2021 (8) TMI 1104 - AT - Service Tax

Refund of excess amount of service tax paid - rejection on the ground of time limitation - relevant date - refund was proposed to be rejected as it has not been filed within one year - HELD THAT - There is no denial of the fact that appellant had made payment for his service tax liability for the quarter ending April, 2017 to June, 2017 in April itself.Certain amount i.e. ₹ 2,85.501/- was paid to be adjusted towards his total liability to be incurred during this quarter. There is also no denial that the entire liability of the appellant for this quarter was for ₹ 1,41,714/- which stand adjusted by the Department as the Service Tax being paid by the appellant for the period of April, 2017 to June, 2017 but out of the payment made from 11.4.2017 to 24.4.2017. Admittedly, ₹ 1,51,404/- remained the balance to be adjusted for the service tax liability of appellant as may occur after quarter ending on 30.06.2017. These admitted facts are sufficient to hold that the amount in question was not at all tax liability of the appellant. Since post July 01, 2017, the applicability of this Rule was no more available to the appellant, the excess amount already got deposited by the appellant at the time when Service Tax liability for the said quarter had not even accrued towards the appellant, but remain unutilised for any tax liability till 30.06.2017, the amount cannot qualify for being called tax. The said balance was appellant s own money and Department cannot be allowed to get unjustly enriched out of said money - the learned Commissioner (Appeals) has erred while invoking bar of limitation of one year as mentioned under section 11 B for the amount which was not duty or tax. Learned Commissioner (Appeals) is also held to have erred while invoking the clause (f) of the definition of relevant date as given under section 11B. Since the amount in question was not duty, date of payment of duty clause cannot apply and date of impugned deposit cannot be taken as relevant date - appeal allowed - decided in favor of appellant.

Summary

Issues:
Refund claim filed beyond one year - Applicability of Section 11B of Central Excise Act - Excess payment towards future liability - Repeal of Rule 6(4A) of Central Excise Rules - Whether excess amount qualifies as tax liability.

Analysis:
The appellant filed a refund claim of ?1,51,404 for excess payment towards Service Tax liability for the period of April 2017 to June 2017. The appellant argued that the excess payment was to be adjusted for future liability, as permitted under Rule 6(4A) of Service Tax Rules, 2004. However, with the introduction of GST Act from 01.07.2017, this adjustment provision was no longer available, leading to the refund claim. The Department proposed to reject the refund claim citing a one-year limitation period from the date of payment. The appellant contended that the relevant date for limitation should be the date of filing the return, not the date of payment. The appellant also argued that the excess amount was not tax liability but the appellant's own money, as no services were provided post-June 30. The Tribunal noted that the excess amount was not tax liability and held that the bar of limitation under Section 11B of Central Excise Act did not apply to the amount.

The Department argued that the excess amount, reflected in the ST-3 return, constituted Service tax and should not be considered a deposit. The Department relied on the definition of 'relevant date' under Section 11B of the Central Excise Act, stating that the period of one year should be reckoned from the date of payment. The Tribunal, however, found that the excess amount was not tax liability but the appellant's own money, as it remained unutilized for any tax liability till June 30, 2017. The Tribunal held that the bar of limitation under Section 11B did not apply to amounts considered as the appellant's money, not tax liability. The Tribunal set aside the order under challenge and allowed the appeal, emphasizing that the excess amount did not qualify as tax liability and thus, the limitation period did not apply.

In conclusion, the Tribunal held that the excess amount paid by the appellant, which was not utilized for any tax liability, could not be considered as tax and was the appellant's own money. Therefore, the bar of limitation under Section 11B of Central Excise Act did not apply to the amount, and the order rejecting the refund claim was set aside, allowing the appeal.