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2015 (5) TMI 297 - AT - Service TaxDenial of refund claim - SEZ Unit - benefit of Notification NO. 4/2004-ST dated 31/03/2004 - held that - Amount which have been paid by the appellant as service tax were not payable as service recipient was situated in SEZ unit and were eligible to avail benefit of Notification NO. 4/2004-ST dated 31/03/2004. - as the ledger account indicates that the service tax amount is payable by their client and subsequently on being informed by their clients, they reversed the entries indicating that the service tax paid by them is receivable from Govt. Department. We also find that the client namely M/s Essar Steel Ltd. (Hazira) has submitted an affidavit, wherein they have categorically stated that the appellant had not charged any service tax nor was paid by them. The C.A.'s certificate produced by the appellant indicates that the amount for which refund is sought is paid out of pocket of the appellant here-in. In our considered view, both the lower authorities have not appreciated these evidences in the correct perspective. In our view, since the appellant here-in shown the entire amount of service tax liability as receivable and in support of which journal entries were produced, we find that the appellant is eligible for the refund of the amount as claimed - Refund granted.
Issues: Refund of service tax paid on services provided to a customer located in a Special Economic Zone (SEZ) who claimed exemption under Notification No. 4/2004-ST.
Analysis: The appeal was directed against Order-in-Appeal No. SB/39/LTU/MUM/2009 dated 22.12.2009. The appellant had paid service tax on services provided jointly with IDBI to a customer, M/s Essar Steel Ltd. (Hazira), who refused to pay service tax citing SEZ exemption. The appellant filed a refund claim with the Asst. Commissioner LTU, Mumbai, which was sanctioned but directed to be credited to the Consumer Welfare Fund due to uncertainty about passing on the tax burden. The appellant appealed, claiming the tax was not recovered from the client, supported by CA certificate, affidavit, bills, and ledger entries. The first appellate authority rejected the appeal, leading to the current appeal. The appellant demonstrated that the service tax claimed as a refund was not recovered from the client, negating the unjust enrichment issue. The CA certificate, affidavit, bills, and ledger entries supported the claim that the amount was not received from the client and shown as receivable in the Balance Sheet. The respondent argued that the appellant initially raised bills inclusive of service tax and claimed to have received payment from the client, thus questioning the refund necessity. However, the records and ledger entries indicated otherwise. The issue revolved around the refund of service tax paid by the appellant, which they believed was not payable due to the client's SEZ status and eligibility for exemption under Notification No. 4/2004-ST. The appellant initially raised bills indicating service tax liability, but evidence showed the client did not pay the tax amount. Ledger accounts and client affidavit supported the appellant's claim that the service tax was not charged or paid by the client. The CA certificate confirmed the refund amount was paid by the appellant. The Tribunal found that both lower authorities failed to appreciate the evidence correctly, concluding that the appellant was entitled to the refund as claimed. The appeal was allowed, setting aside the previous order and granting the refund with consequential relief.
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