after filing the refund claims. The counsel referred to Tribunal decisions where refunds were allowed in similar cases.

The department argued that the credit was reversed only after the refund claims were filed, which went against the rule that reversal must happen before claiming the refund. They also said if the claims were filed after the reversal, they would have been time-barred. So, the refund was rightly rejected.

A single member bench of Ashok Jindal(Judicial Member) heard both sides and noted that as per Notification No. 27/2012-CE(NT), refund could be allowed only if Cenvat credit was reversed. In this case, the assessee had reversed the credit in their books and later reversed the amount transferred to TRAN-1 in June 2018. The tribunal treated this as sufficient compliance.

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It held that the delay in reversal was a technical lapse and should not be a reason to deny the refund. The Tribunal referred to past decisions, including Lightspeed India Partners Advisors LLP, Chariot International (P) Ltd., and Sandoz Pvt. Ltd., where similar delays were accepted and refunds were allowed.

The appellate tribunal concluded that the assessee had met the conditions of the notification and was eligible for the refund. It set aside the orders rejecting the claims.

In short the appeal filed by the assessee was allowed.

To Read the full text of the Order CLICK HERE

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