2011 (1) TMI 667 - HC - Service Tax

Refund - Notification No. 1/2006-S.T., dated 1-3-2006 - Assistant Commissioner of Service Tax has issued second show cause notice dated 9-3-2010, proposing to reject the part of the claim for refund of excess tax on the ground that the Tribunal s order covers only the point of unjust enrichment and does not cover the point of rejection of Rs. 4,00,754/- though the Tribunal has allowed the appeal of the petitioner - The observations made in the show cause notice at Annexure-G that the Tribunal has considered only on the point of unjust enrichment and does not cover the point of rejection, does not hold any water in view of the fact that the entire matter has been discussed and final order has been rendered - the writ petition is allowed

Summary

Issues:
1. Petitioner seeking to quash show cause notice and obtain refund of excess service tax.
2. Rejection of petitioner's refund application by the 2nd respondent.
3. Appeal before the Customs, Excise and Service Tax Appellate Tribunal (CESTAT).
4. Issuance of a second show cause notice proposing rejection of refund claimed by the petitioner.
5. Allegation of Assistant Commissioner of Service Tax not considering Tribunal's order.
6. Validity of show cause notice and direction for refund.

Analysis:

The petitioner filed a writ petition seeking to quash a show cause notice dated 9-3-2010 and to direct the 1st and 2nd respondents to implement the Final Order dated 6-11-2009 and sanction the refund amount of Rs. 8,09,534. The petitioner claimed to have paid excess service tax without claiming abatement as per Notification No. 1/2006-S.T. The application for refund was rejected by the 2nd respondent, leading to an appeal before the CESTAT, which was allowed. However, the Service Tax Department issued a second show cause notice against the Tribunal's order, prompting the petitioner to file this petition.

The Assistant Commissioner of Service Tax issued a second show cause notice proposing to reject part of the refund claim on the grounds that the Tribunal's order did not cover the rejection of a specific amount, despite allowing the appeal. The Assistant Commissioner's actions were criticized for not considering the Tribunal's order before issuing the notice. The High Court noted that the Tribunal had already discussed and rendered a final order on the matter, making the observations in the show cause notice invalid.

The High Court quashed the impugned order at Annexure-G and directed the Assistant Commissioner of Service Tax to refund the excess service tax with interest as claimed by the petitioner. The Court allowed the writ petition, emphasizing the importance of adhering to the Tribunal's decision and ensuring proper consideration of all relevant factors in such cases.

In conclusion, the judgment highlighted the need for authorities to diligently review and implement tribunal decisions, avoiding unnecessary issuance of show cause notices against valid refund claims. The Court's decision emphasized the importance of upholding the principles of natural justice and ensuring fair treatment of taxpayers in matters of tax refunds and appeals.