2023 (6) TMI 1386 - AT - Service Tax

Refund of service tax - Refund claim not filed within time limitation as per Section 11B of the Central Excise Act, 1944 - refund for the amount paid by Cenvat credit - Bifurcation of duty payment has not been provided which was made in the month of June-2015. Timeliness of the refund claim u/s 11B of the Central Excise Act, 1944 - HELD THAT - The relevant date in such circumstances has to be the date of refunding the amount including service tax amount to the service recipient/the buyer of residential units - No doubt as per Section 11B of the Central Excise Act, the date from where the period of one year for filing the refund has to reckon is the date of payment of duty. It is observed from the provision that it defines relevant date to have different meanings. Clause (eb) no doubt is for the cases where duty has been paid provisionally but to my understanding the interpretation of the provision is such that the provision is applicable in the given set of circumstances also. The phrase date of adjustment of duty shall be restricted only to the cases of provisional assessment of duty shall be a very narrow interpretation of the provision especially when provision foresees several possibilities and circumstances where the relevant date may vary. There are no reasonable prudence to deny extending the said phrase to the circumstance as the one in the question. Once no service no law authorizes payment of tax by the service provider. The refund of the service tax as was paid by the service provider after receiving the payments from service recipient, has to be sanctioned in full, due to this reason, by the department itself. With these observations, it is held that the refund claim in question is not barred by time. Whether the refund of duty which was paid by Cenvat credit is not maintainable? - HELD THAT - The fact remains is that the total amount stands deposited with the department as the duty liability of the appellant. Once the appellant becomes no more liable for the duty as stands already deposited with the department. In view of the Article 265 of Constitution of India, department cannot retain the said amount as the article prohibits levy/collection of such amount which is otherwise not leviable. Resultantly, there are no reason to deny the refund for such amount which was paid by way of Cenvat credit. Bifurcation of duty payment - HELD THAT - The original adjudicating authority has well discussed both the issues as were raised in the show cause notice while proposing the rejection of the impugned refund claim - The original adjudicating authority since has dealt with both the issues, the said order gets merged with the Order-in-Appeal. It is further observed that certificate issued by the Chartered Accountant of the appellant has also been placed on record to certify that the refund claim of service tax amount of Rs.7,40,816/- as was filed by M/s. New Modern Buildwell Private Limited, the latter has not passed on the burden of service tax on another person. Nothing is found on record to falsify that certificate. The presumption of correctness is otherwise attached thereto. In light of the said certificate, there is no reason to hold any unjust enrichment of the appellant in case the refund is sanctioned. The appellant is entitled for the refund of service tax for the simple reason that he has not provided any service and as such has not been liable to pay the tax which was already paid by him. His application is not barred by time for the reasons as explained above. Hence appellant is held entitled for refund of the amount as was paid by using the accumulated Cenvat credit - the claim is within the prescribed time limit of one year from the relevant date. The impugned order is set aside - appeal allowed.

Summary

Issues Involved:
1. Timeliness of the refund claim u/s 11B of the Central Excise Act, 1944.
2. Entitlement to refund for the amount paid by Cenvat credit.
3. Bifurcation of duty payment.

Summary:

Issue 1: Timeliness of the Refund Claim u/s 11B of the Central Excise Act, 1944
The appellant filed a refund claim for Rs.7,40,816/- on 21.10.2020, which was received by the jurisdictional Division Office on 21.01.2021. The department observed that the refund claim was not filed within the stipulated time as per Section 11B of the Central Excise Act, 1944. The appellant argued that the relevant date for filing the refund claim should be the date of refund to the buyer, which was within one year of the refund. The Tribunal agreed with the appellant, citing that the necessity for the refund arose only after the cancellation of the agreement and the refund to the buyer. The Tribunal referenced previous decisions, including Pramukh Reality Vs. C.C.E & S.T.-Deman, to support this interpretation. The Tribunal held that the refund claim was not barred by time.

Issue 2: Entitlement to Refund for the Amount Paid by Cenvat Credit
The department contended that the appellant was not entitled to a refund for the amount paid by Cenvat credit. The Tribunal observed that the law permits the payment of duty by way of accumulated Cenvat credit and that there is no distinction created by the statute regarding the method of duty payment. The Tribunal held that once the duty stands discharged, there remains no difference whether it was discharged in cash or by using accumulated Cenvat credit. The Tribunal concluded that the appellant was entitled to a refund for the amount paid by Cenvat credit, citing Article 265 of the Constitution of India, which prohibits the retention of tax not leviable by law.

Issue 3: Bifurcation of Duty Payment
The department noted that the bifurcation of duty payment made in June 2015 was not provided. The Tribunal observed that the original adjudicating authority had discussed both the issues raised in the show cause notice, including the bifurcation of duty payment. The Tribunal also noted that a certificate issued by the Chartered Accountant of the appellant certified that the refund claim of Rs.7,40,816/- had not passed on the burden of service tax to another person. The Tribunal found no evidence to falsify this certificate and held that there was no unjust enrichment by the appellant.

Conclusion:
The Tribunal set aside the order under challenge and allowed the appeal, holding that the appellant was entitled to the refund of service tax, including the amount paid by Cenvat credit, and that the refund claim was within the prescribed time limit of one year from the relevant date.