2022 (7) TMI 767 - AT - Service Tax

Refund claim - time limitation - Denial of refund of certain amount deposited through GAR challan - HELD THAT - It is seen that the appellant deposited a certain amount through GAR challan. The appellant has thereafter, in three days informed the revenue that the said deposit is in the nature of a deposit under Rule 6 (1A) of Service Tax Rules. The said deposit has never been adjusted against any tax liability in any subsequent return filed by appellant. In this circumstances, it is found that the amount deposited has never attained character of tax or duty. Appeal allowed.

Summary

Issues:
- Denial of refund of amount deposited through GAR challan
- Applicability of limitation under Section 11B of Central Excise Act, 1944
- Interpretation of Rule 6(1A) of the Service Tax Rules for advance payment

Analysis:
1. Denial of Refund: The appellant, M/s J P Biscuits Pvt Ltd., filed an appeal against the denial of a refund for an amount deposited through GAR challan. The appellant argued that they deposited the amount in anticipation of liability, following which they informed the department that the deposit was in the nature of an advance under Rule 6(1A) of the Service Tax Rules. The appellant claimed that the amount was never adjusted against any duty in subsequent returns until the refund claim was filed. The appellant relied on a Tribunal decision where a refund was granted under similar circumstances.

2. Applicability of Limitation: The Authorized Representative (AR) argued that the limitation prescribed under Section 11B of the Central Excise Act, 1944, would apply to all refund claims. Citing judicial precedents, the AR emphasized the importance of adhering to the time limits for refund claims. The AR relied on decisions of the Hon'ble Apex Court and the High Court of Gujarat to support the contention that the scope for a refund claim is strictly governed by the law, requiring an extraordinary case for intervention.

3. Interpretation of Rule 6(1A): The impugned order highlighted the actual sequence of events and the provisions of Rule 6(1A) of the Service Tax Rules. It was noted that the appellant failed to fulfill the mandatory provisions of the rule by not reflecting the e-payment in their subsequent returns as required. The failure to follow the rules regarding advance payment and adjustment in subsequent returns led to the rejection of the refund claim. However, the Tribunal found that since the amount deposited was never adjusted against any tax liability, it did not attain the character of duty payment, thereby allowing the refund based on the decision in the Cochin International Airport Ltd. case.

In conclusion, the Tribunal allowed the appeal, granting the refund and any consequential relief. The decision was based on the finding that the amount deposited through GAR challan did not become a duty payment due to non-adjustment against any tax liability, thus distinguishing it from cases where limitation under Section 11B would apply.