The Hyderabad bench of the Customs Excise and Service Tax Appellate Tribunal ( CESTAT ) has ruled that refund under Section 11B of the Central Excise Act is not applicable if the taxpayer was unable to utilize Cenvat credit.
The appellants, M/s Cyient Ltd., are engaged in providing services of “Consulting Engineer”, “Survey and Map Making” and “Information Technology and Software Services”; the appellants export services; audit of the unit was conducted during June to October 2017,the appellants had paid an amount of service tax of Rs.13,71,280/- on Reverse Charge Mechanism in October 2018 before issuance of show-cause notice and have applied for refund of the same claiming refund under Rule 5 of CENVAT Credit Rules, 2004.
The Assistant Commissioner vide OIO dated 31.07.2019 rejected the refund holding that the appellants paid service tax under the provisions of Section 68 (2) of Finance Act, 1994 and as per Section 11B, there is no provision of refund of tax which was due to the government and that in terms of Notification No.27/2012-CE (NT) only one claim is to be filed for every quarter and that the appellants have already availed refund claim in respect of 2016-17 and 2017-18.
Mrs. Shital Rampuria, representing the appellants, submitted that Section 142(3) of CGST Act, 2017 provides a mechanism for refund under Section 11B of the Central Excise Act, 1944; Commissioner failed to appreciate that refund of any tax pertaining to the erstwhile regime should be disposed in accordance with the provisions of the erstwhile laws and any amount found eligible should be refunded in cash; learned Commissioner has not appreciated the facts of the case and the legal provisions on the refund claim filed by them under Section 11B of Central Excise Act, 1944.
Mr,Pawan Kumar, representing the department explained the provisions of Section 142(3) of CGST Act, 2017 and submits that the Section clearly indicates that every refund claim has to be disposed of under the provisions of existing law only; Section 142(3) does not independently provide appellant a right to claim refund of any unutilized CENVAT credit without fulfillment of conditions prescribed under existing law.
The bench observed that If the appellants are seeking refund of service tax under Section 11B of Central Excise Act, 1944, they have to satisfy the conditions of Section 11B which provides for refund of any duty. It is not clear as to why the appellants have claimed refund of duty; it is not duty which is paid in excess or under mistaken notion of law.
Further considered opinion that any claim of refund should have some basis for claiming the same. The claim of the appellants appears to be that they have paid service tax on Reverse Charge Mechanism; they are eligible to avail CENVAT credit of the same and as they are not in a position to avail and utilize the credit, they are seeking refund under Section 142(3)of CGST Act, 2017.
It was found that the appellant is attempting to compress various provisions relating to refund under Central Excise Act, 1944; CENVAT Credit Rules 2004 and CGST Act 2017.The appellants have paid duty on being pointed out after the implementation of GST. Thus, their claim of refund of unutilized credit has no merit. As the service tax cannot be held to have been paid without sanction of law, the appellants are also not eligible for refund of service tax as such.
Further, the single member bench of the tribunal comprising P. Anjani Kumar (Technical member) held that no refund can be sanctioned under Section 11B if the assessee was unable to utilize Cenvat credit on account of closure of the manufacturing activities. Further find that the cases relied upon by the appellant are not of any help as the facts of the cases are different. Accordingly, the appeal was rejected.
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