2013 (12) TMI 626 - AT - Service Tax

Refund of service tax under Section 11B - Commissioner rejected refund claim - Held that - appellant herein who is a recipient of the taxable service provided by the RGTIL and had borne the burden of service tax is entitled to claim refund, consequent on the downward revision of the charges payable by the appellant to RGTIL in terms of the determination of the appropriate rate of charge, by the Regulatory Board, and the excess quantum of Service Tax remitted as a consequence - order of the Commissioner (Appeals), in brushing aside the contention of the petitioner to support its claim for refund by reference to the law declared by the Constitution Bench in Mafatlal Industries 1996 (12) TMI 50 - SUPREME COURT OF INDIA , is perverse and in total non-application of mind. The ld. Commissioner (Appeals) distinguished the clearly applicable law declared in Mafatlal Industries, as to the scope of Section 11B of the 1944 Act, without any analysis whatsoever of either the facts, the circumstances or the ratio of the judgment of the Constitution Bench - Decided in favour of assessee.

Summary

Issues:
1. Refund of service tax under Section 11B of the Central Excise Act, 1944.
2. Jurisdiction for filing refund claim.
3. Interpretation of Section 11B regarding the entitlement to claim refund by the recipient of the service.

Analysis:
Issue 1: The appellant, a cooperative society, applied for a refund of service tax amounting to Rs.16,99,714 under Section 11B of the Central Excise Act, 1944, for the taxable service provided by M/s Reliance Gas Transportation Infrastructure Ltd. (RGTIL) during April 2009 to May 2010. The refund claim was based on the downward revision of charges by the Regulatory Board, resulting in excess service tax remitted by RGTIL.

Issue 2: Initially, the appellant applied for a refund in Navi Mumbai, but the claim was rejected on the grounds of jurisdiction. The Assistant Commissioner, Bareilly, later sanctioned the refund claim, which was appealed by the Revenue. The Commissioner (Appeals), Meerut, allowed the appeal, stating that the refund claim should have been filed by the service provider, not the recipient, as per Section 11B of the Act.

Issue 3: The Tribunal analyzed the scope of Section 11B in light of the Mafatlal Industries case and concluded that a purchaser, if not passing on the burden of service tax, can claim a refund. Referring to precedent cases, the Tribunal established that a customer, in this case, the appellant, who bore the burden of service tax, is entitled to claim a refund following a revision of charges by the Regulatory Board.

Conclusion: The Tribunal found the decision of the Commissioner (Appeals) to be erroneous and lacking proper application of the law declared in Mafatlal Industries. The Tribunal allowed the appeal, quashed the order of the Commissioner (Appeals), and directed the payment of costs to the appellant.