2014 (12) TMI 706 - AT - Service Tax

Denial of refund claim - Franchise service - interest paid by the appellant does not tally with the calculation as per the appellate order - Held that - Amounts deposited by the appellant whether by way of tax or interest, it assumed the character of deposit when it was held in its favour that no Service Tax is payable and or exigible. Thus, I hold that the adjudicating authority has erred in rejecting the refund claim of ₹ 97,520/- on the ground of mismatch. Thus, the appeal is allowed, the impugned order is set aside and the adjudicating authority is directed to issue the refund - Decided in favour of assessee.

Summary

Issues:
1. Appeal against Order-in-Appeal No. SR/212/NGP/2011 dated 20.1.2011 passed by the Commissioner of Customs & Central Excise (Appeals), Nagpur.
2. Dispute over the refund claim of Rs. 97,520 due to mismatch in tax and interest payments.
3. Appeal dismissed by the Commissioner (Appeals) on the ground of time bar.

Analysis:
Issue 1: The appellant filed an appeal against Order-in-Appeal No. SR/212/NGP/2011 dated 20.1.2011 passed by the Commissioner of Customs & Central Excise (Appeals), Nagpur. The appellant, a distributor for BSNL Pre-paid Cellular services, was registered under the category of 'franchise service.' The appellant had deposited Rs. 24,73,590/-, including interest, during a specific period in response to a show-cause notice. The Commissioner (Appeals) allowed the appeal, stating that the appellant is a trader in SIM cards and had paid Sales Tax on such transactions, making Service Tax not payable. The appellant applied for a refund of Rs. 24,76,590/-. The Assistant Commissioner allowed a refund of Rs. 23,76,070/- but rejected Rs. 97,520/- due to a mismatch in the amount paid and the appellate order calculation.

Issue 2: The dispute arose over the refund claim of Rs. 97,520/- rejected due to a mismatch between the tax and interest payments made by the appellant and the calculations based on the appellate order. The appellant argued that since it was held that no Service Tax was payable, the deposited amount acquired the character of a deposit, making the entire amount refundable. The appellant contended that rejecting the refund amount due to a mismatch resulted in a miscarriage of justice. The Tribunal held that the amounts deposited by the appellant, whether tax or interest, became deposits when it was established that no Service Tax was exigible. Consequently, the adjudicating authority erred in rejecting the refund claim of Rs. 97,520/- based on a mismatch. The Tribunal allowed the appeal, set aside the impugned order, and directed the adjudicating authority to issue the refund of Rs. 97,520/- within four weeks.

Issue 3: The appellant's appeal was dismissed by the Commissioner (Appeals) on the ground of time bar. However, the Tribunal, after considering the rival contentions, found in favor of the appellant, emphasizing that the rejection of the refund claim due to a mismatch was unjustified. The Tribunal overturned the decision, allowing the appeal and directing the refund of the disputed amount.