Refund of unutilised credit of EC, SHEC & KKC allowed after reversal of credit which was not GST credit.
Recently, Hon’ble Chandigarh CESTAT, in the matter of Schlumberger Asia Services Ltd. Commissioner of CE & ST Gurgaon-I, cited in  127 taxmann.com 509 (Chandigarh-CESTAT), held that CENVAT credit of various duties and services tax like E.Cess. S.H.E.Cess and K.K.Cess lying unutilized in their account till 30-06-2017 would not lapse on enactment of GST regime. Tribunal further held that Assessee would be entitled to refund subject to verification of records.
In the said case the appellant is 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 above CENVAT credit lying unutilized in their CENVAT credit account 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 to 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 same amount lying unutilized as on 1-7.2017 in their CENVAT credit account. After this the SCN was issued that their refund claim was rejected. The appellant filed the appeal to the CESTAT against this.
The revenue opposes the contention on the basis that:
- The appellant has taken the CENVAT credit of Education Cess, Secondary & Higher Education Cess and Krishi Kalyan Cess under GST Regime on 1-7-2017, therefore, it has become GST credit and therefore, it has become GST credit and if any refund is required to be filed by them, it is to be filed under CGST Act, 2017 in terms of the amendment to Section 140 of the CGST Act, 2017
- Further, if Appellant were required to file the refund, then such refund was required to be filed within the one year from the 01-07-2017, but the same has not been filed within the one year. Thus, the refund claim has become time barred.
After hearing both sides, Hon’ble CESTAT-Chandigarh decided the case in favour of the assessee. It ruled out that
- 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. It is also a fact on record that Section 140 of the CGST Act, 2017 was amended on 30-8-2018 and was applied retrospectively. As per the amendment, any credit which was not admissible by the appellant is cannot be a GST credit for transactional credit. Thus, the contention of revenue that it is a GST credit, is not acceptable.
- on other issue that whether the refund is time-barred or not, Tribunal noticed that in those circumstances, how the appellant could have filed the refund claim within one year from 1-7-2017 till 30-8-2018, 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.
Thus, it is held that held that Assessee would be entitled to refund subject to verification of records.