2016 (10) TMI 391 - AT - Service Tax

Rejection of refund claim - period of limitation - nature of differential duty paid by the assessee on issuance of SCN - The appellants kept quiet for a period of three years and it is only after the Supreme Court s decision in other assessee s case laying down that the value of the materials is not required to be added in the value of the services, was passed, the appellant approached the Revenue for refund of the excess amount deposited by them. Held that - the payments made by the appellant were on account of differential amount of service tax and was not mere deposit during the period of investigation, the provisions of section 11B would admittedly apply. As per the said provisions, the refund can be staked only within the period of one year from the relevant date. The authorities working under the said act are bound by the provisions of the act, and cannot travel beyond section 11B - the refund claim having filed after a period of one year from the date of payment of the same, stands rightly rejected on the ground of limitation - appeal rejected - decided against appellant.

Summary

Issues:
1. Discharge of service tax liability on the gross value inclusive of materials.
2. Refund claim rejected as barred by limitation.

Analysis:
Issue 1: Discharge of service tax liability on the gross value inclusive of materials
The appellant, engaged in providing photography services, was found to have discharged service tax liability only on the value of services, not on the gross value inclusive of materials as per notification number 12/2003. The appellant deposited the differential service tax amount after an audit objection, and no show cause notice was issued as a result. The dispute arose regarding whether the value of goods should be added to the value of services for service tax computation. The Hon'ble Supreme Court settled this issue by dismissing Revenue's appeals in similar cases, clarifying that the value of materials should not be included in service value calculation.

Issue 2: Refund claim rejected as barred by limitation
The appellant filed a refund claim within two months of the Supreme Court's decision, seeking a refund of the deposited amount. However, a show cause notice rejecting the refund as time-barred was issued, leading to the rejection of the refund claim by the Adjudicating Authority and Commissioner (A). The appellant contended that the deposited amount was not a service tax but a deposit, hence not subject to limitation. However, it was established that the deposit was towards a disputable demand, making it subject to limitation provisions. As the refund claim was filed after the one-year limit from the payment date, it was rightly rejected on grounds of limitation.

In conclusion, the Tribunal upheld the lower authorities' decision, stating that the appellant's payments were considered service tax payments, subject to limitation under section 11B. The refund claim filed after the prescribed period was rejected, as it was not based on any appellate order in the appellant's case but on a general declaration of law by the Supreme Court in another assessee's case. Therefore, the appeal was dismissed, affirming the rejection of the refund claim as time-barred.