2016 (2) TMI 726 - AT - Service Tax

Refusal to give refund despite clear direction by the higher authority - Claim of refund of tax paid earlier - Taxability of activity of operation and maintenance of railway tracks as well as maintenance of rolling stock - this is the second round of appeal. - Held that - The orders of the first appellate authority in the first round are crystal clear in setting aside the rejection of the refund claim after detailed appreciation of facts and circumstances in which the tax had been paid by the appellant besides taking into account the eligibility of the appellant for the refund claim. The original authority was merely required to implement the direction relating to consequential relief. Contrarily, it appears that the refund sanctioning authority took it on himself to sit in judgment on the higher appellate authority by issue of a fresh notice for rejection on the ground of limitation without applying his mind to the scope of his authority In such a scheme for protection of the rights of the individual against arbitrariness of the tax executive, a lower authority is mandated to comply with the orders of the higher appellate authority or to act in accordance with the decision of the reviewing authority. Here the two have coalesced and, by its action of choosing a third option, the original authority has placed himself beyond the pale of acceptable behavior. Refund allowed - Cost of ₹ 10,000 imposed on the Deputy Commissioner of Central Excise, Service Tax Division -III, Delhi - Decided in favor of assessee.

Summary

Issues:
Refund claim rejection, jurisdiction, limitation period, judicial discipline, maintainability, compliance with appellate orders, imposition of cost.

Analysis:
The appeal was filed by M/s RITES Limited against the rejection of their refund claim by the Deputy Commissioner of Service Tax, which was upheld by the Commissioner of Central Excise (Appeals). The appellant had initially sought a refund of excess tax paid for providing "consulting engineers" service. Despite the clarification received from the Director General of Service Tax, the refund claims were rejected. However, the Commissioner (Appeals) allowed the appeals, and these orders attained finality as they were not challenged by the Revenue.

The original authority issued a show cause notice after the Commissioner's order, resulting in partial refund and rejection of the remaining claims on the grounds of being time-barred. The appellant contended that the refund should have been sanctioned promptly after the Commissioner's order and raised concerns about the authority's failure to follow the appellate direction. The appellant also highlighted the extension of the refund period due to amendments in May 2000.

The Tribunal noted that this was the second round of appeal and emphasized that the original authority was obligated to implement the direction for consequential relief as per the earlier appellate orders. The Tribunal criticized the refund sanctioning authority for re-examining the issue of limitation without proper consideration, indicating a lack of judicial discipline and understanding of tax law.

It was emphasized that all grounds against an assessee should be stated comprehensively initially, and the original authority's actions were seen as an attempt to deny the refund by any means necessary. The Tribunal reiterated that once an order attains finality, the authority must release the refund, and raising maintainability issues later is improper and indicative of obstinacy.

The judgment highlighted the importance of compliance with appellate orders and the hierarchical appellate mechanism in tax matters. The Tribunal condemned the refund sanctioning authority's actions as an act of indiscipline and impropriety, leading to unnecessary burdens on the appellate process. Consequently, the impugned order was set aside, and a cost of ` 10,000/- was imposed on the Deputy Commissioner of Central Excise, Service Tax Division -III, Delhi for their actions.