2015 (12) TMI 90 - AT - Service Tax

Denial of refund claim - demands consequent to audit by department under EA 2000 - Discrepancy found during Audit - Held that - It is observed that Assessee had not accepted the contentions of the audit. It is not on record that the audit party had raised the same objections, which they have confirmed in their audit report, to the appellant earlier. It is also not on record that the appellant had accepted these objections finally before they were included in the audit report. Therefore, in all fairness, the appellant should be given an opportunity to present their case before the adjudicating authority alongwith whatever evidences they have to substantiate their case. The adjudicating authority is free to decide the issue on merit as per law. - Matter remanded back - Decided in favour of assessee.

Summary

Issues:
Refund claim rejection based on audit findings and adjustment against demands; Discrepancies in audit objections and payments made voluntarily; Appellant's plea for examination on merits; Finality of audit report under Section 73(4A) of Finance Act, 1994; Opportunity for appellant to present case before adjudicating authority.

Analysis:
The appellant challenged the rejection of their refund claim related to amounts adjusted against demands following an audit under EA 2000. The audit focused on reconciling financial statements with ST-3 returns, identifying discrepancies, and voluntary payments made by the appellant. Despite the appellant's objections, the adjudicating authority and Commissioner (Appeals) upheld the rejection. The appellant contended that they paid amounts provisionally and disagreed with the audit objections concerning services classification. The appellant sought a fair examination of the issue on merits, emphasizing that they never admitted or accepted the audit objections.

During the proceedings, the Revenue's Authorized Representative argued that the voluntary payments indicated the appellant's acceptance of the audit objections. Referring to Section 73(4A) of the Finance Act, 1994, it was asserted that the audit report had attained finality, precluding the appellant from reopening the matter. However, upon evaluating both parties' contentions and scrutinizing the reports, the Tribunal found merit in the appellant's submissions. Notably, there was no evidence that the audit objections, later included in the report, were previously raised with the appellant or accepted by them. Consequently, the Tribunal deemed it appropriate to grant the appellant an opportunity to present their case before the adjudicating authority with supporting evidence for a thorough examination on merit as per the law.

In conclusion, the Tribunal allowed the appeal by remanding the case for further proceedings, emphasizing the importance of a fair opportunity for the appellant to substantiate their position before the adjudicating authority. This decision underscores the principle of due process and the right to be heard in matters concerning audit findings and refund claims, ensuring a just and lawful resolution of the dispute.