2014 (6) TMI 32 - AT - Service Tax

Claim of refund of service tax on the ground that the same was not payable - service tax was paid on notional interest after audit objections - Sub licensing of premises - Receipt of interest free security - Bar of limitation - Held that - Revenue authorities are required to look into the limitation aspect. Admittedly, the refund is to be given only in those cases where it is not required to be deposited. As such, limitation would not apply in any case of refund, which proposition would be against the law. Further, it is well settled that the Revenue authorities, including the Tribunal, being creature of statue are required to work within the four corners of the law and cannot go beyond it. As such the refund, if otherwise admissible, has to meet the barred of limitation. They have applied for the refund claim on 12.08.2009. The original adjudication authority has observed that the said letter dated 12.08.2009 is in the office records but has not accepted the same on the ground that there is no evidence of having received the said letter in the office. In my view, the above findings are self-contrary. On one hand the Asstt. Commissioner is accepting the presence of the refund claim application in the office record and on the other hand has observed that the same does not show the receipt. If the same was actually not filed by the appellant, I really fail to understand as to how the said letter travelled up to the concerned file and found its way therein. As such, I deem it fit to set aside the impugned order and remand the matter to the original adjudicating authority look into the said fact afresh and to decide the issue accordingly - Decided in favour of assessee.

Summary

Issues:
1. Whether service tax should be charged on interest received on security deposits.
2. Whether the refund claim of service tax deposited by the appellant is denied on the point of limitation.
3. Whether the Revenue authorities are required to refund the service tax without considering the time bar aspect.
4. Whether the appellant's refund claim application dated 12.08.2009 was accepted by the original adjudication authority.

Analysis:

1. The appellants received interest-free security deposits from sub-licensees. An audit suggested that the interest received on these deposits should be considered as consideration for property use, attracting service tax. The appellants voluntarily paid service tax on this interest amount. However, they later sought a refund based on a legal precedent that no service tax was payable on notional interest. The lower authorities denied the refund claim citing limitation. The Tribunal emphasized that refunds are only granted when not required to be deposited, and thus, limitation applies. The Revenue authorities must work within the legal framework, and if a refund is admissible, it must meet the limitation period.

2. The appellant argued that they initially applied for a refund on 12.08.2009, but the authorities considered the application filed on 18.02.2011 due to a format issue. The Tribunal found the authorities' stance contradictory as they acknowledged the presence of the application in office records but questioned its receipt. The Tribunal set aside the order and remanded the matter to the original adjudicating authority to reevaluate the evidence and make a decision accordingly.

3. The Tribunal disagreed with the appellant's contention that Revenue authorities are not required to consider the limitation aspect for refunds. It emphasized that refunds must adhere to legal limitations, and the authorities cannot overlook this requirement. The Tribunal clarified that if a refund is permissible, it must still meet the limitation criteria, as Revenue authorities are bound by statutory provisions.

4. The Tribunal allowed the appeal by remanding the case for further examination by the original adjudicating authority. The decision highlighted the importance of proper evaluation of evidence and adherence to legal procedures in handling refund claims related to service tax matters.