TMI Blog2022 (1) TMI 744X X X X Extracts X X X X X X X X Extracts X X X X ..... RAS HIGH COURT] hold that the assessee was not entitled to carry forward and set off of unutilized Education Cess, Secondary Higher Education Cess and Krishi Kalyan Cess against the GST output liability with reference to explanation 3 in Section 140 of CGST Act of the CGST Act, 2017. Further, it is observed that there is no explicit provision has been provided under Section 54 of CGST Act, 2017 for refund of such credit. From the provision of GST Law as well as in the light of the above Hon ble Madras High Court judgment it is abundantly clear that once transition of cesses to GST credit ledger is held as inadmissible, as natural corollary, cash refund of the same would also not be permissible. The issue whether the balance of credit of cesses was liable to be refunded or not, was also raised in case of BANSWARA SYNTEX LTD. VERSUS THE COMMISSIONER, CENTRAL EXCISE SERVICE TAX [ 2018 (10) TMI 1064 - RAJASTHAN HIGH COURT] before the Hon ble Rajasthan High Court wherein also given the answered in negative. In view of the provision of Section 140 (explanation 3 of the said section), Section 54 of the CGST Act, 2017 and various judgments in favour of the department, it is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... -2019 - w.e.f. 1-7-2017, Cesses credit cannot be carry forwarded through Tran-1 which is reproduced as below : For removal of doubts, it is hereby clarified that the expression eligible duties and taxes excludes any cess which has not been specified in Explanation 1 or Explanation 2 and any cess which is collected as additional duty of customs under sub-section (1) of section 3 of the Customs Tariff Act 1975 (51 of 1975). From the above, the refund claim appears inadmissible in case of Cesses which was carry forwarded in Tran-1. (2) As per the (1) proviso of Section 54(3) of CGST Act, 2017, no refund of unutilized input tax credit shall be allowed in the cases other than - (i) zero-rated supplies made without payment of tax : (ii) where the credit has accumulated on account of rate of tax on inputs being higher than the rate of tax on input supplies (other than nil rated or fully exempt supplies), except supplies of goods or services or both as may be notified by the Govt. on the recommendation of the Council. As the taxpayer has filed refund of reversal of ITC in any other category and refund claim is allowed in case of u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nation (3) to Section 140 of CGST Act is not relevant in the present case : (A.1) The impugned Order has alleged that since the credit of cesses could not have been carried forward through Tran-1 in terms of Explanation (3) to Section 140 of the CGST Act, 2017 as inserted vide Notification No. 2/2019-Central Tax, dated 29-1-2019 (with retrospective effect from 1-7-2017), the refund claim filed by the appellant of such cesses is also inadmissible. The impugned order has also alleged that since the credit is not allowed to be carried forward through Tran-1 and hence, the appellant has reversed the credit through the return filed for the period of August, 2018. The relevant text of the Order is reproduced hereinbelow for your kind reference : ... 4.4 I further found that as per explanation (3) of section 140 of CGST Act, 2017 which was inserted vide the Central Goods and Services Tax Amendment Act, 2018 read with Notification No. 2/2019-Central Tax, dated 29-1-2019- w.e.f. 1-7-2017, credit of cesses cannot be carry forwarded through Tran-1. Thus, the said credit taken by them was reversed in Input Credit Ledger in August, 2018 through GSTR-3B Return. 4.5 Further, the claima ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ry and Higher Secondary Education Cess and Krishi Kalyan Cess earned by the appellant during the material period has never been taken back by the legislature. Once, the benefit has not been explicitly withdrawn by the legislature, the proposal made in the impugned order to refuse to refund claim of such cess credit reversed by the appellant is improper and liable to be rejected outrightly. (A.5) The appellant submits that the Government inserted explanation (3) to Section 140 of CGST Act, 2017 wherein it sought to explicitly exclude any cesses to be carry forwarded in GST regime. In light of the above notification, the appellant on its own account, reversed the credit of such cesses in its return filed for the period of August, 2018. However, it is pertinent to note here that the Department never proceeded against the appellant for transition of such cess credit to GST Electronic credit ledger and therefore there is no occasion on its part to deny its refund arising out of reversal thereof by the appellant. The appellant further submits that the subject refund cannot be denied unless there is a specific provision which would debar such refunds to the appellant. (A.6) In vi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re eligible to be utilised for the payment of duty on the domestic clearances but the same could not be utilised as the said cesses could not be carry forwarded to GST regime. Thus, these credits were validly earned and suddenly became unutilisable due to transition to GST and hence, in the referred case, the appellant had sought refund of the accumulated cesses under the provisions of old regime. The Hon ble CESTAT in the said case relied upon the judgment of M/s. Eicher Motors Limited v. Union of India - 1999 (106) E.L.T. 3 (S.C.) [attached as Exhibit 4] while passing its decision in favour of the appellant. The relevant extracts of the judgments are given below for your reference : ... 2. He further relied upon Hon ble Supreme Court judgment in the case of Eicher Motors v. UOI [1999 (106) E.L.T. 3 (S.C.)] that the right to credit becomes a vested and duly crystallized right in favour of assessee the moment input goods/services are received and by virtue of assessee paying the duty thereon by reimbursing the said amounts to the supplier of goods. Para.-5 Thus the assessees became entitled to take the credit of the input instantaneously once the input is received in the fac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hold that the rule cannot be applied to the goods manufactured prior to 16-3-1995 on which duty had been paid and credit facility thereto has been availed of for the purpose of manufacture of further goods. 4. We have carefully gone through the rival arguments. There is no dispute that on 1-7-2017, the cesses credit validly stood in the accounts of the assessee and very much utilizable under the existing provisions. The appellants could not carry over the same under the GST regime. Thus the appellants were in a position where they could not utilize the same. We agree with Learned Counsel of the appellant that the credits earned were a vested right in terms of the Hon ble Apex Court judgment in Eicher Motors case and will not extinguish with the change of law unless there was a specific provision which would debar such refund. It is also not rebutted by the revenue that the appellants had earned these credits and could not utilize the same due to substantial physical or deemed exports where no Central Excise duty was payable and under the existing provisions, had the appellants chosen to do so they could have availed refunds/rebates under the existing provisions. There is no prov ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o the case of the appellant is grossly erred and liable to be set aside. 6. Personal hearing in the matter was held on 9-6-2021 through virtual mode. Shri Gurinder Singh, Authorized Representative, on behalf of the appellant, appeared for personal hearing. He reiterated the grounds of appeal during personal hearing and explained the same in details. Further, he submitted that he has sent an additional submission also through E-mail to this office that may also be taken into consideration while deciding the case. In additional submission he referred the order of CESTAT in case of M/s. Schlumberger Asia Service Ltd. v. Commissioner of CE ST, Gurgaon-I. In view of submission, he requested for favourable order. 7. I have gone through the facts of the case as inscribed in the appeal memo, the oral iteration as well as additional submission offered by the appellant at the time of personal hearing. Accordingly, I proceeded to decide the case envisioning the facts submitted by the appellant as well as put forth in the impugned order. 8. On going through the records and submissions of the appellant, I observed that the appellant had accumulated Cenvat credit of Education Cess, Se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at there is no explicit provision has been provided under Section 54 of CGST Act, 2017 for refund of such credit. From the provision of GST Law as well as in the light of the above Hon ble Madras High Court judgment it is abundantly clear that once transition of cesses to GST credit ledger is held as inadmissible, as natural corollary, cash refund of the same would also not be permissible. Further, the appellant has referred the CESTAT, New Delhi judgment in the case of M/s. Bharat Heavy Electricals Ltd. v. Commissioner of Central Goods and Services Tax and Customs Final Order No. 51849/2019-EX(DB), dated 26-4-2019 in his support. Moreover, in his additional submission, he also cited the judgment of CESTAT, Chandigarh in the case of M/s. Schlumberger Asia Service Ltd., Final Order No. 60844/2021, dated 24-5-2021. 10. On going through the above referred CESTAT order, it is observed that in the both the matters, the CESTAT has held that the assessee is eligible for refund of the cesses lying as Cenvat credit and appeals were allowed in favour of the assessee. In this context, to know the status of the above CESTAT order, a letter was written to both the jurisdictional Commissio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ingrained or vested right to claim refund of Education Cess and Secondary and Higher Secondary Education Cess or any other duty paid in accordance with the law de hors the Cenvat Credit Rules, 2004. Provisions as enacted in the form of Section 11B of the Act of 1944 or other provisions are of little avail to the assessee, as they do not even provide for availment of credit of the duty, much less refund or its payment in cash. 27. In view of the discussion foregoing, we are of the considered opinion that the Tribunal has committed no error of law in holding that the appellant cannot claim cash refund or encashment of the unutilized and unavailed amount of Education Cess and Secondary and Higher Secondary Education Cess, lying in its credit. 11. In view of the provision of Section 140 (explanation 3 of the said section), Section 54 of the CGST Act, 2017 and various judgments in favour of the department as cited (supra), I hold that the adjudicating authority has rightly rejected the said refund claim and I also do not find any infirmity in the said order. Accordingly, I reject the appeal filed by the appellant. 12. The appeal is disposed off in above manner. - - TaxTMI ..... X X X X Extracts X X X X X X X X Extracts X X X X
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