2023 (2) TMI 9 - AT - Service Tax

Refund of CENVAT Credit - export of goods or not - whether the refund claim filed by the appellant-claimant has been rightly rejected on the ground of absence of express provision in that regard? - HELD THAT - As per Rule 6(3) of Service Tax Rules, 1994, the builder has an option to take the credit of excess service tax paid by him, if that builder had refunded the payment or part thereof so received alongwith the service tax payable thereon for the service to be provided by him to the person from whom it was received. Undisputedly, the builder has given a declaration under Rule 6(3) ibid vide letter dated 06/04/2018 to the Deputy Commissioner (refund) stating therein that they have not adjusted the amount of Rs.3,34,800/- paid towards service tax / advance service tax on amounts received from appellant-claimant under the provisions of Rule 6(3) and that the advance paid by the appellant-claimant amounting to Rs.24,00,000/- has been refunded on cancellation of booking of the said flat and in support of the declaration the builder has submitted the copies of ST-3 returns filed by them for the period April, 2016 to March, 2017 and April, 2017 to June, 2017. Admittedly, the builder has not refunded the amount of service tax to the appellant-claimant and neither he adjusted the said amount nor claimed refund in respect of the amount in issue. Therefore, the same cannot be adjusted under Rule 6(3) ibid. A perusal of the law laid down by the Hon ble Supreme Court in the matter of COMMISSIONER OF CENTRAL EXCISE, MADRAS VERSUS M/S ADDISON CO. LTD. 2016 (8) TMI 1071 - SUPREME COURT made it clear that the consumer / buyer who has borne the burden of tax is eligible for refund - the learned Commissioner has misdirected himself by observing that there is no provision to refund such Service Tax paid under the existing law as the same is contrary to the law laid down by the Hon ble Supreme Court. It is surprising that on identical facts one authority is passing order in favour of claimant whereas in respect of the same builder on identical facts another authority is taking totally contrary view. There are force in the submission of learned counsel that the authorities below have travelled beyond the show cause notice and that ground itself is sufficient to set aside the order of the authorities below as the show cause notice states that the amount of Rs.2,26,800/- received as advance service tax by the builder from the appellant-claimant has not been accounted by the builder in their ST-3 returns for the period 2016 to March, 2017 and therefore the said amount of Rs.2,26,800/- claimed as refund by the claimant is liable to be rejected, whereas both the authorities below have rejected the entire amount of refund of Rs.3,34,800/-. From the perusal of the builders letters / declaration dated 06/04/2018 and 26/12/2018 respectively along with the copies of ST-3 returns for the period October, 2016 to March, 2017 and April, 2017 to June, 2017, it is clearly established that the service tax liability has been discharged by the builder. Appeal allowed.

Issues:
1. Rejection of refund claim by the Commissioner of Central Tax, Central Excise and Service Tax (Appeals) Raigad.
2. Whether the refund claim was rightly rejected due to the absence of an express provision.
3. Discrepancy in the refund claim amount and the builder's records.
4. Interpretation of Rule 6(3) of Service Tax Rules, 1994 regarding refund eligibility.
5. Applicability of the law laid down by the Hon'ble Supreme Court in the matter of Addison Company Ltd.
6. Jurisdictional overreach by the authorities in rejecting the refund claim.

Analysis:
1. The appellant challenged the rejection of the refund claim by the Commissioner of Central Tax, Central Excise and Service Tax (Appeals) Raigad, which was based on the observation that refund of credit is only permissible in case of export of goods.

2. The key issue was whether the refund claim was rightly rejected due to the absence of an express provision. The appellant had booked a flat, canceled the booking, and the builder refunded the advance amount. The builder confirmed not refunding the service tax but deposited part in cash and utilized cenvat credit for the rest. The appellant filed a refund claim under relevant acts, which was rejected by the authorities citing lack of proof of service tax discharge by the builder.

3. The discrepancy in the refund claim amount and the builder's records led to a show cause notice and subsequent rejection of the claim. The Adjudicating Authority and the Commissioner rejected the claim, with the latter stating that refund of credit is only permissible in case of export of goods.

4. The analysis delved into the interpretation of Rule 6(3) of Service Tax Rules, 1994, which allows a builder to take credit of excess service tax paid if the payment is refunded along with the service tax payable. The builder's declarations and records were scrutinized to determine the eligibility for a refund.

5. The judgment referred to the law laid down by the Hon'ble Supreme Court in the matter of Addison Company Ltd., emphasizing that the consumer/buyer who has borne the tax burden is eligible for a refund. The Commissioner's observation that there is no provision to refund such service tax paid was deemed contrary to established legal principles.

6. The authorities' jurisdictional overreach in rejecting the entire refund claim instead of the specific amount highlighted in the show cause notice was criticized. The appellant was found not liable for service tax as no service was provided, making the refund admissible. The appellant's entitlement to the refund was upheld based on the facts of the case and legal precedents.

7. Consequently, the appeal filed by the appellant was allowed, granting consequential relief as per the law, and the judgment was pronounced in open court on 25.01.2023.

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