2018 (6) TMI 1635 - AT - Service Tax

Whether the appellant is entitled for refund of duty interest and penalty paid during the course of audit and with request that the payment was made voluntarily and for not issuing the SCN the matter should be closed an undertaking was also given that no refund claim shall be made in future? - HELD THAT - There is no dispute that the appellant on the objection from the audit voluntarily paid the duty interest and penalty and also requested that the matter may be closed with this payment and not to issue any SCN. The undertaking was also filed that they shall not claim any refund. The issue is squarely covered by Section 73(3) of the Finance Act once the appellant opted for voluntary payment of service tax and interest and intimate to the department the matter shall stand closed and the department has no liberty to issue any SCN that means the issue stand closed. Neither the assessee can dispute the same nor the department has opportunity to issue any SCN. Therefore at a later period coming with the refund is absolutely contrary to the provision of Section 73(3) of the Finance Act 1994. Appeal dismissed - decided against appellant.

Summary

Issues involved: Whether the appellant is entitled to a refund of duty, interest, and penalty paid voluntarily during an audit, despite giving an undertaking not to claim any refund in the future.

The judgment by the Appellate Tribunal CESTAT AHMEDABAD addressed the issue of refund claimed by the appellant for duty, interest, and penalty paid during an audit. The appellant voluntarily made the payment and requested closure of the matter without issuance of a show-cause notice (SCN), accompanied by an undertaking not to seek any refund in the future. The respondent, represented by the Ld. Superintendent (AR), argued that once the appellant had paid the amounts voluntarily and agreed to close the matter without seeking a refund, they were not entitled to claim a refund at a later stage. The Tribunal, after considering the submissions and relevant provisions, highlighted Section 73(3) of the Finance Act, which states that upon voluntary payment and intimation to the department, the matter stands closed without the possibility of an SCN being issued. The Tribunal concluded that seeking a refund at a later stage was contrary to the provision of Section 73(3) and upheld the order rejecting the refund claim, ultimately dismissing the appeal.

In this case, the primary issue revolved around the entitlement of the appellant to a refund of duty, interest, and penalty paid during an audit process. The appellant had voluntarily made the payment and requested the closure of the matter without the issuance of a show-cause notice (SCN). Additionally, the appellant had provided an undertaking not to claim any refund in the future. The Tribunal noted that the respondent argued against the refund claim, emphasizing that once the appellant had voluntarily paid the amounts and agreed to close the matter without seeking a refund, they were precluded from claiming a refund subsequently.

The Tribunal referred to Section 73(3) of the Finance Act, which plays a crucial role in this judgment. This section outlines the procedure when service tax has not been levied or paid, or has been short-levied, short-paid, or erroneously refunded. It allows the person chargeable with the service tax, upon their own ascertainment or ascertained by a Central Excise Officer, to pay the amount of service tax and inform the officer in writing. Importantly, upon such payment and intimation, the Central Excise Officer shall not serve any notice regarding the same. The Tribunal emphasized that once the appellant had opted for voluntary payment and intimated the department, the matter stood closed, and the department was precluded from issuing any SCN.

The Tribunal concluded that seeking a refund at a later stage, as done by the appellant in this case, was contrary to the provisions of Section 73(3) of the Finance Act, 1994. It was highlighted that neither the assessee could dispute the closure of the matter nor could the department issue any SCN after voluntary payment and intimation. Therefore, the Tribunal upheld the order rejecting the refund claim, stating that the appellant's action was in violation of the statutory provision. Consequently, the appeal for refund was dismissed based on the legal interpretation of Section 73(3) of the Finance Act.