Reversal of credit in GSTR-3B amounts to non-availment of credit.
JMT Consultant Detailing Pvt. Ltd. Vs Commissioner of Central Tax (CESTAT Bangalore)
1.The present appeal is directed against the impugned order dated 4.12.2018 passed by the Commissioner (A), whereby the Commissioner (A) has rejected the appeal of the appellant.
2. Briefly the facts of the present case are that the appellants are registered as service providers under the category of ‘Structural Design and Detailing consultancy Services’ and are availing CENVAT credit of service tax paid on various input services used while exporting their output services. The appellant had filed a refund claim for refund of unutilized CENVAT credit of service tax amounting to Rs.5,45,186/- availed on input services for the period April 2017 to June 2017 under Notification No.27/2012-CE (NT) dated 18.6.2012 read with Rule 8 of Cenvat Credit Rules, 2004 (CCR) and Service Tax Rules, 1994. After due process vide Order-in-Original No.162/2018 dated 31.7.2018/7.8.2018, the original adjudicating authority, AC, CT, East Division-I rejected the claim on the ground that the appellant had failed to submit proof of having debited the amount of refund being claimed in his Cenvat credit account, as per the provisions of Para 2(h) of Notification No.27/2012-CE (NT) dated 18.6.2012 read with Section 142(4) of the CGST Act, 2017. Aggrieved by the Order-in-Original, appellant filed appeal before the Commissioner (A), who rejected the appeal. Hence, the present appeal.
3. Heard both the parties and perused the records.
Learned counsel for the appellant submitted that the impugned order is not sustainable in law as the same has been passed without properly appreciating the facts and the law. He further submitted that the refund claim amount was debited in the books of accounts on 20.5.2018. The refund claim was filed for the period April 2017 to June 2017 on 14.2.2018 and by that time, the due date to file the Tran-1 was over and the appellant could not envisage the quantum of refund at the time of filing Tran-1, therefore the basis to reject the refund claim was not proper. He further submitted that the refund has been rejected only on procedural lapses created by introduction of GST. He also submitted that they have debited the refund claim amount in May 2018 in GSTR-3B Return. He further submitted that the condition at paragraph 2(h) of the Notification No.27/2012 was applicable only during the period prior to GST regime since GST was done away with the filing of the ST-3 returns. Further, they have submitted that there was no procedure in ACES System to debit the value of refund claim in the Cenvat account during the relevant period. Learned counsel also referred to CBIC Circular No.58/32/2018-GST dated 4.9.2018 wherein the Board itself had clarified that the reversal of credit in GSTR-3B amounts to non-availment of credit. Learned counsel further submitted that the substantive right cannot be denied on merely procedural lapses. For this submission, he relied upon the decision in the case of Ramdev Food Products Pvt. Ltd. vs. CCE, Ahmedabad: 2011 (23) STR 475 (Tri.-Ahmd.) wherein it was held that rectifiable defect should be allowed to be cleared. In the present case, the appellant had debited the refund claim amount in the books of accounts and also the debit is made in the GSTR-3B. He also relied upon the decision in the case of Sandoz Pvt. Ltd. vs. CCE: 2015 (10) TMI 882-CESTAT-Mumbai, wherein it was held that failure to debit on the date of filing the refund claim is not such a lapse that it would debar the appellants from refund. On the day of debiting the CENVAT account, they have fulfilled the conditions of the Notification and thereby become entitled to the refund on that date.
5. On the other hand, the learned AR defended the impugned order.
6. After considering the submissions of both the parties and perusal of the material on record, I find that the appellant have reversed the CENVAT credit in their CENVAT credit account but the same was not shown in the ST-3 Returns because by the time refund was filed, GST has been introduced and filing of ST-3 returns itself was done away with. Further, I find that the appellant has voluntarily debited the refund amount in GSTR-3B during May 2018 which clearly complies with the conditions of the Notification. Further, the Board has also clarified the said position in its Circular No.58/32/2018-GST. Further, I find that in the case of M/s. Global Analytics India Pvt. Ltd. vs. Commissioner of GST reported in 2019 ACR 388 CESTAT CHENNAI, on identical set of facts, the Tribunal has allowed the appeal of the appellant and set aside the denial of refund. Following the ratio of the above said decisions, I am of the considered view that the impugned order is not sustainable in law and therefore, I set aside the same by allowing the appeal of the appellant with consequential relief, if any.
(Order was pronounced in Open Court on 16/12/2019.)