Pre-GST unutilized Credit of Education Cess, SHEC and KKC eligible to be refunded

The CESTAT, Chennai Bench has ruled that unutilised cenvat credit of Education Cess, SHEC, and KKC accrued before the GST regime is eligible for refund. The tribunal set aside an order that rejected a refund claim, stating that such credits represent a vested right that does not extinguish with the change in law. The assessee is entitled to file a refund claim, subject to verification.

The CESTAT, Chennai Bench in the matter of M/sInternational Seaport Dredging Pvt.Ltd v Commissioner of GST & Central Excise [Order no. 40249 of 2022 dated, June 17, 2022] set aside the impugned order pertaining to the rejection of refund of unutilized cenvat credit of Education Cess, Secondary and Higher Education cess ("SHEC") and Krishi Kalyan cess ("KKC") and has held that such rejection is not justified and assesses is entitled to file the refund claim.

Facts

M/s International Seaport Dredging Pvt. Ltd.("the Appellant") is a registered company, engaged in providing dredging services, filed refund claim under Section 11B of the Central Excise Act, 1944 ("the Central Excise Act") for the refund of unutilized cenvat credit availed on Education cess, SHEC and KKC and carried forward the same to TRAN-1 after the introduction of the Goods and ServicesTax ("GST"). The Revenue Department ("the Respondent") by an order ("the impugned order") rejected the same holding that under Section 140 of the Central Goods and Services Tax Act, 2017 ("the CGST Act") refund can be sought only for eligible duties and such duties excludes refund of cess. Aggrieved by the impugned order, the Appellant filed an appeal before the Commissioner.

Issue

• Whether the Appellant is eligible for refund of Education cess, SHEC and KKC lying unutilized in hisCenvat account?

Held

The CESTAT, Chennai Bench in [Order no. 40249 of 2022 dated June 17, 2022] held as under:

• Relied upon, the judgement of CESTAT in the case Schlumberger Asia Services Ltd. v. Commissioner of CE & ST [2021] in which it was held that the assessee is entitled to file the refund of Education Cess, SHEC and KKC and accordingly the refund claim is to be allowed subject to verification of the records.
• Further stated that, when GST Regime came in force, credit lying in account of assessee was allowed to be transferred to GST Regime.Also, credits earned were vested right and such right would not be extinguished with change of law unless there was specific provision which would debar such refund.
• Held that, the Appellant is entitled to file the refund claim and rejection of refund is not justified, accordingly, the impugned order is set aside.