2015 (9) TMI 1277 - AT - Service Tax

Claim of refund claim by the recipient of services - service provider had paid the service tax wrongly - assessee who filed a refund claim was driven from one Officer to another for granting refund of service tax remitted by it to the service provider, for no ostensible reason - Held that - recipient of the service is also entitled to file a claim for refund is no longer res-integra. The issue stand concluded by the Constitution Bench decision in Mafatlal Industries Limited vs. Union of India - 1996 (12) TMI 50 - SUPREME COURT OF INDIA . This decision was followed in Indian Farmer Fertilizer Co-op. Ltd., vs. CCE, Meerut-II - 2013 (12) TMI 626 - CESTAT NEW DELHI . If the appellant which is a recipient of a service which is admittedly not taxable files a claim for refund within the prescribed period of limitation, it is axiomatic that it is entitled to do so before the Commissionerate under whose jurisdiction it pursues its taxable activities, business or is a registrant; or before the Commissionerate having authority over the provider of the service. That would be a matter of a legitimate choice for a claimant of refund. In this case, the appellant had initially filed a claim before the Delhi Commissionerate which rejected the same on the ground that it had no jurisdiction since the appellant was pursuing business outside its jurisdiction. The Bilaspur Commissionerate also rejected the refund claim on the ground that the provider of the service is not within its jurisdiction. The rejection by both Commissionerates is in my view unsustainable. - Decided in favour of assessee.

Summary

Issues:
1. Jurisdictional conflict in refund claim processing.
2. Entitlement of recipient to file a refund claim.
3. Bar of limitation in refund claims.

Jurisdictional Conflict:
The appellant, an integrated steel plant, engaged a service provider for construction work. The service provider remitted service tax, which the appellant later realized was for a non-taxable service. The appellant filed a refund claim with the Deputy Commissioner, Service Tax Division-II, Delhi, but it was returned twice on jurisdictional grounds. The Assistant Commissioner, Bilaspur, also rejected the claim citing jurisdictional issues. The appellate Commissioner upheld the rejection, stating that the claim should be entertained by the Delhi Commissionerate, not the Bilaspur Commissionerate. However, it was argued that the recipient of the service can file a refund claim within the jurisdiction where they operate or where the service provider is located. The rejection based on jurisdiction by both Commissionerates was deemed unsustainable.

Entitlement of Recipient to File Refund Claim:
The Constitution Bench decision in Mafatlal Industries Limited vs. Union of India established that a recipient of a non-taxable service can file a refund claim within the prescribed period of limitation. The appellant, being the recipient of a non-taxable service, was entitled to file a refund claim. The appellant's choice of filing the claim before the Delhi Commissionerate and subsequently before the Bilaspur Commissionerate was considered legitimate. The rejection of the refund claim by both Commissionerates solely based on jurisdiction was deemed arbitrary.

Bar of Limitation in Refund Claims:
The appellate order acknowledged that the appellant filed the initial refund claim within the prescribed period, meeting the bar of limitation. Despite the rejection based on jurisdiction, it was recognized that the appellant was entitled to a refund since the claim was within the limitation period and was filed with both Commissionerates. The Departmental Representative conceded that the appellant was entitled to a refund in totality, leading to the appeal being allowed, granting the appellant the refund claimed with consequential benefits as per the law, without any costs imposed.