Order Date: 16 September 2022

Facts-

• The Appellant, OSI Systems Pvt Ltd was an assessee under the Service tax regime and they migrated to GST regime and they also filed TRAN-1 for taking forward the credit which was lying in their Cenvat Credit register.
• Subsequently, it was pointed out by the Revenue/ audit objection that the appellant is required to pay an amount of Rs.1,71,035/- on account of input services under reverse charge mechanism. The appellant deposited the said service tax on 01.08.2018. Further, as the appellant could not take credit of this amount in the GST regime, nor could they revise their TRAN-1 form, as time for which it has expired, the appellant filed an application for refund as they could not take credit of the same in their Cenvat register under service tax provisions. 
• The adjudicating authority rejected the claim on the ground that there was no statutory provision available under the existing law or in the CGST Act to grant refund. The refund was rejected both on merits as well as on limitation.
• Being aggrieved, the appellant preferred appeal before the Commissioner (Appeals) who was pleased to observe that the appellant is definitely entitled to credit of the service tax deposited in August, 2018. Further observed that there is no provision under Cenvat Credit Rules to allow them refund of service tax paid under reverse charge mechanism, in case the taxpayer is not in a position to take credit. The refund is payable subject to the aspect of limitation and unjust enrichment under section 11B.

Issue-

• Whether the denial of refund of Cenvat Credit with regard to service tax paid under reverse charge mechanism after 30.06.2017 is sustainable?

Order-

• The Tribunal observed that under transitional provision under section 142(3) of CGST Act, the limitation has been done away with and the only thing required for refund under the facts and circumstances is to see whether unjust enrichment is attracted.
• In the facts and circumstances, the Tribunal held that no unjust enrichment is attracted as the appellant has admittedly paid service tax in August, 2018 out of their own pocket. Accordingly, The Tribunal allowed this appeal and set aside the impugned order. The adjudicating authority is directed to grant refund within a period of 60 days from the date of receipt of copy of this order along with interest under section 11BB of the Central Excise Act.
• The Appeal filed by the appellant is allowed.