- Pending refund claims to be disposed of under earlier law. This section provides for the treatment of such refund claims which have been filed before the appointed day in respect of any tax, amount of cenvat credit, duty, tax or interest paid before the appointed day. It provides that all such claims will be disposed off as according the rules laid down in the previous law itself and any refund accruing on such account shall be paid in cash only. Thus no cenvat will be granted against such refund.
Presently, the department is allowing the rebate claim under Rule 18 of Central Excise Rules where major amount is sanctioned in cash but small portion of rebate claim is deducted and allowed as credit in Cenvat credit account. As per department the duty is to be paid on the transaction value at factory gate. for computing the same, the department deducts post removal expenses from the FOB value and this is compared with transaction value shown in ARE-1. Hence, the rebate claim is allowed in this value and rest is allowed as credit.
But because under the new law, old taxes and duties won’t exist, such cenvat will be of no use. Apart from this, one amendment has also been bought in form of a proviso which reads as follows:
PROVIDED FURTHER that no refund claim shall be allowed of any amount of Cenvat credit where the balance of the said amount as on the appointed day has been carried forward under this Act
It is a clarificatory in nature to remove such interpretation of the law which would lead to availing of double benefits i.e. cenvat and refund both. It has been clarified that where any cenvat is carried forward in return, then no refund shall be granted of such cenvat.
We have seen that refund of unutilised credit under Rule 5 of Cenvat credit Rules prescribes the condition that the refund claim should be debited from the cenvat account before filing the claim. This provision has been incorporated recently. But earlier the amount was debited only after sanction of rebate claim so that exact amount is debited in the cenvat credit account. If such type of situation emerge where the amount is not debited and it is carried forwarded in GST then claim will not be allowed.
Two new sections have been added after the above sections. These are:
Refund claims filed after the appointed day for goods cleared or services provided before the appointed day and exported before or after the appointed day to be disposed of under earlier law
Refund claims filed after the appointed day for payments received and tax deposited before the appointed day in respect of services not provided
Where the section 179 provided for refund claims filed before the appointed day, a need was felt to provide for such instances where refund claim will be filed after the appointed day but for the transactions undertaken before the appointed date. In the old draft, there was no provision for such instances. It is obvious that the refund in respect of goods sold/exported or service provided/exported before the appointed day (majorly in the quarter of Jan-March) under rebate/refund claim will have to be filed after the appointed day. In absence of any specific provision in this regard, litigation could have happened. Thus addition of these provisions is a welcome step. In both the cases, refund claims will be dealt with in accordance of previous laws and refund if any, will be paid fully in cash.
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