2018 (4) TMI 907 - AT - Service Tax

Refund claim - service tax paid on amount which was available as abatement under GTA Service - refund rejected on the ground that the Appellant have themselves chosen not to avail the exemption given under the N/N. 32/2004 and hence not entitled for the refund - time limitation - scope of SCN - Held that - The show cause notice was issued to them on the grounds of time bar. However the refund was rejected on the ground that the exemption cannot be claimed retrospectively. The lower authorities could not have firstly decided the issue on grounds which was not canvassed in the show cause notice - impugned order traveled beyond SCN. Time limitation - Held that - In the present case vide letter dt. 07.12.2006 they were asked to reverse the credit and hence the claim was filed by Appellant on 14.06.2007 i.e within one year of the letter dt. 07.12.2006. The Appellant s claim is thus cannot be held to be time bar. Appeal allowed.

Summary

Issues:
1. Eligibility for refund of service tax paid under reverse charge basis.
2. Claiming exemption retrospectively.
3. Time limitation for filing refund claim.
4. Scope of adjudicating authority's decision beyond show cause notice.

Analysis:

Issue 1: The Appellant paid service tax under reverse charge basis on goods transport agency services but mistakenly paid tax on the whole freight amount instead of availing the 75% abatement as per Notification No. 32/2004. The department insisted on reversing the credit of the tax paid. The Appellant filed a refund claim, which was rejected by the adjudicating authority, stating that the Appellant chose not to avail the exemption and thus not entitled to a refund. The Commissioner (Appeals) upheld this decision, stating the notification was optional. The Appellant argued that the service tax was paid correctly, citing relevant case laws. The Tribunal found the lower authorities erred in deciding the issue not raised in the show cause notice and held the Appellant entitled to the refund as they were legally entitled to the credit of the tax paid.

Issue 2: The Appellant contended that the impugned order went beyond the scope of the show cause notice, which was based on time limitation, not the correctness of the tax payment. The Tribunal agreed, citing judgments supporting the Appellant's position. The Appellant's claim for refund was found to be valid as they were asked to reverse the credit by the revenue department, making the claim timely within one year of the reversal request. The Tribunal held the Appellants entitled to the refund and the credit of the service tax paid, provided they did not claim both simultaneously.

Issue 3: The Appellant's legal representative argued that the impugned order improperly addressed the issue of correctness of tax payment, which was not the basis of the show cause notice. The Tribunal concurred, finding that the Appellant's refund claim was valid as it was filed within one year of being asked to reverse the credit, as per relevant case law. The Tribunal allowed the appeal, setting aside the lower authorities' decisions and granting the refund to the Appellant.

Issue 4: The revenue authority reiterated the findings of the lower authorities. However, the Tribunal found that the lower authorities incorrectly rejected the refund claim based on retrospective exemption, which was not the subject of the show cause notice. The Tribunal held that the Appellant's claim was not time-barred, as it was filed within one year of reversing the credit, as per legal precedent. The Tribunal allowed the appeal, granting the refund and confirming the Appellant's entitlement to the credit of the service tax paid.

This judgment highlights the importance of adhering to the scope of show cause notices, timely filing of refund claims, and the correct application of legal principles in tax matters.