2019 (11) TMI 1348 - AT - Service Tax

Refund of unutilised Cenvat Credit - rejection on merit when issue of Jurisdiction remain unresolved - rejection on the ground that invoices raised in the name of unregistered branch office, which has been affirmed by the Commissioner (Appeals) in his order referred above, is assailed in this appeal - HELD THAT - Admittedly in the deficiency memo jurisdictional issue had not been agitated nor there was any attempt made by the refund sanctioning authority to send the refund application to Gurgaon Commissionerate, if he were of the view that such an application for refund was not maintainable at Mumbai. Jurisdiction being preliminary issue should have been considered at the first instance before the merit of refund was to be adjudicated upon but the Learned Asst. Commissioner (Refund-II) Service Tax-I Mumbai preferred to give his findings on both without any show cause notice was issued to the appellant indicating his intention to reject such refund claim - the legality of the order concerning non-maintainability of the refund claim at Mumbai and its confirmation by the Commissioner (Appeals) is unsustainable. Other grounds of rejection of refund were also dealt with out of which appellant had accepted the time barred claim of ₹ 43,399/- which has been abandoned by it as revealed from page no. 17(1) of its appeal memo. Concerning the rest 3 rejection of refund of ₹ 188310/- ₹ 1,24,301/-₹ 1,08,915/- on the ground of mismatch of invoices/improper invoices etc., appellant had put forth its stand unsuccessfully before the Commissioner (Appeals) and even filed export invoices etc. in this court as additional evidence but having regard to the fact that appellant was denied of the opportunity to defend its case before the refund sanctioning authority who even did not prefer to issue show cause notice to it in grass violation of the principle of natural justice, in the absence of opportunity being provided to the appellant to put forth the genuiness of its refund claim for which the order of Commissioner (Appeals) confirming the rejection order passed by the Asst. Commissioner is unsustainable in law. Appellant is entitled to get refund of ₹ 28,00,095/- which respondent department is directed to pay within two months from the date of passing of this order with due regard to Section-11AA concerning applicability of interest on refunds - Appeal allowed.

Summary

Issues:
Rejection of refund of unutilised Cenvat Credit on jurisdictional grounds and other reasons.

Analysis:
The appellant, a trader and exporter of Raw Indian Sugar, sought a refund of unutilised Cenvat Credit amounting to ?28,43,494/- for the period April 2014 to July 2014. The claim was rejected by the adjudicating authority primarily due to jurisdictional issues and irregularities in some invoices. The rejection was affirmed by the Commissioner (Appeals) in Mumbai. The appellant contended that there was no bar in availing Cenvat Credit on invoices raised in the branch office address. The appellant argued that the rejection on jurisdictional grounds violated principles of natural justice and cited precedents supporting admissibility of Cenvat Credit on invoices from unregistered branch offices.

During the hearing, the appellant's counsel highlighted that the deficiency memo did not raise jurisdictional issues, and the refund sanctioning authority did not send the claim to the appropriate Commissionerate. The appellant argued that the rejection based on technicalities was unjustified, especially considering the acceptance of inputs received and utilised. The appellant also pointed out the duty of the original authority to forward the refund claim to the competent Commissionerate for sanctioning. The appellant urged to set aside the Commissioner (Appeals)'s order.

The Authorized Representative for the respondent department supported the Commissioner (Appeals)'s order, emphasizing the rationality of the rejection, including time-barred claims and improper invoices. However, the Tribunal found that the jurisdictional issue should have been addressed first, and the refund application should have been sent to the correct Commissionerate if deemed necessary. The Tribunal referred to past decisions supporting the admissibility of refund claims based on invoices from unregistered branch offices, rendering the rejection on jurisdictional grounds unsustainable.

Regarding other grounds for rejection, the Tribunal noted that the appellant had abandoned the time-barred claim but had not been given a fair opportunity to defend against the rejection of other claims due to a lack of show cause notice. The Tribunal held that the rejection without providing an opportunity to present evidence violated the principles of natural justice. Consequently, the Tribunal allowed the appeal, set aside the Commissioner (Appeals)'s order, and directed the respondent department to refund ?28,00,095/- to the appellant within two months, considering the applicability of interest on refunds as per Section-11AA.

In conclusion, the Tribunal found the rejection of the refund claim on jurisdictional and other grounds unsustainable due to procedural irregularities and lack of opportunity for the appellant to defend its case effectively.