refund of cenvat credit of service tax under Rule 5 of Cenvat Credit and Notification no 27/2012 by servive provider.
Query (Issue) Started By: – bk r Dated:- 24-5-2018 Last Reply Date:- 4-9-2018 Goods and Services Tax – GST
Got 21 Replies
GST
We are service provider and engaged in exporting our entire services and claim refund regularly quarterly for cenvat credit availed in respect of inputs service used for providing output service under Rule 5 of the Cenvat Credit Rules read with notification No. 27/2012 CEx and department was providing service tax refund. But after GST we submitted the refund claim for the Q.E.12/2016 on 25/09/2017, for Q.E 03/2017 on 26/12/2017 and for Q.E. 06/2017 on 27/03/2018. All claims were filed after GST implementation i.e. after 01/07/2017. We were having Cenvat Credit Balance of ₹ 92 lacs as on 30.06.2017 and the same was also shown in ST 3 return for the period of April 2017 to June 2017 as a closing balance. but this amount was not c
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6/2017 there was no provision to maintain manual cenvat credit account and we cannot reverse the amount claimed as refund from cenvat account after GST implementation. and the cenvat credit lying as on 01/07/2017 get lapsed. The Department also asked for the copy of return whereunder it has been shown that the amount claimed as refund has been reversed but after GST we filed GSTR-3B /GSTR-1 and in this returns no debit entry made as the cenvat credit balance as on 30/06/2017 was not carried forward in ITC of GST. We also cannot file any return under Service Tax. What we can do now. whether the department contention is right? and they reject my refund claim on these grounds.
Reply By KASTURI SETHI:
The Reply:
The department is absolutely right in this approach. You have committed Himalayan blunder by not carrying forward the balance in TRANS-1. The department extended the date for filing TRANS -1 in the interest of asseessees. Now you are on a warm wicket legally. But there is still h
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laws have been repealed. Elaborate provisions have been made to save the pending as well future claims relating to existing law made before, on or after the appointed day i.e. 1st July, 2017. Such proceedings may pertain to refund claims of CENVAT credit/VAT or export related rebate or service tax, such proceedings may either result in recovery of tax or refund. All such cases would be disposed of under the existing law. If any claim for refund of CENVAT credit is fully or partially rejected, the amount so rejected shall lapse. Refund of CENVAT credit shall be paid in cash. There will be no refund of CENVAT if already carry forwarded. If any amount becomes recoverable, the same shall be recovered as arrear of tax under GST Act. Statutory provisions relating to transition are contained in chapter XX (section 139 to 142) of the CGST Act, 2017, SGST Act(s), 2017 and Rule 117 to 121 of the CGST Rules, 2017″.
Based on above, the intention of the government is clear that right of the tax pa
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As I do not made any debit entry in any return/credit ledger , therefore I am unable to submit this.
Reply By Alkesh Jani:
The Reply:
Sir, Have you filed refund claim under Section11 B (2) (d) of the Central Excise Act, 1944?
Thanks.
Reply By bk r:
The Reply:
Sir I filed the refund under Rule 5 of the Cenvat Credit rules 2004 alongwith Notification No. 27/2012 CE (NT) dated 18.06.2012.
Thanks sir
Reply By Alkesh Jani:
The Reply:
Sir,
Under Rule 5 of the Cenvat Credit Rules, you are required to reverse the Cenvat credit. This is the reason department is insisting for the same. In the whole scenario, my suggestion is that, withdraw you claim and again filed the refund claim under Section 11B of the Central Excise Act, with proper grounds, if SCN has not been issued. Here, please note that Central Excise Act, 1944 has been repealed, but saved otherwise and also mentioned in Circulars is Section11B(2) of the said Act.
Our experts may correct me if mistaken.
Thanks
Reply By
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stance. Wait for the outcome of your claims.
Reply By YAGAY and SUN:
The Reply:
You may file writ on the basis of technical snags in GSTN. There is many judgment on this matter now.
Reply By Ankur Jain:
The Reply:
This issue has created an analogy, the return for the period April-June 2017 was filed in August and by that time no refund application was filed. The refund claims were filed in the month of September and just by not carrying forward the refund amount in Tran-1, the Cenvat Credit shall deemed to be reversed as it has happened in one of our very own case. It was not a mandate to reverse the Credit claimed in the last return filed during the existing law but it was certainly a mandate that Cenvat Credit of refund claimed must not be transitioned in GST regime (which you have correctly done in present case). There is no infirmity as per the law in your refund claims and that must be allowed. In case the Adjudicating authority rejects the refund claim with lack of understand
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it unless eligible under these rules.
Department is objecting that as per Para 15 above that entire credit was to be transferred by us. Now what should I do. please clarify.
Reply By KASTURI SETHI:
The Reply:
The department is right but you will get relief only through appellate channel. No Govt. Officer would take risk.
Reply By Alkesh Jani:
The Reply:
Sir,
Have you received any Notice for rejecting the claim? If so, please mention full grounds for which rejection is purposed.
Thanks
Reply By bk r:
The Reply:
Sir I have not received the SCN yet but I read out the draft SCN put up to the higher authorities by the technical wing and as I memories the issue is taken on the following groind.
1. That the notice was not eligible to retain cenvat credit lying balance as on 30.06.2017 under cenvat credit rules 2004, as there is no provisions under GST Law regarding retaining of Cenvat credit balance lying as on 30.06.2017
2. That as per Rule 15 of the Cenvat Credit Rules 2017 noti
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nd it is also possibility that he can claim ITC later on through the court.
these are the main point which I memorise during reading of draft show cause notice .
Please guide whether the department contention is right. Is there any another way to avoid SCN as my huge amount will be blocked.
Reply By Alkesh Jani:
The Reply:
Sir,
There is no way to avoid SCN. the only way out is to contest the SCN. Please wait till SCN is issued finally, because proposition and supposition may not help any way.
Thanks
Reply By ROSHAN PRADHAN:
The Reply:
GST law allows Refund claim filed in respect of Cenvat Credit even after 1st July 2017 (appointed date), the same has to be disposed under existing law.
Since law allows to process refund of cenvat credit under existing law, the requirement of transfer of credit to GST does not arise.
If cenvat credit in respect of ₹ 92 lakhs meets the basic condition of claiming cevnat credit, there should be any problem ( Input suppliers payment to be m
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sposed as per existing law
Sec 142 (3) 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 (1 of 1944) :
If such claim for Cenvat Credit is fully or partially rejected – Amount so rejected shall lapse
Provided that where any claim for refund of CENVAT credit is fully or partially rejected, the amount so rejected shall lapse :
No refund of Cenvat if the same is carried forward as ITC under GST Act
Provided further that no refund shall be allowed of any amount of CENVAT credit where the balance of the said amount as on the appoi
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