2017 (1) TMI 239 - AT - Service Tax

Rejection of Refund claim - refund of interest and penalty - GTA services used for transportation of the agriculture produce - denial on the ground that once the appellant have admittedly paid service tax, interest and penalty, they have accepted the liability on their own and amount cannot be refunded - Held that - From the provisions of section 73(4A), also it can be seen that appellant has option that if any amount of service tax was not paid or short paid, same can be paid suo moto alongwith interest and penalty equal to one per cent. In the same provision, it was provided oncethe payment is made the case shall stand closed thereafter it is not open to challenge either for the assessee or for the department and department cannot issue show cause notice. In such provision, after availing the option of the volunteer payment of service tax, interest and penalty appellant cannot claim that the payment was wrongly made consequently cannot claimed the refund. Appeal dismissed - decided against appellant.

Summary

Issues:
1. Whether the appellant is entitled to a refund of service tax, interest, and penalty paid in terms of Section 73(3) of the Finance Act, 1994 for GTA service used in transporting agriculture produce.

Analysis:
1. The appellant initially paid service tax, interest, and penalty under Section 73(3) but later claimed a refund only for interest and penalty, not the service tax, as they had availed Cenvat credit for the service tax paid on GTA service. However, the refund claim was rejected on the basis that once the appellant voluntarily paid the amount, regardless of the correctness of the tax liability, it cannot be refunded. The Commissioner(Appeals) upheld the rejection, leading to the appeal before the tribunal.

2. The appellant's counsel argued that since service tax was not payable on the GTA service used for agriculture produce transportation, the entire amount paid should be refundable. He contended that if the service tax was not due, the liability for interest and penalty should not exist. Therefore, the appellant sought a refund of the penalty and interest paid.

3. On the contrary, the revenue's representative reiterated that the appellant had voluntarily paid the service tax, interest, and penalty under Section 73(4A), which restricts the possibility of issuing show cause notices once the payment is made. The revenue's stance was that by availing this option, the appellant admitted the liability, making the refund of interest and penalty unfeasible. A precedent judgment was cited to support this argument.

4. Upon careful consideration, the tribunal observed that the appellant had consciously chosen to avail the option under Section 73(4A) of the Finance Act, which allows for voluntary payment of service tax, interest, and penalty in case of discrepancies. The provision states that once such payment is made, the case is deemed closed without the possibility of challenging it further. Referring to the cited judgment, the tribunal concluded that once the tax is paid under Section 73(3) without a show cause notice, the matter is considered closed, precluding any refund claims. Consequently, the tribunal upheld the impugned order and dismissed the appeal.

This detailed analysis highlights the legal arguments, interpretations of relevant provisions, and the tribunal's reasoning leading to the final decision to dismiss the appeal.