2011 (6) TMI 277 - AT - Service Tax

Refund of service tax paid on input services - notification no. 41/2007 - export of goods - Held that - the show-cause notice was issued on the ground that the refund claim filed is time barred and the appellant did not fulfil the condition of notification No.41/07 and on this basis only the lower adjudicating authority has rejected the refund claim. So far as later aspect is concerned, Ld. Commissioner (Appeals), has himself found that the ground of condition of Notification No.41/07 has not been fulfilled, is not correct. This was not challenged by the department at any stage. So far as the issue of limitation of time is concerned from the records of the case it is clear that the appellant paid the duty for the period from April 2006 to December 2007 under protest on 07/05/2009 and filed the refund claim on 23/07/2009, which is well within the time limit prescribed. Therefore, the refund claim is not hit by limitation of time.

Summary

Issues:
- Appeal against rejection of refund claim by Commissioner (Appeals)
- Time limitation for filing refund claim
- Fulfillment of conditions of Notification No.41/07-ST, dated 06/10/2007

Analysis:

Issue 1: Appeal against rejection of refund claim by Commissioner (Appeals)
The appellant filed an appeal against the order-in-appeal upholding the rejection of their refund claim by the lower adjudicating authority. The Commissioner (Appeals) rejected the claim on the grounds of limitation of time and non-fulfillment of conditions of Notification No.41/07-ST, dated 06/10/2007. The appellant contended that they paid service tax under protest and filed the refund claim within the prescribed time limit. They argued that the department's grounds for denying the refund claim were not valid, citing a Tribunal's decision in a similar case where the appeal was allowed.

Issue 2: Time limitation for filing refund claim
The Commissioner (Appeals) found that the appellant paid the duty under protest for the relevant period and filed the refund claim within the specified time limit. The contention that the department had no right to retain the tax due to the time bar was rejected. The Commissioner stated that paying the tax under protest and then claiming a refund did not absolve the appellant from their responsibilities. However, the Commissioner acknowledged that the appellant had paid the service tax belatedly but did not invoke penal provisions. The show-cause notice was issued based on the claim being time-barred, but the Commissioner found that the refund claim was filed within the prescribed time limit, thus not affected by time limitation.

Issue 3: Fulfillment of conditions of Notification No.41/07-ST, dated 06/10/2007
The Commissioner (Appeals) rejected the refund claim based on the non-fulfillment of conditions of Notification No.41/07-ST, dated 06/10/2007. However, the appellate tribunal found that the grounds for denying the refund claim on this basis were not valid. The tribunal noted that the department did not challenge this finding at any stage. As the appellant had paid the duty under protest and filed the refund claim within the specified time limit, the tribunal concluded that the refund claim was not affected by the failure to fulfill the conditions of the notification.

In conclusion, the appellate tribunal held that the Commissioner (Appeals)'s order was not sustainable, and the appeal was allowed with consequential relief, if any.