Section 142(3) of the CGST Act, 2017 entitles an assessee to a cash refund of service tax paid under the erstwhile law if the corresponding Cenvat credit could not be availed or transitioned due to the implementation of the GST regime.

DATE OF HEARING: 12.03.2026

DATE OF DECISION: 30.03.2026

SATENDRA VIKRAM SINGH

The present appeals have been filed by M/s R R Kabel Ltd, Silvassa (Appellant) against impugned order passed by the learned Commissioner (Appeals), upholding rejection of refund claims of the appellant.

During CERA audit, it was noticed that the appellant had not paid service tax on GTA service, Manpower Recruitment Agency Service and Renting of Immovable Property Service under reverse charge mechanism. On being pointed out by the auditors, the appellant paid the above service tax. Subsequently, they filed three refund claims for refund of above amount of service tax so paid on the ground that they would not be entitled to Cenvat credit as the provisions of chapter-V of the Finance Act,1994 which governed credit of service tax paid by a manufacturer had lapsed and GST Provisions came into force w.e.f. 01.07.2017.

Revenue issued them three show cause notices for denying refund claims filed by the appellant as per the following details alleging that there is no provision for refund of service tax paid in respect of GTA service and Manpower Recruitment Agency Service either in previous regime or under GST.

These show cause notices were decided by the Assistant Commissioner vide three orders bearing No. 41-43/AC/Refund/2018-19/Silvassa-VII all dated 21.01.2019 wherein he rejected their refund claims. Aggrieved with these orders, the appellant filed appeals before the Commissioner (Appeals) who vide impugned order dated 22.04.2019, rejected their appeals and upheld the orders of the Assistant Commissioner. He held that the appellant is not eligible for refund in terms of the existing law and that the new law does not allow them to transit the payment of these taxes into GST regime either by way of input tax credit in terms of Section 16 or under Section 140/142 of the CGST Act, 2017. Hence, the present appeals before this Tribunal.

In their appeals, the appellant took the following grounds:-

• Repeal of any existing law does not affect the right accrued to the appellant under the said existing law. They have correctly claimed the refunds under Section 142(3) read with Section 142(8)(b) of the CGST Act, 2017.

• The right to claim the refund of taxes paid under earlier law is provided by the transitional provisions of GST Act and not by Section 11B of the Central Excise Act, 1944 or Rule 5 of the Cenvat credit Rules, 2004. Reliance is placed on the decision of Commissioner (Appeals) in the case of Sudarshan Chemical Industries Ltd. wherein at pare 5.3 it has been observed as under:-

“5.3. There is no dispute that as per Sub-Rule 9 (1)(b) of Cenvat Credit Rule, 2004, Challan is the proper document for availing credit and duty is paid vide challan after July, 2017 and refund has been filed on 08.05.2018 and 22.05.2018. Therefore, the contention of the adjudicating authority that Cenvat credit has been availed beyond one year is not sustainable. The appellant has filed refund of the Cenvat Credit within the limit specified under Rule 4(1) of Cenvat Credit Rule, 2004. Since there is no scope for avalling and utilizing the credit, so they have filed refund claim of the same as per section 142(3) of the CGST Act."

• Findings given by the learned Commissioner (Appeals) Surat in the impugned order is legally unsustainable. Hon’ble Supreme Court in the case of Commissioner of Central Excise, Bangalore Vs. Brindavan Beverages (P) Ltd. -2007 ELT 487 (SC) has held that if allegation in the show cause notice is not specific, contrary, vague and unintelligible, the same is liable to be set aside.

• Refund of CVD and SAD has been sanctioned by the Assistant Commissioner Central Excise and CGST, Division-VII, Vadodara-I in their own case, on the g