Whether refund claim is vested right or statutory right?
The issue was considered by Delhi Cestat in BHEL Ltd while deciding upon the refund of education, SHE, Krishi Kalyan Cess. The appellant could not utilize these cess in the pre-GST regime because of exempt supply to SEZ, EOU, exports, etc.
Transitional Credit of all above cess into GST was restricted by Amendment Act 2018 retrospectively w.e.f. 01-07-2017.
Cestat held that ITC is vested right as per the supreme court decision in Eicher Motors and Samtel India. There is no provision in GST law which says that this cess shall lapse. By mere change in legislation, the assessee can not be made to lose his valuable right.
Cestat allowed the refund of education, SHE Cess, and Krishi Kalyan cess in the GST regime by relying upon Karnataka High decision in Slovak India Trading Co. Karnataka High court had laid down that where credit becomes unutilized due to stoppage of the factory, it can be granted in cash.
In this case, the department relying upon a large bench decision in Steel Strips argued that refund is not a vested right and is a statutory right. However, Cestat held that in view of contradictory judgments on the issue by various High Court, the cestat judgment in Steel Strips can not be applied.
It may be noted that Delhi Cestat in Sun Ultra Tech on the issue of refund of cess in the GST regime had held that cause of action for refund of cess arises on 01-07-2017 and not before that and limitation of one year under section 11B of Excise law to be counted accordingly.
