2017 (12) TMI 26 - AT - Service Tax

Refund claim - price variation clause - denial on the ground of time bar - Held that - The Board, which was constituted under the Petroleum and National Gas Regulatory Board Act, 2006 is entrusted with fixing the tariff, determination the actual tariff, which are to be followed by the gas companies. In such situation, it is apparent that the service tax payment is on a provisional value. The tariff is managed by statutory Authority as per law passed by Parliament. Regarding the evidence of payment of service tax to the Government, the appellant claimed that the provider of service has given a certificate to this effect. These are Public Sector Undertakings and have categorically stated that about the payment of service tax. We note that, if need be, such payment can be cross- verified by the Original Authority with jurisdictional officer in order to satisfy the correctness of the claim. Appeal allowed by way of remand.

Summary

Issues:
1. Time bar on refund claims due to service tax payment.
2. Proof of payment of service tax by the service provider.
3. Applicability of the concept of undue enrichment.

Analysis:
1. The appellants procured natural gas for manufacturing fertilizers and paid service tax to the service providers. The rates for gas transportation were provisionally determined by the Petroleum and Natural Gas Regulatory Board (PNGRB) and later finalized. The appellants received credit notes for excess charges. The lower authorities rejected refund claims as time-barred, citing lack of proof of tax payment by the service provider and potential tax burden transfer to buyers. The appellant argued that the date of credit note issuance is crucial for time limit computation, referencing relevant Tribunal decisions.

2. The appellant contended that they were not enriched unduly as they sold fertilizers at controlled prices and had not passed on the tax burden. They presented a certificate from a Chartered Accountant to support this claim. The Revenue argued that the claims were time-barred per Section 11 B and lacked evidence of tax payment by the service provider. The Tribunal noted that the taxable value was provisional, set by a statutory authority, and held that the limitation period should be calculated accordingly. The appellant's claims were to be processed, and the evidence of tax payment could be cross-verified if necessary.

3. The Tribunal found no undue enrichment issue based on the appellant's accounts and the Chartered Accountant's certificate, showing the refund amount as receivables from the Government. The concept of undue enrichment did not apply, and the accounts could be verified for accuracy. Consequently, the impugned order was set aside, and the matter was remanded to the Original Authority for a fresh decision, allowing the appellant to present supporting evidence. Adequate opportunity was to be provided for a fair review of the case.