GST UPDATE NO. 72ND ON REFUND OF CVD & SAD PAID POST GST REGIME

The government had promised that the transition into GST regime would be smooth and easy whereas the said promise has been broken several times, be it filing of transitional return by allowing carrying forward of the credit of erstwhile regime or grant of cash refund in various situations post implementation of GST. Recently, the hon’ble Delhi CESTAT in the case of FLEXI CAPS AND POLYMERS PVT. LTD. VERSUS COMMISSIONER, CGST & CENTRAL EXCISE-INDORE [2021 (9) TMI 917-CESTAT NEW-DELHI] has allowed refund of CVD and SAD paid on default in export obligation with respect to imports made under advance license in the GST regime for which availment of credit was not possible. The outcome of this decision is the subject matter of discussion of our present update. The appellant was directed to pay CVD and SAD along with interest and penalty for default in fulfilling the export obligation of the advance license on 17.01.2018, by the time GST Law was already implemented. As the appellant was entitled to avail Cenvat credit of the amount of CVD and SAD paid by them in the GST regime which actually pertained to imports made under the erstwhile regime, refund claim was filed by them. The hon’ble CESTAT allowed the appellant to claim refund of the amount of CVD and SAD paid by them in light of the provisions contained in section 142 (3) and section 142(8)(b) of the CGST Act, 2017 which reads as follows:- (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 (8)(b) where in pursuance of an assessment or adjudication proceedings instituted, whether before, on or after the appointed day, under the existing law, any amount of tax, interest, fine or penalty becomes refundable to the taxable person, the same shall be refunded to him in cash under the said law, notwithstanding anything to the contrary contained in the said law other than the provisions of sub-section (2) of section 11B of the Central Excise Act, 1944 and the amount rejected, if any, shall not be admissible as input tax credit under this Act. Therefore, the appeal was allowed. The above decision is very useful to the assessee in situations wherein they are unable to claim Cenvat credit post implementation of GST. For example- one situation is that under erstwhile regime, while filing refund claim under Rule 5 of the Cenvat Credit Rules, the assessee was required to debit amount claimed in their Cenvat credit account and were eligible for taking re-credit on rejection of the refund claim. However, many assessees who got adverse orders in the GST era for the refund claims filed under Rule 5 of the Cenvat Credit Rules, 2004 have got stuck as they are unable to claim re-credit of the rejected amount. The above decision may prove to be beneficial as a binding precedent in such cases.

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GST UPDATE NO. 72ND ON REFUND OF CVD & SAD PAID POST GST REGIME

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