2023 (9) TMI 1478 - AT - Service Tax

Refund of service tax - maintainability of refund claim in absence of any challenge to assessment or self-assessment in appeal - whether the judgement of Hon ble Apex Court in the case of ITC LIMITED VERSUS COMMISSIONER OF CENTRAL EXCISE, KOLKATA -IV 2019 (9) TMI 802 - SUPREME COURT is applicable to refund of service tax without challenging the assessment in appeal? - whether the provisions of the Customs Act with regard to assessment, refund and appeal are pari-materia with the provisions of service tax as provided in the Finance Act, 1994? - Majority order. HELD THAT - Refund of Service Tax is maintainable in the absence of any challenge to assessment or self assessment in appeal whereas as per Hon ble Member (Judicial) Smt. Binu Tamta, the refund of service tax is not maintainable without challenging the assessment or self assessment in appeal and the judgement of the Hon ble Apex Court in the case of ITC Limited is applicable to self assessment made under Finance Act, 1994. In view of the majority opinion, it is held that That the refund of service tax is maintainable in the absence of any challenge to assessment or self assessment in appeal under the Finance Act, 1994. The appeals may now be listed for hearing before the Division Bench.

Issues Involved:
1. Applicability of the Supreme Court judgment in ITC Limited vs. CCE, Kolkatta to service tax refund claims.
2. Whether refund claims of service tax are maintainable without challenging the assessment or self-assessment in appeal.

Summary:

Issue 1: Applicability of ITC Limited Judgment
The Tribunal examined the applicability of the Supreme Court judgment in ITC Limited vs. CCE, Kolkatta-2019 (368) ELT 216 (SC), which held that a refund claim cannot be entertained unless the order of assessment or self-assessment is modified by appropriate proceedings. The judgment emphasized that it is not within the realm of Section 27 of the Customs Act, 1962 to set aside the order of assessment for granting a refund. This principle was applied by the Mumbai Bench in Karanja Terminal and Logistics Pvt. Limited vs. Assistant Commissioner- Mumbai South- 2021-TIOL-76-CESTAT-MUM, which held that a refund of service tax is not maintainable without challenging the order of assessment, including self-assessment.

Issue 2: Maintainability of Service Tax Refund Claims
The Tribunal considered the contrary view taken by the Ahmedabad Bench in M/s Cadila Healthcare vs. CST-ST, Ahmedabad -2021-TIOL-257-CESTAT-AHM, which held that the ITC Limited judgment is not applicable to service tax matters. The Tribunal noted that under the Finance Act, 1994, there is no provision for verification or endorsement by the proper officer for self-assessed returns filed by the taxpayer. The appeal mechanism under the service tax law is different from the Customs Act, as an appeal can only be filed against a decision or order passed by an adjudicating authority. The Tribunal found that the definition of "assessment" in the Customs Act was amended in 2011 to include "self-assessment," but no such amendment was made under the Service Tax Law.

Decision:
The Tribunal concluded that the provisions of the Customs Act with regard to assessment, refund, and appeal are not pari materia with the provisions of service tax under the Finance Act, 1994. It held that the self-assessed returns under the service tax law cannot be equated to an "order of assessment" against which an appeal can be filed. The Tribunal upheld the decision of the Ahmedabad Bench in Cadila Healthcare, stating that the ratio of the ITC Limited judgment is not applicable to refund claims under the service tax law. The Tribunal answered the reference in favor of the assessee, holding that refund claims are maintainable in the absence of a challenge to the self-assessment under the Service Tax Regime.

Separate Judgment:
Member (Judicial) Binu Tamta dissented, holding that the ITC Limited judgment is applicable to the self-assessment returns filed under the Finance Act, 1994, and the refund applications made thereunder. She concluded that the self-assessment under the service tax is an order of assessment, and an appeal under Section 85 of the Finance Act would be maintainable. Therefore, refund applications can be considered only after the self-assessment order is modified by a higher authority under the Act.

Majority Opinion:
The majority opinion recorded that the refund of service tax is maintainable in the absence of any challenge to assessment or self-assessment in appeal under the Finance Act, 1994.

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