IMPORTANT POINT
The court established that unutilized cesses cannot be transitioned to GST, and refund claims for such cesses are not maintainable under the current legal framework.

JUDGMENT :

The petitioner is a Public Limited Company incorporated under the provisions of the Companies Act, 1956. It is engaged in financing, providing personal and business loans upon the security of gold. For the period from April 2017 to June 2017, the petitioner had filed returns under the provisions of the Finance Act, 1994 disclosing payment of Service Tax of Rs.10,36,39,987/- Education Cess (EC) amounting to Rs.67,69,195/-, Secondary and Higher Education Cess (SHEC) amounting to Rs.35,18,566/- and Krishi Kalyan Cess (KKC) amounting to Rs.54,65,526/-.

2. Following the 101st amendment to the Constitution and the introduction of GST, the petitioner was under the impression that unutilized credit on account of payment of Service Tax including amounts paid towards EC, SHEC and KKC could be transitioned to the GST regime. According to the petitioner, the provisions of Section 140(8) of the CGST Act permitted such transition. However, vide the CGST (Amendment) Act 2018 introduced with retrospective effect from 01.07.2017, Section 140(1) of the CGST Act was amended to replace the term ‘CENVAT credit’ with the term ‘CENVAT credit of eligible duties’. This was to prevent the transition of accumulated credit on account of payment of various amounts as Cess to the GST. It is the case of the petitioner that the said amendment was notified vide notification No.2/2019-Central Tax dated 29.01.2019. It is the case of the petitioner that in the case of Assistant Commissioner of CGST and Central Excise and Others v. Sutherland Global Services Private Limited and Others; 2020 SCC OnLine Mad 27359, the Madras High Court took the view that Cess such as EC, SHEC and KKC could not be transitioned with reference to the provisions of Section 140 of the CGST Act. According to the petitioner, it accordingly reversed the transitional credit claimed on account of payment of EC, SHEC and KKC and on such reversal, the petitioner became entitled to seek a refund in terms of the provisions contained in Section 142(3) of the CGST/SGST Acts under the existing law (Finance Act, 1994) and therefore, the petitioner filed a claim for refund of an amount of Rs.1,57,53,287/-. The said application which, is on record as Ext.P4 was rejected finding that the claim was time-barred in terms of the provisions contained in Section 11B of the Central Excise Act, 1944 as made applicable to Service Tax by virtue of the provisions contained in the Finance Act, 1994. The order of the competent authority (respondent No.2) rejecting the refund claimed as time-barred is on record as Ext.P8. In the meanwhile, the petitioner had also filed an application for refund under Section 54 of the CGST Act clearly stating that the same needs to be processed only if Ext.P4 application is rejected by the competent authority.

3. Sri. Jose Jacob, the learned counsel appearing for the petitioner vehemently contends that the rejection of the application for refund filed by the petitioner in terms of the provisions contained in Section 142 (3) of the CGST Act as time-barred is clearly unsustainable in law.

It is submitted that going by the provisions as they stood at the time of the introduction of GST, the petitioner was entitled to transitional credit available on account of payment of EC, SHEC and KKC and it is only with the retrospective amendment of Section 140 of the CGST/SGST Acts that such transition became impossible. It is submitted that the application for refund in terms of the provisions contained in sub-section(3) of Section 142 of the CGST Act should therefore be considered with reference to the date on which the amendment came into force. Further, it is submitted that it is only on reversal of the transitional credit claimed that the petitioner could maintain an application for refund in terms of the provisions contained in Section 11B of the Central Excise Act, 1944 as made applicable to Service Tax. It is submitted that in such circumstances, the dismissal of the application fo