2023 (5) TMI 336 - AT - Service Tax

Refund claim - time limitation - applicability of section 73A of Finance Act 1994 - amalgamation of two entities - recipient of some taxable service had with retrospective effect from 1st April 2013 been subsumed in the provider of some taxable service and thereby immunized as service rendered to itself is from liability to tax refund of the amounts discharged was claimed - HELD THAT - While the inapplicability of section 73A of Finance Act 1994 is built upon the proposition of erasure of any other person receiving service by deeming of the provider and recipient to be the same through retrospective legislation or as in the present instance through retrospective effect of law placing it thereby beyond even the pale of that taxation which by specific deeming in law reverses the flow of commercial engagement there is an incidental argument of Learned Counsel that appellant had not been placed on notice before the provision was invoked to their detriment - There is no doubt that the observation of the Tribunal therein does seem to suggest as much but that merely appears to be intended in a particular context as exposition for laying the groundwork for the substantive finding that disallowance of the claim for refund therein by discarding the very submissions made by the claimant would overwhelm any representation that procedural infirmity is fatal to the proceedings when such notice is superfluous to the entire exercise. Section 73A of Finance Act 1994 is a special provision to forestall undue deprivation of recipient of service at the hands of provider of service by contriving of tax measure but essentially it places burden of compliance on the person who vis- -vis the recipient is proxy for the State and empowers recovery in the event of non-compliance. It is surely not intended as enablement for transforming tax revenue received in the Consolidated Fund of India to that of deposit for disposition in any manner detailed therein - a careful perusal of section 11B of Central Excise Act 1944 elicits the conclusion that option for rejection of claim for refund of tax that was not payable at all is not contemplated therein; the only substantive alternatives before the competent authority are to credit the Consumer Welfare Fund by default unless subject to compliance with the specified circumstances return of the amount to the claimant is justified. Rejection is contingent only upon satisfaction on the part of the statutory authority that tax liability is mandated by law and that too preceded by notice of intent not to sanction refund. The appellant sought to impose a date of effect well before the elapse contemplated in the several decisions supra to obviate the potential for disruption of the intended timetable. There are no doubt that that amalgamation is effective from 1st April 2013 but in our view the retrospective effect will impact only such aspects as are incorporated in the scheme of amalgamation. The scheme involves transfer of undertakings from transferor to the transferee while obliterating the former and the statutory process is envisaged to provide life to the cutting i.e. the undertaking while it is yet under graft on another artificial person viz. transferee. In the process any aspect of the undertaking that has an existence beyond the date of placement before the jurisdictional High Court is connected to the life support and hence the imperative of retrospective acknowledgement of such. Thus any transaction that creates liability or generates an asset in the books of the transferor is afforded the privilege of artificial life - tax liability discharged before the actual date of approval of amalgamation under Finance Act 1994 pertains to existence as separate persons and therefore not immunized therefrom. The assessed liability under Finance Act 1994 duly discharged and being neither provisional nor tentative is beyond the scope of re-determination of levy merely because of a scheme of amalgamation. Appeal dismissed.

Issues Involved:

1. Premature filing of refund claims before statutory approval of amalgamation.
2. Applicability of Section 73A of Finance Act, 1994.
3. Limitation period for filing refund claims.
4. Requirement to challenge self-assessment for refund eligibility.

Summary:

1. Premature Filing of Refund Claims:
The rejection of four refund claims by M/s Pfizer Ltd and M/s Wyeth Ltd (merged with M/s Pfizer Ltd) was examined. The claims were filed for tax liabilities discharged between April 2013 and September 2014. The original authority rejected these claims, and the first appellate authority confirmed the rejection. The core issue was whether the claims were premature, as they were filed before the statutory approval of the amalgamation scheme by the Hon'ble High Court of Bombay on 31st October 2014, with an appointed date of 1st April 2013. The Tribunal noted that the lower authorities did not render a finding on the tax liability for the period covered by the scheme of amalgamation preceding the approval by the Hon'ble High Court.

2. Applicability of Section 73A of Finance Act, 1994:
The Tribunal addressed the applicability of Section 73A, which precludes the grant of refund for amounts deposited with the exchequer. The Tribunal found that the lower authorities had not proposed rejection of eligibility to sanction refund on this ground in the notice, and the contest thereto in appeal was ignored in the impugned order. The Tribunal concluded that Section 73A is not intended as enablement for transforming tax revenue received into a deposit for disposition in any manner detailed therein, and prior notice of intent is mandated.

3. Limitation Period for Filing Refund Claims:
For the claims filed after the statutory approval of the amalgamation scheme, the Tribunal examined whether the bar of limitation under Section 11B of Central Excise Act, 1944, applied. The Tribunal noted that the decision in Indian Oil Corporation Ltd v. Commissioner of Service Tax, Mumbai-I determined the relevant date to be the date of amalgamation. The Tribunal concluded that the applicability of the relevant date would arise only if the claim of the appellant that retrospective effect accorded to amalgamation erases taxability is accepted.

4. Requirement to Challenge Self-Assessment for Refund Eligibility:
The Tribunal considered the argument that self-assessment attains finality in the absence of a challenge, as held by the Hon'ble Supreme Court in ITC Ltd v. Commissioner of Central Excise, Kolkata-IV. The Tribunal distinguished the circumstances of the present case from those in ITC Ltd, noting that in service tax matters, the assessee simply files the ST-3 return without an order of assessment passed by a departmental officer. The Tribunal concluded that the peculiar circumstances of the appeal, premised on the law declared by the Hon'ble Supreme Court in re Marshal Sons & Co (I) Ltd, call for disposal on its own factual matrix.

Conclusion:
The Tribunal found that the assessed liability under Finance Act, 1994, duly discharged and being neither provisional nor tentative, is beyond the scope of re-determination of levy merely because of a scheme of amalgamation. Consequently, the appeals were dismissed as without merit.

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