2019 (2) TMI 948 - AT - Service Tax

Refund of service tax - export of services - denial on the ground that the details of the Cenvat Credit were not appearing in the ST-3 Return for the period January, 2016 to March, 2016 and no concrete evidence was submitted with the claim that cenvat credit is available to them - N/N. 27/2012 dated 18.06.2012 - Held that - The bare perusal of this condition makes it clear that what is to be determined to ascertain the eligibility of refund, is the balance of credit lying with the assessee, as on the last date of quarter as well as on the date of filing of the refund. To check the balance lying with the assessee the relevant documents are the accounts of the assessee in the form of balance sheets, bills & invoices. Though whatever balance is being shown in the accounts of the assessee has to find mention in the ST-3 but due to the said documents being the basis of ST-3 as far as the amounts shown therein as balance is concerned, ST-3 cannot be the only reliable record to verify the balance cenvat credit at the end of the quarter. Range Superintendent had also committed an error while rejecting the request of the appellant to revise the ST-3 return despite the availability of documents to justify the said revision mainly on the ground of it being proposed beyond the stipulated period. So has been done by Commissioner (Appeals) while endorsing this finding. Issue of the ST-3 return as the sole document to verify the balance - Held that - From Rule 7B, it becomes clear that mistake in ST-3 return was a rectifiable mistake. The findings of Commissioner (Appeals) are held to lack the appreciation of all the documents as were relied upon by the appellant and based whereupon revision of ST-3 return inadvertently showing balance as nil, was proposed - appeal allowed - decided in favor of appellant.

Summary

Issues:
Refund claim rejection based on ST-3 return balance discrepancy.

Analysis:
The judgment involves an appeal against the rejection of a refund claim by the Commissioner (Appeals) regarding service tax on exported output service. The appellant filed a refund claim for ?7,36,702, which was rejected due to alleged non-fulfillment of conditions in Notification No.27/2012. The rejection was based on the ST-3 return showing a 'Nil' balance for the relevant period, despite the appellant submitting documents supporting the claimed cenvat credit balance. The appellant argued that the rejection solely on ST-3 discrepancies was inappropriate, citing cases where refund claims couldn't be rejected based on ST-3 errors.

The Department contended that the ST-3 return is the primary document to verify the balance available with the assessee, and since the appellant filed a 'Nil' balance return, the rejection was justified. They highlighted that the request for a revised ST-3 return was made after the statutory 90-day period for electronic modifications, which was not adhered to by the appellant. The Commissioner (Appeals) upheld the rejection based on these grounds.

Upon review, the Tribunal found that the condition for the refund claim specified in Notification No.27/2012 required verifying the balance at the end of the quarter and at the time of filing the claim. The Tribunal emphasized that while ST-3 is essential, it cannot be the sole reliable record to verify the cenvat credit balance. The Tribunal noted that the appellant had requested to submit a revised ST-3 return to rectify the 'Nil' balance error, supported by substantial documentary evidence, despite the limitation period. The Tribunal referenced legal precedents emphasizing substantive justice over procedural lapses in such cases.

Further, the Tribunal cited cases where rectifiable mistakes in ST-3 returns should not lead to claim denials if the cenvat credit availability is established by other means. The Tribunal concluded that the Commissioner (Appeals) failed to appreciate all documents submitted by the appellant and set aside the rejection, allowing the appeal. The judgment highlighted the importance of considering all relevant evidence beyond ST-3 returns in adjudicating refund claims to ensure substantive justice for the assessee.