Indirect Tax Laws · Miscellaneous Provisions (GST)

Refund and Recovery of Pre-GST Dues under Section 142 CGST

Updated 5 October 2026

Section 142 of the CGST Act lets old-law refunds and recoveries be settled after 1 July 2017. Refund claims and proceedings follow the existing law, and any refund that is allowed is paid in cash, not as ITC. Any amount rejected cannot be taken as ITC. Dues that remain unpaid are recovered as arrears of tax under CGST.

Understand Refund and Recovery of Pre-GST Dues under Section 142

Before 1 July 2017 (the appointed day), taxes like central excise, service tax and VAT ran under the existing law. Many claims and demands were still open when GST began. Section 142 tells you what happens to them.

The core idea is simple: the old law decides the merits, GST decides the mechanics. A refund claim or a demand is judged under the old law, because the tax was paid or levied under that law. GST only changes how the money moves.

There are two directions of money. For refunds, the amount found admissible is paid in cash. It is not credited to the electronic credit ledger. Because the existing law governs the refund, its unjust enrichment test (Section 11B(2) of the Central Excise Act) still applies. The proviso to 142(3) credits the amount the claimant is not entitled to on this ground to the Consumer Welfare Fund. Under 142(3), 142(6)(a) and 142(8)(b), the amount rejected is not admissible as input tax credit under GST. For recoveries, an amount that becomes payable after assessment or adjudication under the old law is, unless already recovered under that law, recovered as an arrear of tax under CGST. The person who pays it cannot claim ITC of it. This no-ITC wording appears in both 142(6)(b) and 142(8)(a).

The sub-sections differ by trigger. Sub-section (3) deals with claims for refund of CENVAT credit, duty, tax or interest paid before the appointed day, whether the claim is filed before or after the appointed day. Sub-section (8) deals with the outcome of assessment or adjudication proceedings under the old law, covering both amounts recoverable (142(8)(a)) and amounts refundable (142(8)(b)). Sub-section (6) deals with appeals, reviews and references pending under the old law. These are disposed of under the existing law. Under 142(6)(a), any credit found admissible is refunded in cash, and the amount rejected is not admissible as ITC. Under 142(6)(b), any amount of credit, duty or tax that becomes recoverable from the claimant as a result of the appeal, review or reference is, unless already recovered under the existing law, recovered as an arrear of tax under CGST, and no ITC is available on it.

Hold the sub-sections apart. 142(3), 142(6)(a) and 142(8)(b) all say the admissible refund is paid in cash and the rejected amount is not admissible as ITC. Recoveries under 142(6)(b) and 142(8)(a) are made as arrears of tax under CGST and are not admissible as ITC. Match each rule to the sub-section the facts trigger.

In the exam, the question usually gives you a dated fact pattern and asks you to name the law that applies, the mode of payment and the treatment of the rejected or recovered amount.

Key rules to remember

Governing law: Pre-GST matter covered by 142(3), 142(6) or 142(8) → dealt with under the existing law; 142(3) covers claims for pre-GST duty or tax filed before or after the appointed day (1 July 2017). 142(6) covers pending appeals, reviews and references. 142(8) covers amounts arising from assessment or adjudication proceedings. Identify which one the facts trigger.
Mode of refund: Admissible amount → refund in cash (not credited to the electronic credit ledger); The unjust enrichment test of the existing law still applies to refund claims, so incidence passed on to others is not paid to the claimant.
Rejected amount: Rejected refund under 142(3), 142(6)(a) or 142(8)(b) → not admissible as ITC under CGST; The claimant cannot recover a rejected amount by taking it as credit. This bar is stated in all three provisions.
Recovery of arrears: Amount recoverable after old-law assessment or adjudication, not yet recovered under existing law → recovered as arrear of tax under CGST; Section 142(8)(a); 142(6)(b) is similar for credit, duty or tax that becomes recoverable from the claimant after a pending appeal, review or reference. Recoveries under both are not admissible as ITC. Any amount already recovered under the old law is deducted.
No ITC on amounts paid: Amount recovered as arrear under 142(6)(b) or 142(8)(a) → not admissible as ITC; Dues paid on old-law demands are a cost and cannot be set off through credit.
Sub-section map: 142(3): refund claims for pre-GST CENVAT credit, duty, tax, interest; cash refund, rejected amount not admissible as ITC | 142(8): (a) amounts recoverable after assessment or adjudication, recovered as arrear under CGST and not admissible as ITC; (b) amounts refundable, paid in cash, rejected amount not admissible as ITC | 142(6): pending appeals, reviews, references disposed of under existing law; (a) admissible credit refunded in cash, rejected amount not admissible as ITC; (b) amounts recoverable from the claimant recovered as arrear under CGST, not admissible as ITC; Use the trigger in the facts to pick the sub-section. The refund limbs (142(3), 142(6)(a), 142(8)(b)) carry the rejected-amount no-ITC rule. The recovery limbs (142(6)(b), 142(8)(a)) carry the arrear-of-tax and no-ITC rule.

How to solve Refund and Recovery of Pre-GST Dues under Section 142 questions

Use this sequence for any question on pre-GST refunds or dues. Write each step as provision, facts, conclusion.

1Identify the tax and the period. Confirm it relates to the existing law (excise, service tax, VAT) and to a period before 1 July 2017.
2Identify the trigger: a fresh refund claim, a pending appeal, review or reference, or an assessment or adjudication order. This tells you the sub-section: 142(3), 142(6) or 142(8).
3State the governing law: the sub-section you identified sends the matter to the existing law. 142(3) applies to claims for pre-GST duty or tax filed before or after the appointed day. 142(6) applies to pending appeals, reviews and references. 142(8) applies to amounts arising from assessment or adjudication proceedings. Do not extend this beyond the trigger in the facts.
4For a refund, split the claim into admissible, rejected and unjust-enrichment portions. Compute the admissible amount first, then deduct any incidence passed on.
5State the mode: the admissible amount is paid in cash, not as ITC. The rejected amount cannot be taken as ITC.
6For a recovery, take the total of tax, interest, fine and penalty. Deduct any amount already recovered under the old law. The balance is an arrear of tax under CGST.
7State that no ITC is available on the amount recovered, and write a one-line conclusion with the final figures.

Quickest way: Four-question shortcut for Section 142 dues

When to use it: Use this for MCQs and for short written parts where you must name the treatment quickly.

Is the matter about a pre-GST period and old-law tax? If yes, Section 142 applies.
Is money coming in or going out? Refund of admissible amount means cash. Recovery means arrear of tax under CGST.
Is anything rejected, or is anything recovered? Neither can be taken as ITC.
Check for unjust enrichment on refunds and for amounts already recovered on arrears. Adjust the figures, then conclude.

Common mistakes in Refund and Recovery of Pre-GST Dues under Section 142

Saying the pre-GST refund is credited to the electronic credit ledger as ITC.
Students link all GST-era credits with the ledger and forget that Section 142 refunds are cash refunds.
Fix: Write "refund in cash under the existing law" every time. ITC is not the mode for these refunds.
Allowing the rejected portion of a refund to be carried forward as ITC.
It feels unfair to lose the amount, so students look for another route.
Fix: State the rule: under 142(3), 142(6)(a) and 142(8)(b), a rejected amount is not admissible as ITC under CGST. Any challenge to the rejection follows the appeal provisions of the existing law, not a credit route.
Applying GST procedure (Section 54 and its two-year limit) to a pre-GST refund claim.
Students treat any refund filed after 1 July 2017 as a GST refund.
Fix: Test the period of the tax. Section 142(3) covers claims for duty or tax paid under the existing law, whether filed before or after the appointed day. If the tax was paid under the old law, the old law's procedure and time limits govern.
Ignoring unjust enrichment and paying the full admissible amount to the claimant.
Students focus on the cash rule and skip the old-law test.
Fix: Check whether the incidence was passed on to buyers. If it was, that part does not go to the claimant.
Recovering the full demand as an arrear without deducting what was already recovered under the old law.
Students read "recoverable" and add up the tax, interest and penalty without reading the facts about part-payment.
Fix: Section 142(8)(a) applies to amounts not recovered under the existing law. Deduct recoveries first.
Mixing up 142(3), 142(6) and 142(8).
All three send the matter to the existing law and provide for cash refunds, so they blur together. The refund limbs 142(3), 142(6)(a) and 142(8)(b) also share the rule that a rejected amount is not admissible as ITC.
Fix: Anchor on the trigger. 142(3) is a refund claim for pre-GST credit, duty, tax or interest. 142(8) is the result of assessment or adjudication proceedings, covering both recovery (142(8)(a)) and refund (142(8)(b)). 142(6) is for pending appeals, reviews and references: 142(6)(a) covers the refund of admissible credit, and 142(6)(b) covers amounts recoverable from the claimant.

Worked examples

Example 1

A manufacturer paid central excise of ₹4,00,000 in March 2017 in excess of its actual duty liability. It filed a refund claim in September 2017. The officer finds ₹3,00,000 admissible and rejects ₹1,00,000. The unjust enrichment test is applied only to the admissible amount, and ₹50,000 of that admissible amount represents duty incidence passed on to buyers. How is the claim treated under Section 142 of the CGST Act?

Show the solution

Provision: Section 142(3) applies. The claim is filed in September 2017, after the appointed day, but it relates to duty paid in March 2017 under the existing law. Section 142(3) covers such claims, whether filed before or after the appointed day.
Governing law: the claim is disposed of under the existing law (Central Excise Act), not under Section 54 of CGST.
Admissible amount: ₹3,00,000.
Unjust enrichment: the test is applied only on the admissible ₹3,00,000, not on the rejected ₹1,00,000. The facts say ₹50,000 of the admissible amount was passed on to buyers. The manufacturer is not entitled to that part, so it is not paid to the manufacturer. Under the proviso to Section 142(3), read with Section 11B(2) of the Central Excise Act, the amount not payable to the claimant on this ground is credited to the Consumer Welfare Fund. Cash refund to the claimant = ₹3,00,000 − ₹50,000 = ₹2,50,000.
Rejected amount: ₹1,00,000 is not admissible as ITC under CGST. Any challenge to the rejection follows the appeal provisions of the existing law.
Check: ₹2,50,000 + ₹50,000 + ₹1,00,000 = ₹4,00,000, the full amount claimed.

Answer: Cash refund to the manufacturer ₹2,50,000. ₹50,000 goes to the Consumer Welfare Fund. The rejected ₹1,00,000 cannot be taken as ITC.

Example 2

An adjudicating authority passed an order in December 2017 under the existing service tax law against a company for the period 2015-16. The order confirms service tax of ₹5,00,000, interest of ₹80,000 and penalty of ₹60,000. The company has already paid ₹1,00,000 under the existing law. The balance remains unpaid. How is the balance recovered, and can the company take ITC of it?

Show the solution

Provision: Section 142(8)(a) applies. An adjudication order under the existing law has made an amount recoverable.
Total dues: ₹5,00,000 + ₹80,000 + ₹60,000 = ₹6,40,000.
Deduct the amount already recovered under the existing law: ₹6,40,000 − ₹1,00,000 = ₹5,40,000.
Mode of recovery: because the balance is not recovered under the existing law, it is recovered as an arrear of tax under CGST.
ITC: the amount recovered is not admissible as input tax credit under CGST.

Answer: ₹5,40,000 is recovered as an arrear of tax under the CGST Act, and no ITC is available on it.

Exam tips

Always name the appointed day, 1 July 2017, and the existing law (excise, service tax or VAT). Marks go to this identification.
In case-scenario MCQs, look for two keywords: "cash" and "input tax credit". Refunds are in cash. Rejected or recovered amounts are never ITC.
Split figures into admissible, rejected, unjust-enrichment and already-recovered amounts before you write the final cash figure.
Write the answer as provision, facts, conclusion, and cite the sub-section only when the trigger in the facts clearly points to it.
Read the filing date and the tax period carefully. The date of filing can be after the appointed day while the tax period is still before it.

Practice questions from Miscellaneous Provisions (GST)

Refund and Recovery of Pre-GST Dues under Section 142: frequently asked questions

What does Section 142(3) of the CGST Act cover?

It covers claims for refund of CENVAT credit, duty, tax or interest paid before the appointed day, whether the claim is filed before or after that day. These are disposed of under the existing law. The admissible amount is paid in cash, and any rejected amount is not available as ITC.

How is Section 142(8) different from 142(3)?

Section 142(8) is triggered by assessment or adjudication proceedings under the old law. It covers amounts that become recoverable, which are recovered as arrears under CGST, and amounts that become refundable, which are paid in cash. Section 142(3) is triggered by a refund claim for pre-GST credit, duty, tax or interest.

Can a pre-GST refund be given as input tax credit?

No. The admissible amount is paid in cash under the existing law. A rejected amount also cannot be taken as ITC under CGST.

Does unjust enrichment apply to refunds under Section 142?

Yes, refunds are governed by the existing law, which includes its unjust enrichment test. If the incidence of duty or tax was passed on to others, that part is not paid to the claimant. Check the facts, as the test does not apply to every kind of refund.