2018 (10) TMI 1755 - AT - Service Tax

Refund of service tax - refund rejected on the ground that the appellant has not paid service tax with the Service Tax Department - HELD THAT - The issue has already been settled by the Hon ble Apex Court in the case of MAFATLAL INDUSTRIES LTD. VERSUS UNION OF INDIA 1996 (12) TMI 50 - SUPREME COURT , wherein the Hon ble Apex Court held that in terms of Section 11(B) of the Act, a person who has suffered the duty can get the refund. Admittedly, the appellant has borned the service tax paid by the contractor, therefore in terms of Section 11B of the Act, the appellant is entitle to claim the refund of service tax paid by the contractor. Thus, the appellant is entitled to claim the refund of service tax paid by them to the contractor who in turn paid to the department - appeal allowed - decided in favor of appellant.

Summary

Issues:
Refund claim rejection due to non-payment of service tax directly by the appellant.

Analysis:
The appellant, a government department, filed a refund claim for service tax paid by a contractor who later had the service tax exempted. The claim was rejected as the appellant did not directly pay the service tax to the department. The Tribunal noted that as per Section 11B of the Act, a person who has borne the duty can claim a refund. Citing the Mafatlal Ltd. case, it was held that since the appellant bore the service tax paid by the contractor, they are entitled to claim the refund. Additionally, a previous refund granted to the appellant by the Assistant Commissioner supported this entitlement. Consequently, the impugned order was set aside, and the appeal was allowed with consequential relief.

This judgment clarifies the entitlement to claim a refund of service tax paid by a contractor when the appellant has borne the tax, even if the payment was not made directly to the department. The decision aligns with the legal principle established in the Mafatlal Ltd. case and reinforces the applicability of Section 11B of the Act in such refund claims.