2015 (1) TMI 1051 - AT - Service Tax

Denial of refund claim - Merger of 2 companies - Successor company after making debit entry in CENVAT Credit account paid the liability of predecessor company - Merger sanctioned by Bombay High Court but still pending before Madras High Court - After realizing the fact predecessor filed a declaration under Voluntary Compliance Encouragement Scheme (VCES) disclosing its service tax liability to the tune of ₹ 79,92,56,919/- and discharged the same - Successor filed refund of CENVAT Credit for the debit made - Held that - amount paid by the appellant is not required to be paid by the appellant as service tax and they have discharged the service tax liability of CNIL during the impugned period. We further note that the appellant has informed vide their letters March 2012 but their claim of re-credit arose only after the issuance of discharge certificate by the competent authority on 22.11.2013 holding that the duty liability discharged by CNIL. Therefore, the cause of action of taking re-credit of such excess amount paid by the appellant before the Hon'ble Bombay High Court and disposal of the same by the Hon'ble Bombay High Court on 27.01.2014, the same is within one year from the date of acknowledgement of discharge certificate issued by the competent authorities in favour of CNIL, therefore the claim of re-credit is filed by the appellant. Representation made by the appellant for re-credit of service tax paid on behalf of CNIL is within time. We further note that from the records placed before us, it is not ascertainable that whether the appellant has paid exactly an amount of ₹ 79,92,56,619/- on behalf of CNIL which is to be examined by the adjudicating authority. Therefore, for the limited purpose, quantification of the amount to be re-credited in the appellant's CENVAT credit account is required and the same is to be computed by the adjudicating authority. In these circumstances, we remand the matter back to the adjudicating authority for only limited purpose of quantification of the amount to be re-credited which shall be done by the adjudicating authority within 15 days of receipt of this order. The appellant is also directed to co-operate with the adjudicating authority for the quantification of the amount. - Appeal disposed of.

Issues Involved:
1. Maintainability of the writ petition.
2. Entitlement to re-credit of service tax paid by the appellant on behalf of CNIL.
3. Limitation period for claiming re-credit.
4. Competence of the Commissioner to decide the issue.
5. Examination of the exact amount paid by the appellant on behalf of CNIL.

Detailed Analysis:

1. Maintainability of the Writ Petition:
The petitioner sought a direction to credit their cenvat credit account for the amount of Rs. 79,92,56,619/- paid earlier. The respondents objected to the maintainability, arguing that the petitioner had only filed a representation and not a refund application. The Tribunal initially dismissed the appeal as non-maintainable, but the Bombay High Court intervened, stating that the Tribunal is competent to decide the appeal. Consequently, the Tribunal was directed to hear the appeal on its merits.

2. Entitlement to Re-credit of Service Tax Paid by the Appellant on Behalf of CNIL:
The appellant, registered under "Business Auxiliary Services," paid service tax on behalf of CNIL following the Bombay High Court's sanction of their merger scheme. However, the Madras High Court had not yet sanctioned the merger. Consequently, CNIL filed a declaration under the Voluntary Compliance Encouragement Scheme (VCES) and paid the service tax liability, obtaining a discharge certificate. The appellant argued that they are entitled to re-credit the amount paid on behalf of CNIL, as CNIL had already settled the liability. The Tribunal agreed, noting that the appellant is entitled to re-credit the service tax paid, as the amount was not required to be paid by them.

3. Limitation Period for Claiming Re-credit:
The respondents argued that the appellant's claim for re-credit was barred by the one-year limitation period under Section 11B of the Central Excise Act, 1944. However, the Tribunal noted that the cause of action for the appellant arose only on 22.11.2013, the date when the discharge certificate was issued to CNIL. The Tribunal held that the claim for re-credit was within time, as it was filed within one year from the date of the discharge certificate.

4. Competence of the Commissioner to Decide the Issue:
The appellant contended that the Commissioner was competent to decide the issue under Section 12E of the Central Excise Act, 1944, read with Section 83 of the Finance Act, 1994. The Tribunal noted that the Commissioner should have honored the High Court's direction to consider the representation as a refund application. The Tribunal found no error in the Commissioner's direction to approach the proper officer for pursuing the remedy.

5. Examination of the Exact Amount Paid by the Appellant on Behalf of CNIL:
The Tribunal noted that the exact amount of Rs. 79,92,56,619/- paid by the appellant on behalf of CNIL needed to be verified. The matter was remanded back to the adjudicating authority for the limited purpose of quantifying the amount to be re-credited. The adjudicating authority was directed to complete this quantification within 15 days of receiving the order, with the appellant's cooperation.

Conclusion:
The appeal was disposed of with directions to the adjudicating authority to quantify the exact amount to be re-credited to the appellant's CENVAT credit account. The Tribunal held that the appellant is entitled to re-credit the service tax paid on behalf of CNIL, and the claim for re-credit was within the limitation period. The Tribunal also clarified that the Commissioner was competent to decide the issue, and the matter was remanded for quantification purposes.

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