2018 (5) TMI 28 - AT - Service Tax

Refund claim of interest - Held that - the appellants has not contested the Service Tax liability which has been discharged by them before the Govt. Authorities, though he might have been directed to pay the tax liability by the authorities. In absence of any contest to the tax liability, the question of seeking interest on the said the tax liability does not arises In the absence of any refund claims for the service tax liability and dispute thereof, the question of paying interest paid under Sec. 75 of the Finance Act, 1994 does not arise. Appeal dismissed - decided against appellant.

Summary

Issues involved:
Rejection of refund claim of interest filed by the appellant.

Analysis:
The appeal before the Appellate Tribunal CESTAT Ahmedabad was directed against an order passed by the Commissioner of Central Excise, Customs (Adjudication)-Vadodara-I. The main issue for consideration was the rejection of the appellant's refund claim of interest amounting to ?16,10,764 for delay in service tax payment related to Advance Mobilization charges. The appellant, a subcontractor for a project, had paid service tax and interest for the delay in payment. The appellant argued that they were eligible for interest refund as the service tax liability was discharged based on audit party direction and reimbursed by the main contractor. However, the authorities rejected the refund claim.

The appellant contended that they did not contest the service tax liability before the government authorities and had the option to file a refund claim for the service tax liability, which they did not do. The tribunal noted that in the absence of contesting the tax liability or filing a refund claim, the question of seeking interest on the tax liability did not arise. Additionally, the appellant's argument that they were not required to discharge service tax liability for services in a Special Economic Zone (SEZ) area was dismissed since no refund claims were made for the service tax liability by either the appellant or the main contractor. Therefore, the tribunal upheld the impugned order rejecting the refund claim, stating that the appellant's claim for interest refund lacked merit and did not require any interference. Consequently, the appeal was rejected by the tribunal.

This judgment highlights the importance of contesting tax liabilities before seeking interest refunds and the necessity of filing refund claims for service tax liabilities to support claims for interest payments. The decision underscores the significance of following proper procedures and making necessary claims to seek refunds effectively in tax matters.