Credit of amount payable to petitioner to the CENVAT account would make no sense because petitioner will not get the money or credit thereof under the GST regime

Top Stories Government cannot Retain any Amount without Authority of Law: Bombay HC directs Refund in Cash instead of CENVAT Credit Account [Read Order] Credit of amount payable to petitioner to the CENVAT account would make no sense because petitioner will not get the money or credit thereof under the GST regime By Manu Sharma – On June 18, 2024 2:26 pm – 3 mins read A Division Bench of the Bombay High Court has held that the Government cannot retain any amount without authority of law while directing the department to process the refund in Cash instead of crediting the same to CENVAT Credit Account. The petitioner challenged an order by the Principal Commissioner of RA and Ex-officio Additional Secretary, directing the original authority to allow re-credit of excess duty paid by petitioner in its CENVAT credit account totalling to Rs.10,48,11,734/-. By these petitions, petitioner is also impugning an order dated 16th July 2020 passed by the Commissioner of Central Tax & Central Excise (Appeals), upholding re-credit of rebate amount to CENVAT credit account. The petitioner is involved in the export of medicaments falling under Chapter 30 of the First Schedule to the Central Excise Tariff Act 1985. Admittedly, the petitioner has in its CENVAT credit account an amount of Rs.10,48,11,734/-. The petitioner submitted that, Section 142(3) of the Central Goods And Services Tax Act 2017 clearly says, w.e.f 1st July 2017, in view of the effect of change in the regime, when the GST regime was introduced, any refund that was payable to the petitioner had to be paid in cash. Sridharan, for the petitioner, submitted that since the CENVAT regime has come to an end, credit of amount payable to petitioner to the CENVAT account would make no sense because petitioner will not get the money or credit thereof under the GST regime. Counsel for the petitioner, Sridharan states since the government cannot retain any amount which is not due to it, the amount collected is allowed to be paid over in cash as provided in sub Section (3) of Section 142 of the Goods and Services Tax Act. It was further submitted that the amount that was paid by petitioner was a voluntary deposit which was given on their own volition and not towards any duty and, therefore, the Adjudicating Authority has correctly come to the conclusion that such amount has to be returned to petitioner in the manner it was initially paid. It was noted by the Division Bench of the Bombay High Court that, “Section 142(3) of the Act is very clear in as much as, it says “ 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 ………….. and any amount eventually accruing …….. shall be paid in cash ……”. It is very widely worded in as much as it uses the expression “CENVAT credit” and also “any other amount paid”. Even if, we take it that petitioner has made voluntary deposit, that amount has to be shown as CENVAT credit in the account of petitioner. In the alternative, it would certainly come under the category “or any other amount paid”. Therefore, either way the amount paid by petitioner, admittedly, has to be refunded. In fact, it is also admitted that an amount of Rs.10,48,11,737/- is refundable to petitioner.” It was thus held by the Bench of Justice Jitendra Jain and K R Shriram that, “Sub-Section (3) of Section 142 of the Act very clearly says “any amount eventually accruing shall be paid in cash “.” It was thus held that, ‘In the circumstances, we are of the opinion that respondents ought to have directed the sanctioning authority to refund the amount of duty refundable to petitioner in cash instead of credit in CENVAT account, 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.” The Bombay High Court also added that the amount shall be paid together with accumulated interest in  accordance with law within four weeks of this order being uploaded.