The judgment of the Gujarat High Court in the case of Thermax Limited v. Union of India, 2019 (31) GSTL 60 (Guj.).

In the instant case, the taxpayer exported the manufactured goods on payment of excise duty and filed a rebate claim under Rule 18 of the Central Excise Rules, 2002 for the same. The authorities rejected this claim on the ground that the amount paid by the taxpayer was not ‘duty’ but in the nature of ‘voluntary deposit’. The authorities directed recredit of this amount in the Cenvat Account of the taxpayer on the ground that the Government cannot retain an amount not due to it.

It is pertinent to note that the authorities passed the above order post advent of GST due to which the sanctioned amount available in the Cenvat Account became infructuous. Accordingly, the taxpayer filed a writ petition before the High Court for payment of such amount in cash.

The High Court held that as per Section 142(3) of the Central Goods and Services Tax Act, 2017, every claim for the refund filed by any person before, on or after the advent of GST for refund of CENVAT credit / duty / tax / interest or any other amount paid under the erstwhile law, should be paid in cash. Accordingly, the Court directed the authorities to refund the amount to the taxpayer in cash.

NITYA’s Comments:

 Several exporters are struggling with this very issue and their rebate claims under the erstwhile laws have been rejected (either fully or party) after advent of GST with an order for re-claim of Cenvat credit. The authorities need to refund such amounts in cash.

The reasoning adopted by the Court is in line with our views expressed in NITYA’s Outlook | Issue 11 dated March 4, 2019 and is a favourable precedent for taxpayers seeking refund of erstwhile taxes that have been paid post-implementation of GST. The taxpayers can consider filing for cash refund in the following situations: 

• Where the authorities have passed orders (post advent of GST) for credit of any tax / deposit pertaining to erstwhile taxes in the Cenvat Account of the taxpayer.

• Where customs duty (CVD or SAD), excise duty or service tax is paid post advent of GST (which was otherwise creditable to the taxpayer pre-GST).