Service Tax Paid Under RCM In GST Regime Allowed To Be Carried Forward-“Doctrine Of Necessity”- Madras High Court

The Hon’ble High Court of Madras vide its order dated 22.02.2022 in the matter of M/s Ganges International Private Limited & Ors. in W.P. No.s – 528, 1092 & 1160 of 2019 applying ‘doctrine of necessity’ held that the refund claims for the Service Tax paid filed by the petitioners could have been considered under Section 142(3) of CGST Act by the respondents and be allowed to carry forward the same to the GST regime.

The Petitioners filed the present writ petitions praying for quashing the impugned orders dated 29.08.2018, 24.09.2018 & 16.07.2018 and direct the respondents to sanction the refund as claimed by the petitioners.


  • The Petitioner is engaged in providing various construction services to Government/private parties and was registered with erstwhile Service tax regime however on the introduction of GST i.e. 01.07.2017 shifted to GST regime. The last return for service tax filed by the petitioner was on 15.08.2017 for the period April to June 2017.
  • During the course of CERA audit, it was pointed out that the petitioner is liable to pay tax service tax for the royalty paid to the Government under reverse charge for services rendered at two quarries in view of Notification no. 22/2016 dated 13.04.2016 and amendment in Section 66D (a)
  • The petitioner as prompted by the department paid service tax of Rs. 26,88,460/- along with interest of 3,99,625/- for the period 01.04.2016 to 31.07.2017 for the royalty paid to the Government for mining the stones.
  • Since the amount paid as service tax was an input service being used for providing the output service, the petitioner was entitled for credit of the same. However, the petitioner could not avail the same due to the introduction of GST, erstwhile laws were repealed, CENVAT Credit rules, 2004 were superseded by new CENVAT Credit rules, 2017, various transitional provisions were enacted in Section 140 to 142 of the CGST Act.
  • The petitioner could file an application under GST TRAN – 1 for transferring the credit to GST regime as the payment of service tax by the petitioner was in December 2017, when prompted to pay by the Department.
  • The petitioner facing this peculiar situation filed a refund claim as the amount was paid on 30.12.2017. The application for refund was rejected by the respondents vide impugned order in original no. 19/2018 dated 24.09.2018 stating that the petitioner is eligible for taking CENVAT credit of the amount paid however there was no provision in new regime to allow as input tax credit in GST.
  • Almost similar facts are there in other two cases.To read more subscribe today:


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