2018 (7) TMI 1708 - AT - Service Tax

Refund claim - Section 11B of Central Excise Act - appellant paid the Service Tax liability in cash without making use of credit available in the Cenvat Credit - Held that - This appears to be an omission on their part which was attempted to be made good by submitting the revised ST-3 returns as provided under Rule 7B of the Service Tax Rules - Once the revised returns have been filed, in which the entire Service Tax liability has been shown as discharged with available CENVAT Credit, any excess Service Tax paid in cash will be eligible for refund subject to relevant refund claim satisfying all the conditions prescribed under Section 11B of the Central Excise Act. The lower authorities do not appear to have examined the claim with reference to the provisions of Section 11B properly - matter is remanded for de novo decision - appeal allowed by way of remand.

Summary

Issues:
1. Eligibility for refund of excess Service Tax paid in cash without utilizing available Cenvat Credit.
2. Interpretation of Rule 7B of the Service Tax Rules regarding revision of ST-3 returns.
3. Examination of refund claim under Section 11B of the Central Excise Act.

Analysis:
Issue 1: The appellant, engaged in contract bottling of liquor, paid Service Tax in cash without using available Cenvat Credit. Upon realizing the error, they filed revised ST-3 returns to rectify the omission and claimed a refund for the excess amount paid in cash. Both lower authorities rejected the refund claim, citing ineligibility under Section 11B of the Central Excise Act. The appellate tribunal noted the appellant's timely revision of returns to show discharge of Service Tax liability through Cenvat Credit and ruled that any excess Service Tax paid in cash should be eligible for refund, subject to compliance with Section 11B requirements.

Issue 2: The appellant's counsel cited Rule 7B of the Service Tax Rules, which allows for the revision of ST-3 returns within 90 days from the original submission. By rectifying the omission and showing the discharge of Service Tax liability through Cenvat Credit in the revised returns, the appellant sought a refund of the excess amount paid in cash. The tribunal acknowledged the timely filing of revised returns as per Rule 7B and considered this action as a valid attempt to correct the initial error.

Issue 3: The tribunal found that the lower authorities failed to properly examine the refund claim in light of the provisions of Section 11B of the Central Excise Act. By setting aside the impugned order, the tribunal remanded the matter to the Original Adjudicating Authority for a fresh decision on the refund claim. The authority was directed to reevaluate the claim, considering the observations in the tribunal's order and allowing the appellant an opportunity to provide necessary supporting documents for the refund application.

In conclusion, the appellate tribunal allowed the appeal, emphasizing the eligibility of the appellant for a refund of the excess Service Tax paid in cash, provided that all conditions under Section 11B of the Central Excise Act are met. The tribunal's decision highlighted the importance of proper examination of refund claims in accordance with relevant legal provisions and directed a de novo decision by the Original Adjudicating Authority.