2024 (5) TMI 523 - AT - Service Tax

Refund of service tax paid on Reverse Charge Mechanism - It is the case of the Department that payment of service tax on RCM availment of CENVAT credit of the same and refund of unutilized credit under Rule 5 are different and are governed by different provisions of law - HELD THAT - On going through the records of the case it appears that having paid the applicable service tax on being pointed out by the audit the appellants have filed the refund claim. 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. Any claim of refund should have some basis for claiming of 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. From the records of the case it is seen that the case does not fall under the category of refund under Rule 5 as a refund claim for the relevant quarter has already been filed and availed by the appellant the fact of which is not denied by them. It is 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 provisions of law do not permit the same. It was for the appellant to pay the applicable service tax in time; to avail CENVAT credit of the same and claim refund under the provisions of Rule 5 as the appellants are engaged in export. 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. The appeal is rejected.

Summary

Issues involved:
The issues involved in this case are the eligibility of the appellants for refund of service tax paid on Reverse Charge Mechanism, the interpretation of Section 142(3) of CGST Act, 2017, and the applicability of CENVAT Credit Rules for claiming refund under Rule 5.

Eligibility for Refund of Service Tax:
The appellants, engaged in providing various services, exported services and paid service tax on Reverse Charge Mechanism in October 2018. The Assistant Commissioner rejected the refund claim stating that there is no provision for refund of tax due to the government. The Commissioner upheld this decision, emphasizing that payment of tax does not automatically entitle to claim credit. The appellants argued that they are eligible for refund based on previous Tribunal decisions supporting refund of tax paid on Reverse Charge.

Interpretation of Section 142(3) of CGST Act, 2017:
The appellants contended that Section 142(3) provides a mechanism for refund under Section 11B of the Central Excise Act, 1944. They argued that any refund claim should be disposed of under existing laws. The Department, however, explained that Section 142(3) does not independently grant the right to claim refund without fulfilling conditions under existing law. Various legal cases were cited by both parties to support their arguments.

Applicability of CENVAT Credit Rules for Refund under Rule 5:
The Department rejected the appellants' claim under Rule 5 of CENVAT Credit Rules, stating that only one claim per quarter can be filed, and the appellants had already availed a refund for a previous period. The Tribunal found that the appellants were trying to combine provisions from different laws and that their claim lacked merit. The Tribunal emphasized that payment of tax, availment of credit, and claiming a refund are distinct processes governed by specific provisions.

Conclusion:
After considering the arguments and reviewing the case records, the Tribunal concluded that the appellants' claim for refund was not admissible. The Tribunal highlighted that the appellants had paid the service tax after being audited and that their claim lacked a valid basis. The Tribunal found that the appellants' attempt to claim a refund under various provisions was not permissible under the law. The appeal was ultimately rejected based on these findings.