2015 (2) TMI 567 - AT - Service Tax

Denial of refund claim - Benefit of CENVAT Credit - Held that - Ground taken by Commissioner (Appeals) in denying the benefit to the appellant is not based on consideration of totality of facts and verification of the Assistant Commissioner of records. It is noted that the company is contributing service tax amounting to ₹ 4 Crore duty and Central Excise Duty amounting to ₹ 70 Crore. No mens rea could be imputed. Further no intention to evade is manifested. It is only a technical error for which substantial right could not be disallowed. Appellant has made a case for refund subject to legal proceedings. - Decided in favour of assessee.

Summary

Issues:
1. Appeal against the order of Commissioner (Appeals) for refund of service tax.
2. Consideration of evidence regarding passing on of service tax incidence to the service receiver.
3. Denial of refund claim by Commissioner (Appeals) despite evidence.
4. Verification of records by Assistant Commissioner regarding service tax incidence.
5. Grounds for allowing the appeal based on lack of undue enrichment and technical error.

Analysis:
1. The appellant appealed against the order of Commissioner (Appeals) dismissing their refund claim of service tax. The stay application was initially granted in their favor based on the balance of convenience due to the higher amount involved, and the case was set for early hearing.

2. During the final hearing, the appellant's counsel highlighted findings by the Assistant Commissioner where evidence favored the appellant. The evidence included a certificate from the service receiver stating that the service tax incidence was not passed on to them, leading to no undue enrichment. The appellant had paid the service tax but did not avail Cenvat credit, supporting their refund claim.

3. The counsel argued that despite clear findings and evidence, the Commissioner (Appeals) ruled in favor of the Revenue. The appellant's position was supported by the certificate issued by a chartered accountant confirming non-receipt of services against the invoice. The Assistant Commissioner's verification also supported the appellant's case.

4. The judgment noted that the denial of the refund by the Commissioner (Appeals) lacked a comprehensive consideration of facts and verification of records. The appellant's substantial contribution of service tax and central excise duty, amounting to significant sums, indicated no mens rea or intention to evade. The denial was considered a technical error, and the appellant was entitled to a refund pending legal proceedings.

5. Consequently, the appeal was allowed, emphasizing the lack of undue enrichment and the technical nature of the error. The judgment highlighted the importance of a holistic consideration of facts and verification of records in such cases, ensuring that substantial rights are not disallowed due to technicalities. The decision was made in favor of the appellant, granting them the refund of the service tax amount.