2019 (8) TMI 1177 - HC - Service Tax

Refund of service tax - logistic charges - period 2009-10 to 2010-11 - time limitation - Section 11B of the Act, 1944 - HELD THAT - The controversy with regard to the issue as to whether a transaction would be amenable to Service Tax or VAT has drawn the attention of the Hon ble Supreme Court in a number of cases. In the case of Bharat Sanchar Nigam Ltd vs Union of India 2006 (3) TMI 1 - SUPREME COURT , where the issue was as to whether on the sale of SIM card, Sales Tax could be leviable or the same was a service subjected to Service Tax , the Hon'ble Supreme Court after extensively dealing with all the constitutional provisions, in paragraph 87 of the judgment concluded that the same would depend upon the intention of the parties. But we are not called upon to adjudicate this issue in the present case in as much as only the question of refund of Service Tax has been raised by the appellant on the ground that VAT has already been levied by the Commercial Tax Authorities. From a bare perusal of Section 11B of the Act, 1944 it is clear that an application for refund has to be made within a period of one year from the relevant date. The appellant made an application for refund on 21/04/2012 for the refund of Service Tax deposited for the financial year 2009-10 and 2011-12 (April June). The application for refund of Service Tax having been moved beyond the period of limitation prescribed, was rightly rejected and further the appellant had himself conceded before the CESTAT that Service Tax was not deposited under protest nor was there any provisional assessment. Even otherwise, the application for refund should have been moved within a period of one year, which was admittedly moved beyond the stipulated period. As already held by the Apex Court the application moved beyond the statutory period prescribed in Section 11-B of the Act, 1944, would be time barred and the claim of the appellant could not have been admissible on this score also. Appeal dismissed.

Summary

Issues Involved:

1. Applicability of Section 11-B of the Central Excise Act, 1944, regarding the limitation period for claiming a refund.
2. Entitlement of the appellant to the refund of the amount deposited as Service Tax.
3. Double taxation on logistic charges under both VAT and Service Tax.

Issue-wise Detailed Analysis:

1. Applicability of Section 11-B of the Central Excise Act, 1944:

The appellant filed for a refund of Service Tax deposited on logistic charges for the period 2009-10 to 2010-11. The Assistant Commissioner rejected the refund claims citing that the application was "beyond limitation" and due to "unjust enrichment" as the appellant did not provide proof that the incidence of Service Tax had not been passed on to any other person. The Commissioner (Appeals) upheld the rejection, stating that the Service Tax was validly imposed on logistic charges, and thus, the refund was not warranted. The CESTAT also rejected the appeal, emphasizing that the refund claim was time-barred under Section 11-B, which mandates a one-year limitation period for such claims unless the tax was paid under protest. The appellant conceded that the Service Tax was not deposited under protest, thus disqualifying them from the benefit of the second proviso of Section 11-B.

2. Entitlement to Refund of Service Tax:

The appellant argued that since VAT was already imposed on logistic charges, Service Tax should not be levied on the same charges to avoid double taxation. However, the Commissioner (Appeals) and subsequently the CESTAT found that the appellant had accepted the Service Tax liability on logistic charges under the category of "business auxiliary service" for the financial year 2009-10. The VAT authorities classified logistic charges as part of the sale price, thereby subjecting them to VAT. The appellant's challenge to the VAT imposition was still pending before the High Court. Therefore, the CESTAT concluded that the Service Tax was correctly levied, and the refund claim was not justified.

3. Double Taxation on Logistic Charges:

The appellant contended that imposing both VAT and Service Tax on logistic charges amounted to double taxation. However, the court noted that the appellant had accepted the Service Tax liability and had not accepted the VAT authorities' decision, which was under challenge. The court referred to the Supreme Court's decision in Imagic Creative, which held that Service Tax and VAT are mutually exclusive and should be applied based on their respective parameters in a composite contract. The court found that the appellant's logistic charges for transportation/delivery of cars constituted a service, justifying the Service Tax levy. Consequently, the court held that the Service Tax was rightly levied, and there was no occasion for a refund.

Conclusion:

The court dismissed the appeals, affirming that the refund application was time-barred under Section 11-B of the Act, 1944, and that the Service Tax was correctly levied on logistic charges. The appellant's arguments regarding double taxation were not upheld, as the court found that both VAT and Service Tax could be applied based on their respective legal frameworks. The court emphasized that the appellant's challenge to the VAT imposition did not negate the validity of the Service Tax levy.