Post-GST service tax paid under existing law is refundable in cash under Section 142(3).

The appellant provided, among other services, restaurant, accommodation, and convention services.

Following an audit for 2015–16 to 2017–18, it paid ₹23,84,916 in service tax under the reverse-charge mechanism on royalty paid in foreign currency and sought a refund/credit.

The Assistant Commissioner rejected a refund claim of ₹23,00,436 by order dated 20 June 2018, and the Commissioner (Appeals) upheld that rejection on 3 August 2020.

The appellant appealed to the Tribunal, contending that the post-GST payment and refund claim were governed by Section 142(3) of the CGST Act.

Whether service tax paid after the commencement of the CGST Act could be claimed as a refund under Section 142(3) of the CGST Act, notwithstanding that the payment was not reflected in the final ST-3 return.

Whether the appellant was entitled to a cash refund of the service tax paid under the reverse-charge mechanism.

Section 142(3) of the CGST Act provides for disposal, in accordance with the existing law, of refund claims relating to amounts paid under the pre-GST law.

The Tribunal relied on a Larger Bench decision, Final Order No. 40021/2023 dated 21 December 2023, which held that even where service tax was deposited after the CGST Act came into force, a refund of the amount claimed as CENVAT credit could be sought under Section 142(3), with an appeal against the refund decision lying to the Tribunal.

The Larger Bench also noted that Section 140 transition was unavailable where the payment was not reflected in the ST-3 return and that the CENVAT Rules were no longer in force after the CGST Act commenced.

The Tribunal observed that the Larger Bench ruling had been followed in subsequent Tribunal decisions.

The appellant had paid service tax under the Finance Act and sought a refund after the GST transition.

Applying the Larger Bench’s interpretation of Section 142(3), the Tribunal held that the timing of the payment—after the CGST Act came into force—did not preclude a refund claim under that provision.

The fact that the amount was not available for transition under Section 140 or credit under the CENVAT Rules did not defeat the statutory refund route under Section 142(3).

On that basis, the Tribunal found the refund in cash admissible.

It set aside the Commissioner (Appeals)’ order and allowed the appeal, with consequential relief, if any, in accordance with law.