2018 (2) TMI 1677 - AT - Service Tax

Refund claim - Section 102(2) of FA 2016 - denial on the ground that refund would result in double benefit to the appellant - Held that - it is difficult to appreciate how double benefit of the refund allowed u/s 102(2) of Finance Act, 2016 would accrue to the appellant once the amount paid by utilizing CENVAT credit if now refunded to their CENVAT credit account only - appeal allowed - decided in favor of appellant.

Summary

Issues:
Appeal against order in appeal No.OIA-AHM-EXCUS-002-APP-118-17-18 regarding refund claim under Sec. 102(2) of Finance Act, 2016 for service tax paid utilizing Cenvat credit account.

Analysis:
The appellant filed a refund claim for service tax paid during 01.04.2015 to 29.02.2016, amounting to &8377; 42,39,861/-, which became exempted retrospectively by virtue of Section 102(1) of the Finance Act, 2016. The authorities sanctioned a refund of &8377; 24,14,667/- paid through cash but rejected the refund of &8377; 18,25,194/- paid by utilizing Cenvat credit, citing potential double benefit to the appellant. The appellant argued that the mode of payment should not affect the refund eligibility, as Section 102(2) does not specify cash-only refunds. The absence of a notice alleging inadmissibility of CENVAT credit further supported the appellant's claim.

The Tribunal acknowledged that the services provided by the appellant became exempt from service tax retrospectively, making them eligible for a refund under Section 102(2) of the Finance Act, 2016. The authorities' disallowance of a portion of the refund based on the payment from the Cenvat credit account was deemed unjustified. The Tribunal emphasized that the Finance Act did not impose a condition on the mode of payment for refund eligibility. Refunding the Cenvat credit account would not result in double benefit, as alleged by the Revenue, especially when there were no concerns raised regarding the eligibility of the CENVAT credit utilized during the relevant period. Consequently, the impugned order was set aside, and the appeal was allowed with any consequential relief as per law.

In conclusion, the Tribunal ruled in favor of the appellant, emphasizing that the mode of payment for service tax should not impact refund eligibility under Section 102(2) of the Finance Act, 2016. The absence of any notice challenging the admissibility of CENVAT credit further supported the appellant's entitlement to the refund. The decision highlighted that the conditions for refund specified in the Finance Act did not include a requirement regarding the payment mode, thus rejecting the Revenue's argument of potential double benefit.