2018 (6) TMI 1150 - AT - Service Tax

Refund of Service Tax paid - time limitation - Section 11B of the Central Excise Act 1944 - Held that - The Commissioner (A) vide his order dated 22.8.2014 in para 10.1 has clearly held that the appellants are entitled to refund and he directed the lower authority to grant the refund along with interest and the original authority after following the directions of the Commissioner (A) has allowed refund along with interest - this categorical finding by the Commissioner (A) in para 10.1 has not been challenged by the Department and therefore, it has attained finality and on the basis of the said findings, if the lower authority has sanctioned the refund, there is no infirmity in sanctioning the refund - appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Refund claim hit by limitation of time.
2. Applicability of time limits on non-tax/duty amounts.
3. Merits of the case not discussed by lower authority.
4. Principles of natural justice not followed by lower authority.
5. Eligibility of appellant for refund amount.
6. Department's appeal against sanctioning of refund.

Analysis:

Issue 1: Refund claim hit by limitation of time
The appellant filed a refund claim beyond the one-year period specified by Section 11B of the Central Excise Act 1944. The claim was rejected due to expiry of the time limit, without considering the merits of the case or verifying if the service was provided and the tax liability discharged.

Issue 2: Applicability of time limits on non-tax/duty amounts
The Commissioner (Appeals) opined that time limits do not apply if the amounts paid are not tax/duty. The appellant's refund claim was considered still open and not hit by limitation of time, based on the reasoning that the claim was filed on a working day after general holidays.

Issue 3: Merits of the case not discussed by lower authority
The lower authority rejected the refund claim after discussing the merits, concluding that the service was provided, accounted for, and liable for service tax. The claim was denied based on the assessment of the applicability of tax under Banking and Other Financial Services.

Issue 4: Principles of natural justice not followed by lower authority
The Commissioner (Appeals) set aside the Order-in-Original for not following principles of natural justice, violating judicial discipline, and not considering the merits or eligibility of the appellant for the refund amount claimed.

Issue 5: Eligibility of appellant for refund amount
The lower authority sanctioned the refund claim along with interest, despite holding the appellant liable to pay service tax. The Department appealed against this sanctioning of the refund, leading to the present appeal.

Issue 6: Department's appeal against sanctioning of refund
The Deputy Commissioner sanctioned the refund based on the appellate Commissioner's order, which found the appellants eligible for the refund. The Department contended that the refund was wrongly sanctioned without discussing the merits of the case.

In the final judgment, the impugned order was set aside, allowing the appeal of the appellant due to the finality of the Commissioner (A)'s findings and the principles of res judicata. The decision highlighted the importance of following legal procedures and principles of natural justice in such cases.