2018 (10) TMI 544 - AT - Service Tax

Condonation of delay in filing refund application - refund of service tax - SEZ Unit - N/N. 40/2012-ST dated 20.06.2012 - Held that - The said order of the adjudicating authority not condoning delay in few applications, needs reconsideration as the procedure mentioned in the Notification No.40/2012- ST dated 20.06.2012 for sanctioning of the refund claims based on this exemption notification, specifically at clause 3(a) indicates that refund claims should be filed within one year from the end of the month in which actual payment of service tax was made by such developer or unit (SEZ) to the registered service provider but considering the situation prevalent at ground level, such clause 3(a) specifically grants powers to the Asst. Commissioner or the Dy. Commissioner of the Central Excise as the case may be condoning the delay of such extended period. There is no limit laid down in the said clause during the relevant period. In the case in hand, the adjudicating authority should have exercised this power granted to him for condoning the delay by appreciating the factual matrix in a broader perspective, wherein the delay has been sought to be explained. The adjudication order for rejection of refund claims of ₹ 13,75,625/- needs reconsideration by the adjudicating authority looking at the circumstances at which appellant had to file the refund claims belatedly - Appeal allowed by way of remand.

Summary

Issues involved:
Refund of service tax paid by SEZ unit for various services received, rejection of refund claims based on specified services for authorized operations, rejection of refund claims due to delay in filing.

Analysis of Judgment:

Issue 1: Refund of service tax paid by SEZ unit
The appellant, an SEZ unit, sought exemption from service tax payment on services received for authorized operations in SEZ as per Notification No.40/2012-ST. The appellant filed refund claims which were partly allowed and partly rejected. The first appeal rejected refund claims for Rent-a-Cab services not specified in the approved list of services. However, the Tribunal set aside the rejection, allowing refund of ?39,583 citing approval of Rent-a-Cab services for authorized operations by the Ministry of Commerce and Industry.

Issue 2: Rejection of refund claims due to delay
In another appeal, refund claims amounting to ?13,17,625 were rejected due to being filed beyond one year from the date of payment to service providers. The adjudicating authority had condoned delays up to 3 months but rejected claims beyond that period. The appellant argued delays were due to the time taken for service providers to pay service tax to the Government and attrition in the business department causing document collection delays. The Tribunal noted that the adjudicating authority should have considered condoning delays beyond 3 months as per Notification No.40/2012-ST, granting powers to condone delays without a specific limit. The Tribunal remanded the issue back to the adjudicating authority for reconsideration, emphasizing the need for a justification for delays and following principles of natural justice.

In conclusion, the Tribunal allowed one refund claim and remanded another for reconsideration, highlighting the importance of justifying delays in filing refund claims and the authority's power to condone delays beyond the specified period. The judgment focused on interpreting the relevant notifications and ensuring procedural fairness in adjudicating refund claims for SEZ units.