Department Cannot Retain RCM Service Tax Without Authority of Law: CESTAT Allows Refund Claim u/s 142(3) [Read Order]

The Customs, Excise & Service Tax Appellate Tribunal (CESTAT), Mumbai has allowed the appeal of appellant, holding that the company is entitled to a cash refund of service tax paid under the Reverse Charge Mechanism (RCM), which could not be transitioned into the GST regime. The Tribunal set aside the order of the Commissioner (Appeals-I), Pune, after noting that Section 142(3) of the CGST Act, 2017 mandates that any amount eventually found refundable must be paid in cash, irrespective of the restrictions under existing law.

Section 142(3) of the CGST Act, 2017 reads as:

“Miscellaneous transitional provisions -

Every claim for refund filed by any person before, on, or after the appointed day, for refund of any amount of CENVAT credit, duty, tax, interest or any other amount paid under the existing law, shall be disposed of in accordance with the provisions of existing law and any amount eventually accruing to him shall be paid in cash, notwithstanding anything to the contrary contained under the provisions of existing law other than the provisions of sub-section (2) of Section 11B of the Central Excise Act, 1944:

Provided that where any claim for refund of CENVAT credit is fully or partially rejected, the amount so rejected shall lapse:

Complete Supreme Court Judgment on GST from 2017 to 2024 with Free E-Book Access, Click here

Provided further that no refund shall be allowed of any amount of CENVAT credit where the balance of the said amount as on the appointed day has been carried forward under this Act.”