Refund of unutilised Cenvat Credit cannot be rejected merely on the ground that the same is not Reflected in Service tax Return: CESTAT [Read Order]

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In a recent judgment, the Mumbai bench of the Customs, Excise & Service Tax Appellate Tribunal (CESTAT) has held that refund of unutilised cenvat credit cannot be rejected merely on the ground that the same is not reflected in a service tax return.

Warburg Pincus India Pvt. Ltd, the appellant challenged the order passed by the Commissioner (Appeals), GST and Central Excise, Mumbai-I where the denial of Refund to the extent of Rs. 24,03,260/- was upheld. 

The appellant provides “Banking and other financial services”. They filed two refund claims of RS. 14,44,091/- for the period April 2005 to Dec. 2005 and Rs. 38,44,130/-for the period from January 2006 to September 2006 with the erstwhile Service Tax Commissionerate on the ground that they were not in a position to utilize the cenvat credit of the duty service Tax taken on input services used in providing output services exported without payment of service tax.

Refund of unutilised cenvat credit cannot be rejected merely on the ground that the same is not reflected in the service tax return.  The Appellants have availed the cenvat credit in the books of accounts and the Cenvat credit register maintained.  It was observed that the appellant is eligible to avail of the Cenvat credit of the input services for the period before 14.03.2006 and is eligible toclaim a refund of the unutilised Cenvat credit.

In the case of Serco Global Services Pvt Ltd Vs [2015], it was held that the refund is to be granted based on the Cenvat credit available in the Cenvat Credit Account and not based on the closing balance of Cenvat credit shown in ST-3 Return. Further, the appellant submitted a revised return showing a correct closing balance of Cenvat credit but the same was ignored by the Adjudicating Authority.

 In the case of Jagdamba Polymers Ltd. v. C.C.E., Ahmedabad – 2010 (253), it has been held by CESTAT that omission to reflect the balance in ER 1 return is only a procedural error for which credit cannot be denied when there is no dispute about its eligibility.

A single-member bench comprising of Mr Sanjiv Srivastava, Member (Technical) observed that the refund claim could not have been denied for this reason. It was a stated/ unstated policy which governs the exports of goods or services across the globe that the local taxes should not be exported along with the goods or services exported.  The appeal of the assessee was allowed.

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M/s. Warburg Pincus India Pvt. Ltd vs Asstt. Commissioner

Counsel for Appellant:   Shri Vinay Jain

Counsel for Respondent:   Shri S.B.P. Sinha


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