2016 (1) TMI 68 - AT - Service Tax

Refund of service tax - period of limitation - whether protest is required to submitted at every time of making payment of service tax - Held that - there was a continuing deemed protest by the appellant for the service tax paid for the subject services namely authorized free services for the automobiles sold under warranty and the charges for the said warranty of services had been taken from the customers at the time of sale/purchase of the vehicles and on which amount sales tax/VAT had been paid to the State Govt Authorities. When the department has already paid the refund amount for the same services for the two periods as the service tax was not chargeable, it is not understood why the department had been insistent on separate written protest for each payment against the said services which were not liable for payment of service tax. The appellant is entitled to this refund of this amount of service tax, which was not due to the exchequer. - Decided in favor of assessee.

Summary

Issues: Non-sanction of refund under Section 11 B of the Central Excise Act 1944

Analysis:
The main issue in this case before the Appellate Tribunal CESTAT Bangalore was the non-sanction of a refund totaling to Rs. 2,02,445/- for the period of July 2007 to November 2008. The dispute arose due to the appellant's failure to make payments of this amount of service tax under protest, leading to the contention that the refund claim filed after the expiry of one year from the relevant date is time-barred under the provisions of Section 11 B of the Central Excise Act 1944.

The appellant argued that their payment of service tax had always been under protest, either expressly or impliedly. They highlighted that refunds had been sanctioned for the same issue in prior and subsequent periods, indicating a continuing protest against the service tax payments. The appellant contended that for the middle period in question, there was no need for a separate express protest since the payment of service tax for the same service was ongoing.

The appellant further relied on the decision of the Hon'ble Supreme Court in the case of Mafatlal Industries Ltd Vs UOI to support their argument. The Supreme Court's decision emphasized the importance of the second proviso to Section 11B, which exempts the limitation of six months for refund claims where duty has been paid under protest. This interpretation was crucial in determining the appellant's entitlement to the refund.

On the other hand, the department argued that there was no clear protest lodged by the appellant during the payment of the subject service tax for the relevant period. The department contended that without a clear protest, the appellant was bound by the one-year time limit for filing refund claims as per Section 11 B of the Central Excise Act 1944. The department also cited a decision of the Hon'ble High Court of Punjab & Haryana in support of their position that refund applications beyond one year could not be accepted.

After considering the submissions from both sides, the Tribunal concluded that there was a continuing deemed protest by the appellant regarding the service tax paid for the subject services. The Tribunal emphasized that since the department had already refunded amounts for the same services in other periods where service tax was not chargeable, there was no justification for insisting on a separate written protest for each payment. The Tribunal's decision was influenced by the precedent set by the Hon'ble Supreme Court in the Mafatlal Industries case, supporting the appellant's claim that the wrongly charged service tax was refundable. As a result, the appeal was allowed, granting the appellant the entitled refund amount.

In conclusion, the judgment highlighted the significance of protests in refund claims under Section 11 B of the Central Excise Act 1944 and underscored the principles laid down by higher courts in interpreting such provisions to ensure fair treatment of taxpayers in cases of disputed tax payments.