The Principal Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT), New Delhi has held that a one-day delay in filing a revised ST-3 return under the erstwhile service tax regime cannot be condoned as a mere procedural lapse.
The bench of Binu Tamta (Judicial Member) and Hemambika R. Priya (Technical Member) ruled that the company had failed to establish the admissibility of a substantial portion of the claimed CENVAT credit due to non-production of supporting documents, thereby rejecting its refund claim of ₹2.13 crore under the transitional provisions of the Central Goods and Services Tax (CGST) Act.
The appellant/assessee was registered under the erstwhile service tax regime and, upon the introduction of GST, migrated to the new tax system. While filing Form TRAN-1 under Section 140 of the CGST Act, it transitioned CENVAT credit amounting to ₹1.78 crore, reflecting the closing balance in its original ST-3 return.
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Subsequently, the company realized that input service invoices involving an additional CENVAT credit of ₹2.13 crore had not been reflected in the original ST-3 return. It therefore filed a revised ST-3 return on 29 September 2017, increasing the closing CENVAT credit balance to ₹3.58 crore, and thereafter sought a cash refund of the additional credit under Section 142(9)(b) of the CGST Act, which governs refund claims arising from revised returns filed after the GST transition.
The refund application was initially rejected in 2020. Although the appellate authority remanded the matter for fresh adjudication, the adjudicating authority once again denied the refund, concluding that the revised ST-3 return had been filed beyond the statutory period prescribed under Rule 7B of the Service Tax Rules, 1994. That decision was upheld by the Commissioner (Appeals), prompting the present appeal before the Tribunal.
The appellant contended that the revised ST-3 return had been filed only one day beyond the 45-day statutory period, and such a minor delay was purely procedural and should not defeat a substantive right to claim legitimately earned CENVAT credit.
It argued that the department had never questioned the admissibility of the additional CENVAT credit in the show cause notice, but had rejected the refund solely because of the alleged one-day delay in filing the revised return. According to the company, procedural irregularities should not override substantive tax rights, particularly where the credit itself was otherwise available.
The appellant also relied upon several judicial precedents and CBIC Circular No. 207/5/2017-ST dated 28 September 2017 to contend that revised returns filed during the GST transition deserved liberal interpretation. It further argued that even if there was a delay, it could have been regularized through payment of the prescribed 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 expressly permits refund only where a revised return is filed within the time prescribed under the existing law. Since the revised ST-3 return had been filed on the 46th day, the statutory condition itself remained unfulfilled.
The department further argued that, apart from the limitation issue, the appellant had repeatedly failed to furnish invoices, proof of payment, and supporting documents necessary to establish eligibility for the claimed CENVAT credit. It also maintained that several of the services related to excluded input services such as rent-a-cab and outdoor catering, for which admissibility of credit had never been satisfactorily demonstrated.
The Tribunal undertook an extensive examination of Section 142 of the CGST Act, which governs transitional refund claims arising after implementation of GST.
It observed that the provision was intended to deal with pending claims relating to the pre-GST indirect tax regime and recognised that judicial decisions have generally viewed Section 142(3) as a substantive transitional relief designed to prevent legitimate CENVAT credit from lapsing merely because GST had replaced the earlier tax regime.
However, the Bench clarified that such relief remains subject to proof that the credit itself was legally admissible. Where admissibility of the underlying credit is disputed, the refund cannot automatically follow merely because transitional provisions exist.
The Tribunal found that the appellant had failed to discharge the burden of establishing the eligibility of the claimed CENVAT credit.
According to the Bench, despite being granted multiple opportunities, the company did not produce complete invoices and proof of payment in numerous instances. Even where invoices were furnished, several discrepancies remained unexplained.
The Tribunal particularly noted that credits relating to rent-a-cab, outdoor catering and other services excluded under the amended definition of “input service” had not been adequately justified as being used in the course of providing taxable output services. Since CENVAT credit constitutes a substantive statutory benefit, the claimant bears the burden of proving eligibility through proper documentary evidence, which the appellant failed to do.
Rejecting the appellant’s principal argument, the Tribunal held that the 45-day limitation prescribed under Rule 7B is mandatory.
The Bench observed that statutory timelines governing revised returns cannot be diluted merely because the delay is minimal. It relied upon the Allahabad High Court’s decision in S. Kumars Constructions, which emphasised that limitation provisions contained in special statutes must be strictly enforced to preserve legislative certainty.
Accordingly, the Tribunal ruled that even a one-day delay in filing the revised ST-3 return could not be condoned as a procedural lapse.
The Tribunal also rejected the appellant’s reliance on Rule 7C, which provides for payment of late fees for delayed filing of returns.
It held that Rule 7C applies only to original returns filed under Rule 7 and does not extend to revised returns governed by Rule 7B. Since the legislature consciously omitted any reference to revised returns while introducing Rule 7C, the Bench held that late fee provisions could not be invoked to regularize delayed revised returns.
The appellant had relied upon a CBIC circular extending certain filing timelines during the GST transition.
The Tribunal, however, held that the circular was confined to returns involving invoices under the Reverse Charge Mechanism (RCM) and did not apply to the appellant’s claim, particularly since most of the disputed invoices neither related to RCM nor established admissible input services.
The Bench carefully distinguished several authorities cited by the appellant, including decisions involving GE Power Systems India, Punjab National Bank, Lupin Ltd., Bharat Heavy Electricals, Slovak India Trading, and Eicher Motors.
It observed that in those cases either the revised returns had been filed within the prescribed limitation period or the admissibility of the underlying CENVAT credit was never disputed. In contrast, the present case involved both delayed filing of the revised return and failure to substantiate the eligibility of the claimed credit, making those precedents inapplicable.
Finding no infirmity in the appellate order, the Tribunal upheld the denial of refund and dismissed the appeal.
The Bench concluded that the appellant had failed to comply with the statutory time limit for filing the revised ST-3 return under Section 142(9)(b) read with Rule 7B, and had also failed to establish the admissibility of the disputed CENVAT credit through supporting evidence. Consequently, no refund under the CGST transitional provisions could be granted.
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