One-Day Delay In Revised Service Tax Return Filing Bars Refund Claim Under CGST Act: CESTAT New Delhi

The New Delhi Customs, Excise and Service Tax Appellate Tribunal (CESTAT) on 21 July held that a one-day delay in filing a revised ST-3 return under Rule 7B of the Service Tax Rules, 1994 cannot be condoned as a procedural lapse for claiming refund of transitional CENVAT credit under Section 142(9)(b) of the Central Goods and Services Tax (CGST) Act, 2017.

A Bench comprising Judicial Member Binu Tamta and Technical Member Hemambika R. Priya upheld the order rejecting the refund claim of TV Today Network Limited for Rs. 2.13 crore, holding that the company had failed to establish the admissibility of the CENVAT credit by producing the necessary supporting documents and invoices. It observed:

“...we hold that the delay of one day in the filing of the revised return cannot be condoned as procedural delay.”

TV Today had carried forward CENVAT credit of about Rs. 1.78 crore through TRAN-1 after the introduction of GST. It later noticed that certain input service invoices were not reflected in the original ST-3 return and filed a revised ST-3 return showing additional credit of Rs. 2.13 crore. Based on the revised return, the company claimed cash refund under Section 142(9)(b) of the CGST Act, which provides for refund of eligible CENVAT credit where the credit could not be carried forward due to transitional provisions.

The Department rejected the refund claim on the ground that the revised ST-3 return was filed one day beyond the 45-day period prescribed under Rule 7B of the Service Tax Rules, 1994, which governs filing of revised returns. It also questioned the company's failure to produce documents establishing the admissibility of the claimed credit.

Before the Tribunal, TV Today argued that the one-day delay was merely procedural and should not defeat its substantive right to claim refund. It also contended that the Department had not disputed the admissibility of the credit and that the delay could be regularised by payment of late fee under Rule 7C of the Service Tax Rules.

The Department opposed the appeal, submitting that Section 142(9)(b) of the CGST Act requires the revised return to be filed within the time permitted under the existing law. It further argued that TV Today had failed to provide invoices and proof of payment necessary to establish entitlement to the CENVAT credit.

The Tribunal held that while Section 142 of the CGST Act provides transitional relief for refund of eligible CENVAT credit, the claimant must first prove that the credit itself is admissible. It noted that transitional provisions are intended to protect legitimate credit from lapsing during the shift to GST, but such benefits cannot be granted unless the eligibility of the credit is established.

Examining the records, the Bench found that TV Today had failed to produce invoices, proof of payment and satisfactory explanations relating to several input services, including excluded services such as rent-a-cab and outdoor catering. It held that the company had not discharged the burden of proving the admissibility of the claimed CENVAT credit.

On the issue of limitation, the Tribunal rejected the argument that the one-day delay was a procedural irregularity. Relying on the Allahabad High Court's decision in S Kumars Constructions, it held that limitation provisions contained in a special statute must be strictly applied and that the time limit prescribed under Rule 7B cannot be relaxed.

It also rejected the argument that Rule 7C, which permits payment of late fee for delayed returns, could regularise the delay in filing a revised return. It held that Rule 7C applies only to original returns filed under Rule 7 and does not extend to revised returns filed under Rule 7B. It further held that the CBIC Circular dated 28 September 2017, which extended the deemed filing date, was limited to reverse charge cases and had no application to TV Today's claim.

Further, the Bench distinguished the decisions relied upon by TV Today, observing that those cases either involved situations where the admissibility of CENVAT credit was not disputed or where revised returns were filed within the prescribed time limit.

Accordingly, the CESTAT upheld the order rejecting TV Today's refund claim and dismissed the appeal.

Appearances for the Appellants: Ms. Shagun Arora, Ms. Shreya Khunteta and Shri Kunal Agarwal, Advocates.

Appearances for the Respondent: Shri Dhirendra Singh Garbyal, Authorised Representative (Department).