2019 (7) TMI 1658 - AT - Service Tax

Applicability of Doctrine of merger - Maintainability of appeal - power of Revenue to file an appeal before before Commissioner(Appeals) - Revision of orders by the Commissioner of Central Excise - training institute imparting vocational training - recovery of the erroneously sanctioned refund along with interest - time limitation - principles of unjust enrichment - HELD THAT - The Commissioner(Appeals) has not examined the merits of the case, but had dismissed the Revenue s appeal against the Deputy Commissioner s order on the ground of maintainability. Such dismissal is also upheld by the Tribunal. During the relevant period section 84 of the Finance Act or any other legal provision did not provide for the Revenue to appeal to the Commissioner(Appeals) against an order passed by the Deputy Commissioner. There was only a legal provision for revision by the Commissioner within two years from the date of the order. As the issue was not examined by the learned Commissioner(Appeals) or by the Tribunal, but appeals were dismissed on the question of maintainability itself, the doctrine of merger does not apply in this case. Merits of the case - refund claim - applicability of exemption notification - non-collection of service tax from the customers - time limitation for reversal of refund - HELD THAT - The case law of Pasha Educational Training Inst. 2008 (12) TMI 80 - CESTAT, BANGALORE that the exemption Notifications No.9/2003-ST as well as Notification No.24/2004-ST are available to the coaching and training imparted by the appellant. On merits the appellants are eligible for the exemption Notification. Also, IRDA (Licensing of Insurance Agents) Regulation, 2000 require the specific practical training imparted by the appellant for anyone to work as an agent. Therefore, by undertaking the training one would be able to seek employment or become self-employed. The coaching/training imparted by the appellant is vocational training in terms of the exemption Notifications. Time Limitation - HELD THAT - The appellant was not liable to pay Service Tax, but undisputedly they did so. The relevant period in the case is 19.12.2003 to 31.03.2006. The refund application was filed on 27.10.2006 which would mean that part of their refund claim was filed beyond the period of one year within which the refund claim must be filed. Part of the refund claim is within the period of limitation. Therefore, in our considered view it would meet ends of justice if refund is sanctioned within the period of limitation. Any claim filed beyond the period of limitation is not admissible in view of the statutory time limit. Principles of unjust enrichment - HELD THAT - The refund claim must still be sanctioned, but credited to consumer welfare fund instead of giving it to the appellant. However, the appellants must be given an adequate opportunity to establish whether they have passed on the burden of the Service Tax to their clients or otherwise. Appeal allowed in part.

Summary

Issues:
1. Revision of order by Commissioner of Central Excise.
2. Entitlement to exemption Notifications for refund claim.
3. Doctrine of merger and legality of Commissioner's order revision.
4. Refund claim within statutory time limit.
5. Burden of Service Tax passed on to clients.

Revision of order by Commissioner of Central Excise:
The appeal was against a revision order by the Commissioner of Central Excise, challenging the rejection of a refund claim previously sanctioned by the Deputy Commissioner. The Tribunal noted that during the relevant period, the Commissioner could revise orders under Section 84 of the Finance Act, while the department could not file appeals before the Commissioner(Appeals). The Tribunal upheld the dismissal of the Revenue's appeal by the Commissioner(Appeals) and found that the Commissioner's revision order was legally sustainable.

Entitlement to exemption Notifications for refund claim:
The appellant, a vocational training institute, filed a refund claim based on exemption Notifications No.9/2003-ST and No.24/2004-ST, as they believed their services were exempt from Service Tax. The Tribunal analyzed the definition of vocational training under the exemption Notifications and relevant regulations, concluding that the training provided by the appellant was covered under the exemptions. Citing precedent, the Tribunal held that the appellant was eligible for the exemption Notifications, and the refund claim should be sanctioned on merits.

Doctrine of merger and legality of Commissioner's order revision:
The Tribunal addressed the doctrine of merger concerning the Commissioner's revision order after the Tribunal's decision. It clarified that the Commissioner could revise the Deputy Commissioner's order within two years, as per Section 84 of the Finance Act. The Tribunal found that the doctrine of merger did not apply in this case, allowing the Commissioner's revision order to stand.

Refund claim within statutory time limit:
Regarding the refund claim's timeliness, the Tribunal observed that part of the claim was filed beyond the one-year limitation period prescribed under section 11B of the Central Excise Act. However, it ruled that the refund claim filed within the limitation period should be sanctioned, emphasizing the importance of adhering to statutory time limits for refund claims.

Burden of Service Tax passed on to clients:
The Tribunal considered whether the appellant had passed on the burden of Service Tax to their clients. It directed that if the burden was passed on, the refund should be credited to the consumer welfare fund. The Tribunal instructed the appellant to demonstrate whether the burden was transferred to clients, ensuring a fair resolution based on the evidence presented.

In conclusion, the Tribunal partly allowed the appeal, granting relief to the appellant based on their entitlement to exemption Notifications and the timely filing of the refund claim. The case was remanded to the original authority for further proceedings in accordance with the Tribunal's findings.