Refund Of CENVAT Credit By Cash As Per Transitional Provisions Of S.142(5) Of CGST Act, Is Subject To Time Limit U/s 11B Of Central Excise Act: CESTAT

The Chennai Bench of Customs, Excise and Service Tax Appellate Tribunal (CESTAT) has held that the refund of CENVAT credit by cash as per the transitional provisions of section 142(5) of the CGST Act, is subject to the time limit under Section 11B of the Central Excise Act. The bench of Ajayan T.V. (Judicial Member) and M. Ajit Kumar (Technical Member) has has dismissed a series of appeals filed by Mahindra Holidays and Resorts India Ltd. (MHRIL) seeking refunds of service tax amounting to over Rs. 6 crore, holding that the claims were time-barred under Section 11B of the Central Excise Act, 1944. The appellant, Mahindra Holidays and Resorts India Ltd. which operates the popular “Club Mahindra Holidays” timeshare business, had filed multiple refund claims between 2020 and 2023 for service tax paid on Annual Subscription Fees (ASF) and membership fees for holiday services that were later cancelled. The company argued that since the services were not rendered following membership cancellations, the tax paid should be refunded under Section 142(5) of the CGST Act, 2017. The refunds, covering the period from July 2017 to March 2021, totaled more than ₹6 crore. However, the Department of GST & Central Excise rejected the claims, citing that they were filed beyond the one-year limitation prescribed under Section 11B of the Central Excise Act. The appellant contended that the transitional provision under Section 142(5) of the CGST Act allowed such refunds “notwithstanding anything to the contrary” in earlier laws and hence the one-year limitation under Section 11B should not apply.The appellant argued that there was no unjust enrichment, as credit notes were issued to members along with refunds of service tax. The tax paid on cancelled services should be treated as a deposit, not a tax, and therefore, the limitation provisions of Section 11B should not apply. The Department contended that Section 142(5) clearly states refund claims must be disposed of “in accordance with the provisions of existing law,” which includes the time limit under Section 11B. The Department maintained that MHRIL’s interpretation was contrary to legislative intent, emphasizing that the limitation clause remains applicable even for transitional refunds under GST. The Tribunal examined in detail the scope of Section 142(5) and held that the non-obstante clause in the section cannot be read as an exemption from the statutory time limit. The provision was intended only to ensure refunds are paid in cash rather than by re-credit, not to override the limitation period. Refund claims filed beyond one year from the date of tax payment are time-barred, and no relief can be granted even on grounds of equity. The bench observed that the company had delayed filing claims despite having cancellation timelines built into its membership agreements, remarking that “equity aids the vigilant, not those who sleep over their rights.” While MHRIL claimed there was no unjust enrichment, the Tribunal declined to examine the issue in detail, noting that since the refund itself was barred by limitation, other questions did not arise. The Tribunal also rejected the company’s argument that the tax paid should be treated as a deposit, citing the landmark Mafatlal Industries Ltd. v. Union of India (1997) decision, which held that all refund claims—except those arising from unconstitutional levies—must be made under Section 11B and within its prescribed period. Concluding that the Commissioner (Appeals) had taken a “reasonable, legal, and proper” view, the Tribunal upheld the rejection orders and dismissed all ten appeals filed by Mahindra Holidays. Case Details Case Title: Mahindra Holidays and Resorts India Ltd. Versus Commissioner of GST & Central Excise Case No.: Service Tax Appeal Nos. 40011 to 40014 of 2021 Date: 07.11.2025 Counsel For Appellant: Harish Bindumadhavan, Advocate Counsel For Respondent: AR Sanjay Kakkar Click Here To Read Order Read More: Woman Impersonating NIA Officer Nabbed at Delhi Airport with Rs. 10 Crore Worth of Ganja

Refund Of CENVAT Credit By Cash As Per Transitional Provisions Of S.142(5) Of CGST Act, Is Subject To Time Limit U/s 11B Of Central Excise Act: CESTAT

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