Unjust enrichment not proved: CESTAT sets aside denial of CENVAT Credit [Read Order]

The Customs, Excise and Service Tax Appellate Tribunal (CESTAT), Hyderabad sets aside denial of CENVAT Credit as Unjust enrichment is not proved.

The issue involved herein is denial of refund of Cenvat credit with regard to service tax paid under reverse charge mechanism after 30.06.2017.

The appellant, OSI Systems Pvt Ltd was an assessee under the service tax regime and they migrated to GST regime and they also filed TRAN-1 for taking forward the credit which was lying in their Cenvat credit register. Subsequently, it was pointed out by the Revenue/ audit objection that the appellant is required to pay an amount of Rs.1,71,035/- on account of input services under reverse charge mechanism.

The appellant deposited the said service tax on 01.08.2018. Further, as the appellant could not take credit of this amount in the GST regime, nor they could revise their TRAN-1 form, as time for which it has expired, the appellant filed application for refund as they could not take credit of the same in their Cenvat register under service tax provisions. The adjudicating authority rejected the claim on the ground that there was no statutory provision available under the existing law or in the CGST Act to grant refund. The refund was rejected both on merits as well as on limitation.

A Single Bench consisting of Anil Choudhary, Judicial Member held that “I find that under transitional provision under section 142(3) of CGST Act, the limitation has been done away with and the only thing required for refund under the facts and circumstances is to see whether unjust enrichment is attracted. In the facts and circumstances, I hold that no unjust enrichment is attracted as the appellant have admittedly paid service tax in August, 2018 out of their own pocket. Accordingly, I allow this appeal and set aside the impugned order. The adjudicating authority is directed to grant refund within a period of 60 days from the date of receipt of copy of this order along with interest under section 11BB of the Central Excise Act.”

To Read the full text of the Order CLICK HERE

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