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2015 (1) TMI 1148 - AT - Service TaxGoods transport agency services - Recovery of erroneously granted refund - Held that - Circular No. 423/56/98 dt. 22-09-1998 by referring to the decision of Hon ble Supreme Court in the case of CCE Vs. Re-rolling Mills reported in 1997 (94) ELT 8 (SC) has clarified that timely demands should invariably be raised with in the normal period under section 11A of Central Excise Act, 1944. It also refers to the opinion of Law Ministry holding that the demand for recovery of erroneous refund has to be made under section 11A of Central Excise Act, 1944 within the limitation period. Similar view has been taken by this Tribunal in the case of Motor Industries Company Ltd Vs CCE reported in 1999 (6) TMI 124 - CEGAT, MADRAS ; in the case of Gillooram Gouri Shanker Vs CCE reported in 2000 (7) TMI 186 - CEGAT, KOLKATA and also in the case of Rosemount (I) Ltd Vs CCE reported in 1998 (1) TMI 158 - CEGAT, MUMBAI . I find that in the present case, show cause notice for recovery of erroneous refund under section 73 (1) has not been issued by the department. The Board Circular and the decision of Hon ble Supreme Court as well as this Tribunal s judgment are squarely applicable in the present case. I, therefore, hold that the learned Commissioner could not have passed the impugned Order in Revision without issuing notice for recovery of erroneous refund under section 73 of Finance Act, 1994. The order is liable to be set aside on this ground alone. - Recovery of erroneously granted refund is not possible. Accordingly I set aside the impugned order - Decided in favour of assessee.
Issues involved:
1. Recovery of excess service tax paid by the appellant. 2. Validity of the order for recovery of erroneously granted refund without issuing notice under section 73(1) of Finance Act, 1994. 3. Eligibility of the appellant for adjustment of service tax excess paid under Rule 6(3) of Service Tax Rules, 1994. Issue 1: Recovery of excess service tax paid The appellant, engaged in biscuit manufacturing, availed services of a goods transport agency and paid excess service tax of Rs. 1383745 for the period May 2007 to March 2008. The Assistant Commissioner granted a refund of Rs. 952164 and ordered adjustment of the remaining amount in subsequent payments. However, the jurisdictional Commissioner ordered recovery of Rs. 1559695, stating that the refund granted by way of adjustment was barred by limitation under Section 11B of the Central Excise Act, 1944. The Commissioner held that the excess amount refunded was recoverable as it exceeded the actual liability. The appellant argued that the recovery without issuing a notice under section 73(1) for erroneous refund was impermissible, citing relevant case laws and circulars. The Tribunal held that recovery of erroneously granted refund was not possible without a proper notice and set aside the order for recovery. Issue 2: Validity of the recovery order without notice under section 73(1) The appellant contended that the Commissioner could not order recovery without issuing a notice under section 73(1) of the Finance Act, 1994. The appellant argued that the absence of a demand for the erroneously granted refund precluded the department from enforcing recovery. The Tribunal referred to Circular No. 423/56/98 and various judgments, including those of the Hon'ble Supreme Court and the Tribunal, emphasizing the necessity of timely demands under section 11A of the Central Excise Act, 1944 for recovery of erroneous refunds. The Tribunal held that the Commissioner's order for recovery without issuing a notice under section 73(1) was untenable, citing legal precedents and set aside the impugned order on this ground. Issue 3: Eligibility for adjustment of excess service tax paid The appellant argued that the excess service tax paid during May 2007 to November 2007 could have been adjusted for subsequent payments under Rule 6 of the Service Tax Rules, 1994. The appellant contended that the excess amount was essentially an unspent deposit and should have been refunded without any limitation. The Tribunal, however, focused on the absence of a proper notice for recovery of the erroneously granted refund and did not delve into the specific issue of adjustment under Rule 6. As the recovery order was set aside on procedural grounds, the Tribunal did not address the eligibility of the appellant for adjustment of the excess service tax paid. In conclusion, the Tribunal held that the recovery of erroneously granted refund without issuing a notice under section 73(1) was impermissible, setting aside the Commissioner's order for recovery of the excess amount. The Tribunal did not delve into the specific issue of adjustment of the excess service tax paid under Rule 6 due to the procedural irregularity. The appellant successfully argued that the legal position favored them, leading to the allowance of the appeal with consequential relief, if any, as per law.
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