2018 (6) TMI 1157 - AT - Service Tax

Refund claim - Time limitation - the refund was rejected on the ground that the refund of Service Tax paid by the appellant was not filed within one year from the date of payment of Service Tax - Held that - As per audit the appellant was not supposed to pay Service Tax on 100% gross value, whereas, in terms of N/N. 30/12-ST, they were supposed to pay on 25% of the gross value. Since, appellants paid the Service Tax on 100% and the same was availed by the recipient as the Cenvat credit, there was no occasion for filling any refund claim, refund has arisen only as per the audit objection and compliance thereof by making the payment towards Cenvat credit and interest thereon. The relevant date should be from the date when audit has raised an objection and compliance thereof. The appellant admittedly filed the refund claim well within one year of that date i.e. on 22.02.2015. Therefore, the refund is not time bar, as the same was filed within one year from the relevant date as per facts of the present case - rejection of refund on time bar not sustainable. Appeal allowed.

Summary

Issues: Time bar for filing refund claim

Analysis:
The appellant, engaged in providing Man Power Service, paid Service Tax on 100% of the gross value charged to their client from 01.07.2012 to 31.12.2013. However, audit officers pointed out that the appellant was supposed to pay Service Tax only on 25% as per Notification No.30/2012-ST. The recipient of the service reversed the Cenvat Credit along with interest, recovered from the appellant, leading to a refund claim of &8377;6,94,210. The refund claim was rejected by the adjudicating authority as time-barred since it was filed on 22.02.2015, beyond one year from the date of payment of Service Tax. The Commissioner (Appeals) upheld the decision, leading to the present appeal.

The appellant argued that the refund was not time-barred as it arose from an audit objection raised against the service recipient, leading to the reversal of Cenvat Credit. They contended that the relevant date for the refund claim should be from the date of the audit objection and compliance, within one year of which they filed the refund claim.

The Revenue, however, reiterated that as per Section 11B, the relevant date for the refund claim is only from the date of payment of Service Tax, with no other exceptions provided. They cited various judgments to support their stance.

After considering the submissions, the tribunal found that the main issue was the time bar for the refund claim. It noted that the refund arose due to the audit objection and compliance, not at the time of payment of Service Tax. The appellant paid tax on 100% gross value based on a bonafide belief, and the dispute only arose later. The tribunal held that the relevant date for the refund claim should be from the date of the audit objection and compliance, within which the refund claim was filed. As the claim was filed within one year of this relevant date, the tribunal deemed it not time-barred. The impugned order was set aside, allowing the appeal and directing the adjudicating authority to verify unjust enrichment based on available records.