2014 (4) TMI 881 - AT - Service Tax

Denial of refund claim - Banking and other Financial Services - appellant had collected this amount from M/s.Tamil Nadu Electricity Board @ 8% for the services rendered during 1.4.2003 to 30.5.2003. Subsequently, they have refunded the amount to TNEB which was originally collected in excess and filed the refund claim - Held that - it is seen from the adjudication order that the appellant placed copy of the trial balance as on 31st March 2004 wherein they have claimed the amounts sought for refund as receivables . The appellant by their letter dt. 16.2.2005 submitted that they have refunded the amount to the TNEB towards excess collection of service tax for the period from 1.4.2003 to 13.5.2003. On perusal of the adjudication order, it is not clear that as to whether TNEB refunded the amount to the appellant. In my considered view the matter is required to be examined by the original authority afresh in the light of the decision of the Hon ble Rajasthan High Court in the case of A.K. Spintex Ltd. (2008 (11) TMI 89 - RAJASTHAN HIGH COURT) and the Tribunal s decision in the case of TFL Quinn India Pvt. Ltd. (2011 (8) TMI 989 - CESTAT BANGALORE). Accordingly, the impugned orders are set aside and appeal is allowed by way of remand - Decided in favour of assessee.

Summary

Issues:
Refund claim rejection for paying tax at 8% instead of 5% - Burden of proof on appellant regarding excess collection and refund to customer - Interpretation of relevant legal provisions and precedents.

Analysis:
The appellant, a Govt of Tamil Nadu Enterprise, filed a refund claim for paying tax at 8% instead of 5% under "Banking and other Financial Services." The adjudicating authority rejected the claim, directing the amount to be deposited as per Section 11B(2) of the Central Excise Act, 1944. The Commissioner (Appeals) upheld this decision.

Upon review, it was found that the appellant had collected the excess amount from M/s.Tamil Nadu Electricity Board at 8% for services rendered during a specific period. Subsequently, the appellant refunded this excess amount to the customer and filed the refund claim. Both lower authorities rejected the claim based on precedents like S.K. Kumar's Ltd. Vs CCE Indore and decisions of the Hon'ble Rajasthan High Court in Union of India Vs A.K. Spintex Ltd.

The Hon'ble Rajasthan High Court emphasized that if the appellant provides reliable evidence of passing the burden on the purchaser and the Revenue fails to rebut it, the presumption under Section 12B is sufficiently rebutted. Additionally, the court noted that when customers pay higher duty amounts, refunds are permissible upon raising debit and credit notes. The Tribunal's decision in CCE Hyderabad Vs TFL Quinn India Pvt. Ltd. further clarified the burden of proof requirement.

In the present case, the appellant submitted a trial balance showing the refund amount as receivables and confirmed refunding the excess tax to TNEB. However, it was unclear if TNEB refunded the amount to the appellant. Following the principles from the Hon'ble Rajasthan High Court and relevant Tribunal decisions, the matter was remanded for a fresh examination by the original authority. The impugned orders were set aside, emphasizing the need for a proper hearing before reaching a decision.