2017 (6) TMI 217 - AT - Service Tax

Refund claim - nature of amount deposited at the instance of department - period of limitation - scope of SCN - amount deposited to be deemed as under protest or not - Held that - a new case cannot be made out at the appellate level and the Department cannot travel beyond the SCN - the impugned order is not sustainable in law firstly on the ground that the impugned order has traveled beyond the SCN. In the SCN there was a proposal to reject the refund only on the ground that the entire refund claim filed by the appellant was barred by time whereas in the impugned order, the learned Commissioner (Appeals) has partially allowed the refund claim and partially disallowed the same. Since the litigation was going on therefore the amount deposited by the appellant will be deemed to be under protest and no limitation as prescribed under Section 11B will be applicable. Also, the amount deposited by the assessee to the Revenue has to be treated as deposit at the hands of the Government and hence the limitation to claim refund under provisions of Section 11B is not applicable. Appellant is entitled to refund - appellant is also entitled to interest after the expiry of three months from the date of filing the refund application which was filed on 16.05.2012 - decided in favor of appellant.

Summary

Issues:
Refund claim time-barred, Service tax demand dispute, Refund application denial, Protest against assessment, Consequential refund eligibility, Interest on delayed payment entitlement.

Refund claim time-barred:
The appeal was against an order rejecting a refund claim of ?6,04,779 on the grounds of being time-barred. The appellant, a Chartered Accountant, had paid service tax under Business Auxiliary Service for services to MESCOM. The Commissioner (Appeals) partially allowed the appeal, leading to further litigation. The appellant filed a refund application post a High Court judgment, which was denied due to not being covered in the judgment. The appellant contended that the claim was under protest, citing precedents, and challenged the time-barred decision.

Service tax demand dispute:
The dispute arose from the service tax demand of ?1,99,373 for services rendered to MESCOM, categorized as Practicing Chartered Accountant services. The Order-in-Original confirmed the demand, leading to appeals and subsequent legal battles. The Commissioner (Appeals) and CESTAT ruled in favor of the appellant, with the High Court dismissing the Revenue's appeal. The appellant sought a refund, triggering the current dispute.

Refund application denial:
The denial of the refund application was based on it not being covered in the High Court judgment, leading to the current appeal. The appellant argued that the claim was under protest, citing legal precedents and challenging the denial on procedural grounds.

Protest against assessment:
The appellant contended that the duty paid and challenged constituted a protest, even without a formal letter, citing legal precedents. The appellant argued that the entire service tax amount was paid under protest, seeking a refund based on this premise.

Consequential refund eligibility:
The issue of consequential refund eligibility arose concerning the period not covered by the demand and appeal proceedings. The appellant argued for the refund based on the appellate order's favorable decision and challenged the denial of the refund for the subsequent period, citing legal precedents.

Interest on delayed payment entitlement:
The appellant claimed entitlement to interest on delayed payment as the refund was not sanctioned within three months of filing the application. Citing legal provisions and a previous order, the appellant sought interest on the delayed refund amount.

The judgment allowed the appeal, holding the appellant entitled to a refund of ?4,44,820 and interest post a specified period. The decision emphasized that the entire deposit was under protest during ongoing litigation, and the refund claim was not time-barred. The ruling highlighted the appellant's entitlement to the refund and interest, citing legal precedents and the Supreme Court's judgment.