2012 (10) TMI 835 - HC - Service Tax

Limitation u/s 11B - rejection of refund claim of demand of service tax paid - demand raised on ground of short duty paid without adjusting excess duty paid in other quarters - Held that - It is observed that petitioner deposited the duty on billing basis without actual collection, but within the time limit provided for depositing the duty on actual collection. In such case, u/s 68(3), the time available to a service provider such as the petitioner for depositing with the Government service tax though not collected from the service recipient was 75 days from the end of the month when such service was provided. Section 68(3) never provided that the same cannot be paid by the 15th of the month following the end of the month when such service was provided. Thus, if the petitioner deposited such duty with the Government during a particular quarter on the basis of billing without actual collection, he had discharged his liability under sub-section (3) of section 68. Thereafter, on an artificial basis, the Assessing Officer could not have held that he ought to have deposited same amount once all over again in the following quarter. This is fundamentally flawed logic on the part of the Assessing Officer. Further, to accept such formula adopted by the Assessing Officer would amount to collecting the tax from the petitioner twice. Before raising demand under the head of duty short paid, the Assessing Officer should have granted adjustment of the duty already paid by the petitioner towards the same liability.Under the circumstances, question of applying limitation under section 11B of the Act would not arise since we hold that retention of such service tax would be without any authority of law. Issuance of unjust enrichment - held that - A question of unjust enrichment is wholly irrelevant. It is not refund of a duty which is found upon completion of assessment excess paid that the petitioner is asking for. It is a duty which the petitioner has already paid separately and second time under insistence of the department which he is asking for being refunded. Under the circumstances, the question of unjust enrichment cannot be applied. - Decided in favor of assessee

Summary

Issues:
Challenge to order of Customs, Excise and Service Tax Tribunal for dismissal of appeal against Revenue Authorities' orders. Refund claim rejection based on limitation under section 11B of Central Excise Act, 1994.

Analysis:
1) The petitioner challenged the Tribunal's order dismissing the appeal against Revenue Authorities' orders. The petitioner, a company providing engineering services, paid service tax on billing basis without actual collection but within the prescribed time limit. The Assessing Officer raised a demand for short payment of service tax, which the petitioner paid along with interest. The Competent Authority rejected the refund claims as time-barred under section 11B of the Act.

2) The petitioner contended that refund claims were not time-barred as they arose only upon finalization of assessment. The petitioner argued for adjustment of tax already paid towards subsequent liabilities, citing relevant court decisions. The petitioner claimed the excess payment was a mistake and not subject to limitation under section 11B.

3) The Department opposed the petition, stating refund claims were time-barred under section 11B. They argued that duty was not paid provisionally or under protest, making the refund claims rightly treated as time-barred. The Department highlighted the pending examination of the unjust enrichment aspect.

4) The Court found that the petitioner had fulfilled their obligation under section 68 by depositing service tax within the prescribed time limit, even without actual collection. The Assessing Officer's demand for re-payment in subsequent quarters was deemed flawed and akin to double taxation. The Court held that the Department withholding the refund was unauthorized and not in accordance with the law.

5) The Court concluded that the Department's retention of the service tax amount claimed for refund was unjustified. Limitation under section 11B was deemed inapplicable, and the question of unjust enrichment was irrelevant in this context. The impugned order was set aside, and the Department was directed to refund the amount with interest within four weeks.

6) In summary, the Court allowed the petition, nullified previous orders, and directed the refund of the disputed amount to the petitioner with statutory interest within a specified timeframe.