2021 (1) TMI 139 - AT - Service Tax

Refund of unutilised CENVAT Credit - refund denied for non-submission of requisitioned documents - opportunity of being heard also not given - violation of principles of natural justice - HELD THAT - Refund has been denied for non-submission of requisitioned documents which the appellant submitted before the Ld. Commissioner (Appeals) which has not been considered in the impugned order. With regard to the dispute raised by the original authority for denial of refund on ground of classification I do not agree with the reasons assigned by the said authorities inasmuch as when the repair and maintenance service per se is not excluded for the purpose of availing credit refund should not be denied on the ground that the service provider should not have classified the same under the category of Renting of Immovable Property services. Further while denying refund the lower authorities have not stated the reasons as to why such credit is not available. In any case it is a settled position that the entitlement of credit should not be denied when the assessee is pursuing refund of credit claimed in returns. In the instant case there is no dispute that service tax of which refund has been claimed has not been deposited with the Revenue. Since the appellant has submitted necessary confirmations from the service provider duly supported with CA certificate it would be unjust to deny the refund. Since the case pertains to grant of refund and that the original order has been passed ex-parte it is considered fit and proper to remand the matter to the original authority who would provide reasonable opportunity to the appellant to submit the desired documents and decide the claim - appeal allowed by way of remand.

Summary

Issues:
Denial of refund of service tax availed as Cenvat Credit for the Quarter ended March 2015.

Analysis:
The appellant, a registered STPI unit, appealed against the denial of refund of service tax availed as Cenvat Credit for the Quarter ended March 2015. The appellant primarily engaged in providing services constituting export of service on which no output service tax is payable. They availed various input services on which Cenvat Credit was taken, remaining unutilized as no output tax was payable. The appellant claimed a refund under Notification no. 27/2012 for the Quarter ended March 2015. However, a Show Cause Notice was issued, pointing out discrepancies, to which the appellant did not reply. Consequently, an ex-parte order was passed rejecting the refund claim. The appeal before the Ld. Commissioner (Appeals) also upheld the original order rejecting the refund claim, leading the appellant to appeal before the Tribunal.

The appellant's representative argued that the refund was wrongly rejected without giving an opportunity to be heard and in violation of principles of natural justice. On merits, the appellant was deemed eligible for a refund for various reasons, including the classification of services by the vendor, submission of necessary documents, and compliance with procedural requirements. The Departmental Representative disputed the refund, citing the appellant's failure to reply to the Show Cause Notice and questioned the credibility of documents submitted for the first time during the appeal.

Upon hearing both sides and reviewing the records, the Tribunal found that the refund was denied due to non-submission of requisitioned documents, which were actually submitted before the Ld. Commissioner (Appeals) but not considered. The Tribunal disagreed with the lower authorities' reasons for denying the refund based on the classification of services, emphasizing that the entitlement of credit should not be denied when pursuing a refund claimed in returns. Since the service tax for which a refund was claimed was not deposited with the Revenue, and the appellant provided necessary confirmations supported by a CA certificate, the Tribunal deemed it unjust to deny the refund.

The Tribunal decided to remand the matter to the original authority, providing the appellant with a reasonable opportunity to submit the required documents and decide the claim accordingly. The directive was to ensure an expeditious decision within three months of the order receipt, advising the appellant against seeking unnecessary adjournments for prompt disposal of the matter. Consequently, the appeal was allowed by way of remand.

This detailed analysis of the judgment highlights the issues involved, arguments presented by both parties, the Tribunal's reasoning, and the final decision to remand the matter for further consideration.