2016 (3) TMI 141 - AT - Service Tax

Legality and propriety of the direction in the impugned order - Return of the refund application to the appellant sans sanction or rejection - Assessee pleaded that the claim be held in abeyance but without demur and with ingenuity, lower authorities have devised the outcome of returning the application for refund without dealing with the ground for such claim - a course of action not thought of in the law and borders on impossibility of implementation. Held that The claim having been filed and taken on record, its return can be said to be complete only when its custody is transferred back to the claimant. It is moot whether an order can render it to be so without the willing participation of the claimant in a custodial transaction. That the claimant has been pursuing appellate remedies is a clear indication of lack of such willingness. The orders of the lower authorities would appear to be no whit more than printing on a piece of paper. The claim itself is symptomatic of a lack of faith in the fairness of the institution in dealing with refund claims. Every conceivable reason is assigned to justify the unwillingness to open the purse strings and not the least used are limitation and pre-requisite of challenging the assessment. It would appear that the claim has been filed to forestall recourse to these justifications. That the claim has been filed and that it has been preceded by payment of tax is undeniable. That the content of the order passed in relation to the refund claims is unimplementable is uncontestable. The eligibility for refund should have been decided taking into consideration the taxability of the service and the procedures laid down in law relating to tax collection and refund. The order of the original authority has merged with that of the first appellate authority and the merged order lacks legal sanctity for reason. Therefore, the return of the refund claim is not said to be legal and to be decided as afresh by the original authority. - Appeal disposed of

Summary

Issues:
Refund claims related to service tax payments under protest; Applicability of tax liability; Rejection of refund claims; Provision for keeping refund application in abeyance; Legality of returning refund application without sanction or rejection; Lack of provision for returning refund claims; Premature description of refund claims; Inadequate justification for returning refund claims; Responsibilities of tax authorities in handling refund claims.

Analysis:
The appellant, a software development company, filed refund claims for service tax payments made under protest for different periods. Despite asserting non-liability for tax before a certain date, they paid substantial amounts as service tax. The refund claims were not sanctioned but returned by authorities citing prematurity and lack of provision for keeping them in abeyance. The appellant challenged this decision before the Commissioner of Central Excise (Appeals), who upheld the original authority's decision. The matter reached the appellate tribunal.

The tribunal noted the complexity arising from parallel proceedings related to tax liability and refund claims. It highlighted the lack of provision in the law for keeping refund claims in abeyance and criticized the decision to return the claims without proper justification. The tribunal found the description of the claims as "premature" inexplicable and raised concerns about the statutory impropriety and lack of legal basis for returning the refund application.

The tribunal emphasized the importance of responsibly deciding on refund claims based on taxability and legal procedures. It criticized the handling of the refund claims by lower authorities and directed the original authority to reevaluate the refund claims in accordance with the law. The tribunal urged the Central Board of Excise & Customs to ensure robust implementation of tax laws and collection procedures to avoid such mishandling in the future.

In conclusion, the tribunal set aside the decision to return the refund claims and emphasized the need for tax authorities to fulfill their responsibilities diligently in handling refund applications and upholding the laws of the country.