2018 (2) TMI 1128 - HC - Service Tax

Refund claim - time limitation - export of services out of India - validity of SCN - Revenue s case is that as per Section 11(B) of the CEA 1944, the refund claim has to be filed within one (1) year from the relevant date and the relevant date in the case of the petitioner is the date of order passed by the appellate authority and if such date is reckoned, the application for refund dated 27.04.2017 is filed beyond the period of one year - Held that - Relevant date means, in the case of export of services out of India, where a refund of CENVAT paid is available in respect of the export of services or as the case may be, the excisable material used in the export of services shall be the relevant date and if the goods are exported by sea or air, the date on which the ship or the aircraft in which such goods are loaded, leaves India, or if it is exported by land, the date on which such goods pass the frontier, or if the goods are exported by post, the date of despatch of goods by the Post Office concerned to a place outside India. The refund has not accrued to the petitioner on account of any order or judgment but on account of statutory provisions coupled with the notification where input services are used for export of services. Thus, the reliance placed on the explanation (B)(ec) does not render any support to the case of the revenue. The SCN is without jurisdiction - petition allowed - decided in favor of appellant.

Summary

Issues:
Challenge to show cause notice for refund denial based on limitation period.

Analysis:
The petitioner challenged a show cause notice issued by the respondent, seeking a refund, which was allegedly barred by limitation. The Senior Standing Counsel for the Revenue contended that the petition was not maintainable as the petitioner should have replied to the notice and participated in the adjudication process. However, the court decided to entertain the writ petition after scrutinizing the factual position. The main issue was whether the respondent's proposal to hold the petitioner's refund claim as time-barred was justified. The court found it appropriate to exercise its jurisdiction under Article 226 of the Constitution of India.

The petitioner had filed a refund application under the CENVAT Credit Rules, 2004, which was considered by the Adjudicating Authority. The authority found that while some export invoices were within the time limit, a portion of the refund claim was rejected due to non-registration of one of the petitioner's business premises. The petitioner appealed against this decision, and the appellate authority partially allowed the appeal. Subsequently, the revenue appealed against one of the orders, which was dismissed by the Division Bench. Despite these proceedings, a show cause notice was issued claiming the petitioner's refund application was time-barred. The revenue argued that the application was filed beyond one year from the date of the appellate authority's order.

The revenue relied on Section 11(B)(1) Explanation (B)(ec) of the Central Excise Act, 1944, which states that the relevant date for calculating the one-year period for refund claims is the date of judgment, decree, or order. However, the petitioner's claim was based on a notification by the Central Board, not a court order. The court opined that the explanation cited by the revenue was not applicable in this case. The court also noted that the revenue did not appeal against the findings favoring the petitioner in previous orders, making the rejection of the refund application unjustified and erroneous.

The court distinguished a Supreme Court decision cited by the revenue, emphasizing that the present case did not involve directing authorities to act against mandatory limitation provisions. Ultimately, the court held the show cause notice as without jurisdiction and unsustainable. The writ petition was allowed, quashing the notice and directing the respondent to process the refund within eight weeks.