‘Input’ vs ‘Input Service’ Mismatch in ST-3 Return a Harmless Error: CESTAT Allows Cenvat Credit Refund u/s. 142(9)(b) [Read Order]

The Customs, Excise & Service Tax Appellate Tribunal, Delhi, held that a mismatch between ‘input’ and ‘input service’ entries in an ST-3 Return is a clerical error and cannot defeat a legitimate refund claim filed under Section 142(9)(b) of the Central Goods and Services Tax Act (CGST Act), 2017.

Punjab National Bank (PNB) filed its original ST-3 Return for April to June 2017 showing a nil Cenvat Credit balance. A revised return filed on 19.09.2017 reflected closing credit of ₹2,61,589, which prompted the bank to submit a refund claim under Section 142(9)(b) of the CGST Act, 2017.

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The bank later revised the ST-3 Return again, declaring an additional ₹32,599. This second figure was carried forward in TRANS-1, but the amount of ₹2,61,188 though shown as an outstanding balance in the revised return was not carried forward. During verification, the Range office issued a discrepancy notice pointing out that the ST-3 Return showed Cenvat Credit on ‘inputs’, while the supporting invoices showed credit of service tax paid on ‘input services’.

The adjudicating authority rejected the refund claim citing mismatches, and the Commissioner (Appeals) upheld the order. PNB then approached the Tribunal.

Represented by Gunjan Goel, the appellant argued that the substantive entitlement to refund was already settled in its favour by multiple earlier Tribunal decisions in its own cases. It was contended that Section 142(9)(b) of the CGST Act, 2017 expressly grants a cash refund where a revised return increases the closing balance of Cenvat Credit.

The appellant submitted that the mismatch between ‘inputs’ and ‘input services’ in the ST-3 Return was a clerical mistake and did not alter the underlying nature of the credit, which related to audit fee, an input service. It was further argued that non-carry-forward of the credit in TRANS-1 does not bar a refund claim.

Represented by Rohit Issar, the Department argued that the appellant claimed Cenvat Credit on ‘inputs’ in the ST-3 Return but produced invoices for ‘input services’, which created a mismatch. It was contended that such discrepancies justified the rejection of the claim, and the findings of the lower authorities were reiterated.

Justice Binu Tamta, Judicial Member, observed that the issue of entitlement under Section 142(9)(b) of the CGST Act, 2017 was already settled in favour of the appellant through judicial decisions. The provision clearly permits a cash refund where a revised return enhances the closing balance of Cenvat Credit.

The Bench held that not carrying forward the amount in TRANS-1 cannot be used to deny the refund, noting the Tribunal’s earlier ruling that an assessee may choose the more beneficial option available under law.

In assessing the mismatch, the Tribunal found that the credit amount of ₹2,61,589 was clearly reflected in invoices relating to audit fees. The description of the entry as ‘input’ in the ST-3 Return, instead of ‘input service’, was deemed a harmless clerical error. The Tribunal ruled that the appellant had genuinely availed the credit, and the minor reporting lapse did not impact the merits of the refund entitlement.

Since that the appellant is a nationalised bank and no mala fide intent could be attributed, the Tribunal held that denial of refund was unwarranted. The impugned order was therefore set aside, and the appeal allowed with consequential relief.

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