2018 (1) TMI 58 - AT - Service Tax

Refund of service tax which was not payable - denial on the ground that appellant has not filed the prescribed documents in terms of Section 11B of CEA - Held that - the appellant has produced the registration number and other details of the builder who sold the flat to the appellant and collected service tax from the appellant on behalf of the Revenue being their agent. In that circumstances, it is duty of the refund sanctioning authority to verify the fact whether the service provider has paid the service tax or not - appeal allowed by way of remand.

Summary

Issues:
Refund claim rejection based on non-filing of prescribed documents under Section 11B of the Act; Applicability of Section 11B to the case; Entitlement to refund claim; Requirement of verifying service tax payment by builder; Contradictory views in the impugned order; Duty of refund sanctioning authority to verify facts before rejecting claim.

Analysis:
The appellant appealed against the rejection of their refund claim due to non-filing of prescribed documents under Section 11B of the Act. The appellant purchased a flat and paid service tax to the builder, later realizing that they might not have been required to pay service tax based on a court ruling. The refund claim was rejected on the grounds of limitation and lack of documents. The ld. Commissioner (Appeals) held that Section 11B was not applicable to the case, but rejected the claim due to missing documents. The appellant argued that they had provided necessary details and that it was beyond their control to provide proof of the builder's tax payment. The issue of taxability was not raised in the show cause notice. The Tribunal found the ld. Commissioner's views contradictory and directed the adjudicating authority to verify if the builder had paid the service tax and to sanction the refund claim if appropriate.

The ld. AR opposed the appellant's contentions, raising concerns about taxability and missing documentation. The ld. AR's request for adjournment was rejected, and the Tribunal found that the issue of taxability was not part of the current proceedings. The only issue at hand was the refundability of the service tax paid by the appellant. The Tribunal noted the confusion in the ld. Commissioner's order, where he mentioned Section 11B not being applicable but also cited missing documents as a reason for rejection. The Tribunal emphasized the duty of the refund sanctioning authority to verify facts before rejecting a claim, especially regarding the builder's tax payment. The adjudicating authority was directed to verify this fact and decide on the refund claim within 30 days, providing the appellant with an opportunity to be heard.

In conclusion, the Tribunal disposed of the appeal by directing the adjudicating authority to verify if the builder had collected service tax from the appellant and to sanction the refund claim accordingly, emphasizing the importance of verifying facts before rejecting a claim.