TMI Blog2023 (12) TMI 843X X X X Extracts X X X X X X X X Extracts X X X X ..... gain paying the service tax on the Ocean Freight, as demanded by the Revenue - thus, the recovery of Service Tax on Ocean freight is not legally justified and hence the demand is not maintainable. Whether the appellants are eligible for sanction of refund of Service Tax paid on Ocean Freight and on licence fee paid to Government under Reverse Charge basis paid for the period prior to 01.07.2017, under Section 142(3) of CGST Act,2017? - whether the said refund becomes inapplicable in view of section 148(8)(a) of CGST Act? - HELD THAT:- The refund claim has been rejected by Commissioner (Appeals) by resorting to Section 142(8)(a) of GST Act, 2017 - it is found that similar issue was analyzed by the Tribunal regarding the issue of sanction of refund of Service Tax paid during the GST era in M/S INDO TOOLING PVT. LTD. VERSUS COMMISSIONER, CENTRAL GOODS AND SERVICE TAX CENTRAL EXCISE, INDORE (M.P) [ 2022 (3) TMI 1100 - CESTAT NEW DELHI] wherein it was held that from a conjoint reading of sub-sections (3), (5) and (8)(a) of the CGST Act, it is evident that an assessee is entitled to claim refund of service tax under RCM paid after the appointed day under the existing law and su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Tax rules have been amended wherein Rule 6(7CA) was inserted and option had been given to pay service tax for the services provided or agreed to be provided by a person located in non-taxable territory to a person located in non-taxable territory by way of transportation of goods by a vessel from a place outside India up to the Customs station of clearance in India at the rate of 1.4% of CIF Value of such imported goods. Hence, as per the above legal provisions, the Appellant being an importer as per Section 2(26) of Customs Act, 1962 is liable to pay service tax for services provided or agreed to be provided by a person located in non-taxable territory to a person located in non-taxable territory by way of transportation of goods by a vessel from a place outside India up to the Customs station of clearance in India. 2.2 During the course of audit of the accounts of the Appellant during March 2019, it was found that the Appellant had not paid service tax on such ocean freight paid on imports during May and June 2017 and on license fee paid to Government as recipient of service under Reverse charge basis. On being pointed out by the Internal Audit, GST Central Excise, Audit II ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... May and June 2017. Hence the averments that the Appellants should have paid Service tax in time is not acceptable and in any event the Appellants would have paid Service tax only after 30.06.2017 and not before that. As the filing of the TRAN-1 was completed, the Appellants could not take credit of the same and therefore a refund claim was filed on 13.06.2019 pertaining to the CENVAT credit that could not be taken as credit by the Appellants. 3.2 It was contended that the appellants did not file refund of the Service tax amount paid but only for the amount available as credit to the appellants. Therefore the averment in Para 10 of the Show Cause Notice that the appellants have claimed refund of Service Tax amount paid under RCM is not correct. 3.3 The Ld. Advocate adverted to the Provisions of Section 142(3) of the CGST Act, 2017 which reads as follows: Every claim for refund filed by the person before, on or after the appointed day, for refund of any amount of CENVAT credit, duty, tax, interest or any other amount paid under the existing law, shall be disposed of in accordance with the provisions of existing law and any amount eventually accruing to him shall be paid in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The Hon ble High Court of Madras in the case of M/s. Ganges International Pvt. Ltd. Vs. The Assistant Commissioner of GST Central Excise, Puducherry [2022 (66) GSTL 186 (Mad.)] has inter alia observed as follows: 41. Merely because the transitional provisions have come into effect from 01.07.2017 and under 140(1) of the Act, persons like the Petitioners can make a claim only in respect of the credit which is already accrued as on 30.06.2017 and these credit have come into the account of the Petitioners only subsequently, for which , claim under Section 140(1) could not have been made, the chance of making such an application to seek the refund or otherwise of such a credit which has subsequently accrued in the account for the petitioners, cannot be denied. 42. In view of the matter, this court feels that, in these kind of special situations, for which, the provision is not Section 142(3), no other provision is available. Therefore, this Court feels that , since it is a dire necessity, as these kind of situation necessarily to be met with by the legislation, for which this provision has been brought in the statute book, there can be no impediment for invoking Section 142 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (xv) Union of India Vs. MCPI Pvt. Ltd. [2022 (64) GSTL 431 (Cal.)]. 3.8 The Appellants also filed a copy of the judgement pronounced by the Hon ble High Court dated 28.03.2023 in WP No. 8809/2020 and in WP No. 15398/2021 praying to direct the Hon ble Court for refund of Service Tax paid on Ocean Freight and the Hon ble High Court inter alia held that such refund applications shall be disposed of in accordance with the decision of the Hon ble Supreme Court in Mafatlal Industries Pvt. Ltd. Vs. Union of India [1997 (89) ELT (SC)], within a period of 60 days from the date of receipt of copy of the order. 4. The Ld. Authorised representative Shri N. Satyanarayanan appeared for the department and reiterated the findings in the impugned order passed by the lower appellate authority. 5. Heard both sides and carefully considered the submissions and evidences on record. 6. The main issues to be decided in this appeal relates to:- (i) Whether Service Tax demand made on Ocean freight paid is justified? (ii) Whether the appellants are eligible for sanction of refund of Service Tax paid on Ocean freight prior to 01.07.2017, under Section 142(3) of CGST Act,2017, and Whether ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o the period prior to 30-6-2017, paid in the year 2018 during the GST regime, amounts to payment in accordance with law as the same has been paid on the insistence by the Department-audit objection. I further find that the demand pursuant to audit is also bad as the appellant was entitled to Cenvat credit being a manufacturer of dutiable items, and as such the situation is revenue neutral. Further, the appellant under the erstwhile Cenvat Credit Rules was entitled to Cenvat credit of the said amount. Further, in view of the provisions of Section 142(3) of CGST Act, provides that every claim for refund filed by any person before, on or after the appointed day, for refund of any amount of Cenvat credit, duty, tax, interest or any other amount paid under the existing law, shall be disposed of in accordance with the provisions of existing law and any amount eventually accruing to him shall be paid in cash, notwithstanding anything to the contrary contained under the provisions of existing law other than the provisions of sub-section (2) of Section 11B of the Central Excise Act, 1944 (unjust enrichment). Further, Section 142(8)(a) provides that in pursuance of an assessment or adjudicat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f 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 can be availed under GST Act, 2017. To be more clear, if there are 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t with intent to evade payment of duty. In such circumstances, the credit cannot be denied. I hold that the appellant is eligible for credit of CVD and SAD paid by them. The Tribunal in the case of Circor Flow Technologies (supra) and Mithila Drugs Pvt. Ltd. (supra) had analysed a similar issue. In M/s. Mithila Drugs Pvt. Ltd., the facts are identical to that of the instant case. The relevant paragraphs read as under : 5.6 Learned Counsel further relies on the precedent ruling of this Tribunal in Flexi Caps and Polymers Pvt. Ltd. v. Commissioner, CGST Central Excise, Indore - 2021 (9) TMI 917-CESTAT, New Delhi, wherein also pursuant to demand of service tax under reverse charge mechanism after 30-6-2017, for transaction related prior to the said date (1-7-2017), this Tribunal held that as the appellant was entitled to cenvat credit under Cenvat Credit Rules, which is not now available due to GST regime, is entitled to refund under section 142 read with Rule 146 of the CGST Act. 6. Learned Authorised Representative Sh. Mahesh Bhardwaj appearing for the Revenue relies on the impugned order. 7. Having considered the rival contentions, I find that the payment of CVD a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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