TMI Blog2021 (10) TMI 531X X X X Extracts X X X X X X X X Extracts X X X X ..... d the amount on 22.01.2018. Though they were eligible for credit since the time to carry forward the Cenvat Credit to the GST regime had expired on 27.12.2017, the appellant could not follow the procedure to carry the Cenvat Credit to the GST regime. They then applied for refund of the said credit. On bare perusal of Section 142 (8), it can be seen that this sub-section (8) provides for recovery of arrears of tax after the implementation of GST Act, 2017. It deals with the provisions for assessment/adjudication proceedings that are carried out under the erstwhile law after introduction of GST. The section states that in such proceedings for recovery of arrears, the assessee will not be getting the benefit of any input credit for adjustment under GST Act. 2017. In the present case, there is no credit that requires to be adjusted to the GST Act, 2017. The entire tax paid is claimed as credit under the existing law. The sub-section states that input tax credit will not be available under GST Act. It does not say that credit is not eligible under existing law (erstwhile law). This means in consequent to recovery of arrears in assessment/adjudication proceedings no input credit ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct, 2017, the appellant was unable to avail the credit and utilize the credit as admissible under Cenvat Credit Rules, 2004 as amended. The appellant also was unable to transfer the credit to TRAN-1 credit, as the date of filing TRAN-1 had expired on 27/12/2017. They then filed refund claim for ₹ 11,03,876/-. The original authority rejected the refund claim holding that as per Section 142 (8) (a) of the CGST Act,2017, credit is not admissible and therefore not eligible for refund in cash. The appellant preferred appeal before the Commissioner (Appeals), who upheld the order of the original authority. 2, On behalf of the appellant learned Counsel Ms. D. Naveena, appeared and argued. She adverted to paragraph-5 of the impugned order and submitted that the department does not dispute that the appellant is eligible for Cenvat Credit if the service tax was paid on or before 30.06.2017 i.e., before introduction of GST Act, 2017. The refund has been denied resorting to 142(8) (a) of the GST Act, 2017, alleging that the input tax credit is not eligible as the amount is paid as recovery of arrears. She referred to relevant part of Section 142 which reads as under:- Section 14 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... existing law other than the provisions of sub-section (2) of section 11B of the Central Excise Act, 1944 and the amount rejected, if any, shall not be admissible as input tax credit under this Act: Provided 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; (b) every proceeding of appeal, review or reference relating to recovery of CENVAT credit initiated whether before, on or after the appointed day under the existing law shall be disposed of in accordance with the provisions of existing law and if any amount of credit becomes recoverable as a result of such appeal, review or reference, the same shall, unless recovered under the existing law, be recovered as an arrear of tax under this Act and the amount so recovered shall not be admissible as input tax credit under this Act. (7) (a) every proceeding of appeal, review or reference relating to any output duty or tax liability initiated whether before, on or after the appointed day under the existing law, shall be disposed of in accordance with the provisions of the existing law, and if any amount becomes recove ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e spot memo was issued by the audit officers under Rule 22 of the Central Excise Rules, 2002. Hence, there was neither any adjudication nor any recovery so as to demand the payment made by the appellant as recovery of arrears. The present situation falls beyond the scope of Section 142 (8) (a) of GST Act, 2017. 3.2 When the department admitted that the credit is eligible, then the same ought to have been refunded to the appellant as the appellant could not carry forward the credit to TRAN-1. In terms of Section 140 of the GST Act, 2017, the appellant indeed was eligible to transfer the credit as TRAN-1 credit. Only because the last date for availment as TRAN-1 credit falls on 27.12.2017, the appellant was unable to carry forward the Cenvat Credit to the GST regime. The credit then ought to have been refunded in cash. It is submitted by the learned Counsel that availment of eligible credit as TRAN-1 credit has been held to be an indefeasible right in a plethora of cases (a) In the case of Adfert Technologies Pvt. Ltd. Vs UOI and Others. -2020 (32) GSTL 726 (P H), it has been held that transitional credit being a vested right, it cannot be taken away on procedural or technical ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and Others in a writ petition No. 8890/2020 dated 13.07.2020. 5. Heard both sides. 6.1 It is not in dispute that the appellants have been called upon to pay service tax under reverse charge mechanism. During the process of audit it was noticed that they have made certain foreign remittances and that they are liable to pay service tax for the input services received from their parent company. Consequently, they are eligible for credit. However, the said omission or default for not paying the tax under the reverse charge mechanism came to the knowledge of the appellant only after the Audit Officers pointed out the same. They immediately paid the amount on 22.01.2018. Though they were eligible for credit since the time to carry forward the Cenvat Credit to the GST regime had expired on 27.12.2017, the appellant could not follow the procedure to carry the Cenvat Credit to the GST regime. They then applied for refund of the said credit. The discussion of the Commissioner (Appeals) in this regard is noteworthy and reproduced as under:- 5. The appellants have also claimed that to deny input tax credit such amount should have been recovered as an arrear of tax under CGST Act, 201 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... any arrears to be recovered under the existing law, the same can be recovered by invoking the transitional provisions of the GST Act, however, input tax credit will not be admissible under the GST Act, The ingredients of Section 142 (8) (a) is as under:- a) Amount of tax is recoverable consequent to an assessment or adjudication proceedings; b) Such amount has not been recovered under the existing law;(erstwhile law) c) Such amount can be recovered as an arrear of tax under CGST Act, 2017. d) On the amount so recovered, input tax credit will not be admissible under the CGST Act, 2017. 6.3 Further, as rightly argued by the learned Counsel for the appellants, the above provision deals with recovery of arrears under the erstwhile law after implementation of CGST Act, 2017. In the present case, there is no assessment/adjudication tax as contemplated under the provisions of the erstwhile law. The appellant has paid the tax when pointed out by the Audit Officers. Such payment does not fall under recovery of arrears of tax by an assessment or adjudication proceedings. The sub-section (8) to Section 142 only means that after assessment or adjudication proceedings if an ass ..... X X X X Extracts X X X X X X X X Extracts X X X X
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