2018 (5) TMI 31 - AT - Service Tax

Refund claim of service tax reversed earlier - rejection on the ground of limitation - Held that - the appellant had reversed the credit on 26.12.2013. However, within one after year from the date of reversal of credit, instead of taking re-credit in their books of accounts, they filed refund claim on 06.08.2014. In view of the definition of relevant date contained in Section 11B of Central Excise Act, 1944, the date of reversal of credit be considered as the commencing point in computing the period of limitation under the said Provision - In the result, the refund claim of Cenvat credit filed on 05.08.2014 cannot be construed as beyond the limitation prescribed under Section 11B of Central Excise Act, 1944. To consider the eligibility of refund on merit, the matter is remanded to the adjudicating authority - appeal allowed by way of remand.

Summary

Issues:
1. Eligibility of Cenvat credit under reverse charge mechanism.
2. Rejection of refund claim on the ground of limitation.

Analysis:

Issue 1: Eligibility of Cenvat credit under reverse charge mechanism
The appellant had paid service tax under reverse charge mechanism for availing manpower supply service as per Notification No. 30/12-ST and availed credit of the same. However, upon objection by the audit team, the credit was reversed on 26.12.2013. The appellant later realized that the Cenvat credit was correctly availed, as the service tax was paid under reverse charge mechanism. Consequently, they filed a refund claim for the reversed Cenvat credit amount. The appellant argued that they were eligible for the Cenvat credit under the reverse charge mechanism, and thus, the refund claim was valid. The Tribunal agreed with the appellant's contention and held that the refund claim could not be considered barred by limitation as per Section 11B of the Central Excise Act, 1944.

Issue 2: Rejection of refund claim on the ground of limitation
The Revenue, represented by the Ld. AR, supported the findings of the Commissioner (Appeals) who rejected the refund claim based on limitation. However, the Tribunal found that the appellant had filed the refund claim within one year from the date of reversal of credit, instead of re-crediting the amount in their books of accounts. The Tribunal interpreted the "relevant date" as the date of reversal of credit for computing the limitation period under Section 11B of the Central Excise Act, 1944. Consequently, the Tribunal concluded that the refund claim filed on 05.08.2014 was not beyond the limitation period prescribed by law. The Tribunal also noted that the eligibility of the refund claim on merit was not considered by the lower authorities, and the claim was rejected solely on the ground of limitation. Therefore, the matter was remanded to the adjudicating authority to assess the eligibility of the refund claim on merit. The appeal was allowed by way of remand.

In conclusion, the Tribunal upheld the appellant's eligibility for the Cenvat credit under the reverse charge mechanism and ruled that the refund claim was not time-barred. The matter was remanded to consider the eligibility of the refund claim on merit, emphasizing the importance of assessing claims beyond just the limitation aspect.