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04 June 2021

Refund can’t be denied on time barred grounds in lieu of retrospective amendment in GST regime.

In the case of Schlumberger Asia Services Ltd. vs Commissioner of CE &ST, Gurgaon-I cited in [2021] 127 taxmann.com 509 (Chandigarh - CESTAT), appellant is engaged in providing various services. The CENVAT credit of various duties and services paid by them and Education Cess, Secondary & Higher Education Cess, Krishi Kalyan Cess were lying unutilized in their CENVAT credit account and the appellant could not utilize the same till 30-6-2017. On 1-7-2017, the GST Regime came in force and the credit lying in the account was allowed to be transferred under GST Regime. The appellant took the CENVAT credit lying unutilized in their CENVAT credit account of services, goods, Education Cess, Secondary & Higher Education Cess and Krishi Kalyan Cess to their GST account. Later on, an amendment came on 30-8-2018 in Section 140 of the CGST Act, 2017 that the assessee cannot carry forward the credit lying in their CENVAT credit on account of Education Cess, Secondary & Higher Education Cess and Krishi Kalyan Cess.

Consequent the amendment, the appellant immediately reversed the amount of CENVAT credit pertaining to Education Cess, Secondary & Higher Education Cess and Krishi Kalyan Cess and filed the refund claim of the amount lying unutilized as on 1-7-2017 in their CENVAT credit account of Education Cess, Secondary & Higher Education Cess and Krishi Kalyan Cess.

A show cause notice was issued to the appellant that in terms of Section 140 of the CGST Act, 2017 the refund claim filed on 30-8-2019 is barred by limitation. The matter was adjudicated and refund claim was rejected.

In the instant case it was held that, the new regime of GST came into force and on the said date, there was no bar on carry forward of the CENVAT credit of Education Cess, Secondary & Higher Education Cess and Krishi Kalyan Cess to GST regime. In these circumstances, the appellant has taken the CENVAT credit under CGST Act. Further, Section 140 of the CGST Act, 2017 was amended on 30-8-2018 and was applied retrospectively.

As the appellant has reversed the said amount in their GST account, in terms of the amendment to Section 140 of the CGST Act, 2017 on 30-8-2018, the said amount shall remain lying unutilized in their CENVAT credit account on account of Education Cess, Secondary & Higher Education Cess and Krishi Kalyan Cess as good as on 1-7-2017.

Now the question arises whether the refund claim filed by the appellant is barred by limitation or not?

The amendment to Section 140 came after one year of the switching to the GST Regime on 30-8-2018 which is applicable retrospectively. In that circumstances how the appellant could have filed the refund claim within one year from 1-7-2017 till 30-8-2018, when there was no provision of law existed, when amendment itself takes on 30-8-2018, therefore, the relevant date of filing the refund claim shall be 30-8-2018 and within one year of the said date, the refund claim has been filed by the appellant. In that circumstance, it was held that the refund claim filed by the appellant is not barred by limitation.