2013 (5) TMI 673 - AT - Service Tax

Refund - Re-credit of the service tax amount when services are not provided - Rule 6(3) - Mandap Keeper services - party plot could not be given for the intended purposes - refund of amount to the customers - period of limitation - held that - there is no time limit indicated in the provisions of Rule 6(3) of Service Tax Rules, 1994 for the appellant to utilize or take credit of excess tax paid by him. In the case in hand, there being no dispute as to the payment of excess Service Tax by the appellant and having refunded to his client, in my view, the appellant can avail the credit of such excess Service Tax paid by him for discharge of Service Tax liability which may arise subsequently having started his business as Mandap Keeper services. - both the lower authorities are in error in not sanctioning the refund to the appellant. Lower authorities directed to give the credit of excess amount of Service Tax paid by the appellant that can be utilized to discharge the Service Tax liability arising out of the services rendered by him, after lifting of sealing of the party plots. - Decided in favor of assessee.

Summary

Issues:
Refund claim under Section 11B of Service Tax Rules, 1994; Applicability of Rule 6(3) of Service Tax Rules, 1994.

Issue 1: Refund claim under Section 11B of Service Tax Rules, 1994

The appellants, engaged in providing Mandap Keeper services, collected advance payments along with Service Tax from customers. Due to the sealing of party plots by the Ahmedabad Municipal Corporation, bookings were canceled, and the appellants refunded the booking amounts along with the Service Tax. The lower authorities rejected part of the refund claim as time-barred under Section 11B. The first appellate authority upheld this decision. The consultant argued that Rule 6(3) should apply, allowing the credit of Service Tax paid since the appellants refunded the amount to customers. The Departmental Representative contended that Section 11B's limitation period applies. The Tribunal found that the refund claim was beyond one year under Section 11B but analyzed Rule 6(3) to allow the credit of excess Service Tax paid for future liabilities.

Issue 2: Applicability of Rule 6(3) of Service Tax Rules, 1994

The Tribunal examined Rule 6(3) of the Service Tax Rules, 1994, which allows an assessee to take credit of excess Service Tax paid if the service was not provided and the amount was refunded to the recipient along with Service Tax. The Tribunal noted that the appellants had refunded the Service Tax along with the advance payments to customers. The Tribunal emphasized that Rule 6(3) does not specify a time limit for utilizing the credit of excess tax paid. As the appellants had won a case in the High Court, resumed business, and confirmed their ability to utilize the credit, the Tribunal held that the lower authorities erred in not granting the refund. The Tribunal directed the lower authorities to give credit for the excess Service Tax paid, which could be used to discharge future Service Tax liabilities.

In conclusion, the Tribunal allowed the appeals, setting aside the lower authorities' decisions and directing the credit of excess Service Tax paid by the appellants for future liabilities. The judgment clarified the applicability of Rule 6(3) over Section 11B in this scenario, emphasizing the assessee's right to credit for refunded amounts.