2022 (12) TMI 1192 - AT - Service Tax

Refund claim - rejection of claim on the ground of nondisclosure of availment of Cenvat Credit in ST-3 Returns - Rule(5) of Cenvat Credit Rule, 2004 read with Notification No. 27/2012 CE(NT) dated 18/06/2012 - HELD THAT - Time and again in series of decisions this Tribunal has repeatedly held that non-mentioning of the credit availed in ST-3 return is only a procedural lapse for which the substantial relief cannot be denied to the assessee but despite that the lower authorities seem to be adamant in not taking cognizance of the views of the Tribunal. In the instant matter, when the appellant realized their mistake they immediately, vide letter dated 16/06/2017, intimated the said mistake / discrepancy to the authority before whom the refund claim was filed by them and requested the said authority to accept the duly corrected/ rectified ST-3 returns manually for the period April, 2016 to September, 2016 but the said authority vide letter dated 16/06/2017 turned down the said request and rejected the refund claim merely on the basis of non-disclosing the availment of credit in ST-3 returns. Learned Commissioner also followed the same without applying his independent mind to the issue and without looking into the settled legal position as laid down by this Tribunal in number of decisions. In the instant matter, the mistake committed by the appellant is merely a procedural lapse which they tried to rectify immediately thereafter but were not permitted and substantial relief was denied to them, which is not permissible in law. Admittedly the ST-3 Returns manually filed by the Appellants were not verified as the same were not accepted by the authority below - the justice demands that the impugned order be set aside and the matter be remanded to the Original Authority for deciding the issued afresh after verification of ST-3 returns filed by the appellant manually. The matter is remanded to the Original Authority in order to decide the issue afresh - Appeal allowed by way of remand.

Summary

Issues:
Whether rejection of refund claim for non-disclosure of Cenvat Credit in ST-3 Returns is justified?

Analysis:
The appeal challenges the rejection of a refund claim by the Commissioner (Appeals)-III GST & Central Excise, Mumbai. The issue revolves around the rejection of the refund claim under Rule(5) of Cenvat Credit Rule, 2004 read with Notification No. 27/2012 due to the appellant's failure to disclose the availment of Cenvat Credit in ST-3 Returns. The appellant, a Market Research Agency Services provider, filed a refund claim amounting to Rs.13,31,503/- for the period from April, 2016 to June, 2016. However, they later realized their mistake in not disclosing the credit availed in the ST-3 returns filed for the period April, 2016 to September, 2016. Despite informing the Assistant Commissioner and requesting acceptance of rectified returns, the request was rejected, leading to the rejection of the refund claim by the Adjudicating Authority and the 1st Appellate Authority.

The appellant argued that the rejection of the refund claim violated the principles of natural justice as no show cause notice was issued. They contended that the failure to disclose credit in ST-3 returns should not result in denial of the refund claim. The appellant cited various Tribunal decisions to support their argument. On the other hand, the Revenue's Authorized Representative supported the impugned order's findings and cited a Tribunal decision in a similar matter.

The Member (Judicial) noted that the non-disclosure of credit in ST-3 returns is a procedural lapse, and substantial relief should not be denied to the assessee based on this alone. The lower authorities were criticized for not considering the Tribunal's consistent position on this issue. The Member highlighted that the appellant promptly notified the mistake and requested rectification, which was unreasonably denied. Drawing parallels with a previous Tribunal decision, the Member concluded that justice required setting aside the impugned order and remanding the matter for fresh consideration after verifying the manually filed ST-3 returns.

Consequently, the appeal was allowed, and the matter was remanded to the Original Authority for a fresh decision in line with the observations made. The importance of following the principles of natural justice and granting a proper opportunity for hearing to the appellant was emphasized.

In conclusion, the judgment delves into the procedural aspect of disclosing Cenvat Credit in ST-3 Returns and emphasizes the need for authorities to consider the Tribunal's established positions on such matters, ensuring justice is served through a fair and thorough review process.