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2023 (6) TMI 1159 - AT - Service TaxRefund of service tax paid on gas transmission charges collected by them from their customers - refund claim arose due to differential price charges i.e. the difference between tariff already charged as per contract by the appellant and the tariff amount as received by PNGRB - it appeared to the Department that the said refund amount had already been adjusted / utilized by the appellant under Rule 6(3) of Service Tax Rules, 1994. Whether the data entered in the ST-3 Returns will bind the appellant and the act of not correcting an error in time, will close the avenues for a claim of refund, filed subsequently by the appellant? - HELD THAT - The ST-3 Returns filed by the appellant show that the appellant had adjusted an amount of Rs.11,47,41,041/- under Rule 6(3) of the Service Tax Rules, 1994 towards their service tax liability. The appellant on the other hand claimed that this was an inadvertent error and that in fact they had adjusted only an amount of Rs.66,24,847/-. In the normal course departmental officers have powers to correct an error of clerical or arithmetical nature, which are obvious, apparent or patent as do not admit of any debate or discussion. The original authority however felt that since the ST-3 Returns showed that an amount of Rs.11,47,41,041/- which was greater than the refund amount claimed, has been adjusted under Rule 6(3), no refund could be paid. A question arises that if the appellant had inadvertently or otherwise entered a lesser figure as the value of taxable service and the amount of tax payable in Part B of the ST-3 Return, would the Original Authority be similarly bound? The answer lies in Section 72 of finance act, 1994 which gives power to central excise officer to make best judgment assessment if he finds that the Assessee has filed the service tax return but has failed to assess service tax as per provisions of Finance Act, 1994. Assessment in its broad sense means determination of tax liability. Since Revenue cannot retain any money deposited / collected without the authority of law, excess collection has to be refunded. Rule 6 of the Service Tax Rues, 1994 has been introduced as a part of the procedure to bring in a tax payer friendly regime - The CBIC has a scheme for the scrutiny of ST-3 Returns as in Circular No. 113/07/2009-St, dated 23.04.2009 and has brought out a Return Scrutiny Manual for Scrutiny of ST-3 Returns , for this very purpose. As per these instructions Division/Range offices should, among other things, at first carry out a preliminary online scrutiny of the ST-3 Returns filed. The purpose is to ensure the completeness of the information furnished in the Return, arithmetic correctness of the amount computed as tax and its timely payment, timely submission of the return etc. The refund claim under 11B was rejected by the Original Authority on the ground that the claim cannot be modified by the appellant to include a totally new ground. While the Commissioner (Appeals) in the impugned order felt that the appellant was seeking a refund claim under section 11 B to derive a double benefit by also taking credit of the same amount - as per the appellant the total excess service tax paid by was Rs 11,47,41,041/- during the period April 2011 to July 2014. However, they have claimed a refund of Rs 10,54,78,124/- only as stated in para 2 of the impugned order. The balance of Rs 92,62,917/- which was not claimed was due to the fact that Rs 66,24,851/- was adjusted by the appellant under Rule (3) in the October 2014 to March 2015 ST 3 Returns and Rs 26,38,066/- that was not claimed due to being able to produce certificates of non-availment of credit from 3 customers. (Rs 66,24,851/- Rs 26,38,066/- Rs 92,62,917/-). It is seen that as per the table the amount of Rs 66,24,851/- was not included in the refund claim of Rs 10,54,78,124/- and no double benefit was claimed. The appellant has now in their appeal before us brought to notice that in a subsequent development the Hon ble new Delhi Tribunal s vide its Final Order 2017 (9) TMI 554 - CESTAT NEW DELHI has held that there can be no levy of service tax on the activity of transportation of gas up to delivery point at customers premises as it pertains to self-service. Hence on this ground too they would be eligible for a refund under section 11B of the Central Excise Act, 1944. While this is a fresh legal issue which has not been examined by the Original Authority, it is no longer in dispute that claims for refund, even where tax has been paid under a mistake of service tax law are to be filed and decided upon under Section 11B of the Central Excise Act, 1944, subject to the claimant establishing that burden of duty has not been passed on to third parties. The only issue for rejecting the refund claim is a data entry in the ST-3 Return, which when claimed to be erroneous by the appellant was not verified for its correctness just because the original authority mistakenly found himself bound by the legal framework - the appellant s claim was wrongly dismissed without examining the claim based on verifiable facts. Hence the impugned order merits to be set aside. Revenue can however verify the mathematical accuracy in computing the refund claim before sanction - impugned order set aside - appeal allowed.
Issues Involved:
1. Adjustment of Service Tax in ST-3 Returns 2. Eligibility for Refund under Section 11B of the Central Excise Act, 1944 3. Procedural and Clerical Errors in Tax Returns Summary: Adjustment of Service Tax in ST-3 Returns: The appellant, M/s. GAIL India Ltd., filed a refund claim of Rs.10,54,78,124/- for service tax paid on gas transmission charges from 1.4.2011 to 31.7.2014. The refund claim was rejected by the original authority and upheld by the Commissioner (Appeals) on the grounds that the appellant had adjusted an amount of Rs.11,47,41,041/- under Rule 6(3) of the Service Tax Rules, 1994, as reflected in their ST-3 returns. The appellant argued that this was an inadvertent error, and they had actually adjusted only Rs.66,24,847/-. However, they did not file revised ST-3 returns to correct the error, leading to the rejection of their claim. Eligibility for Refund under Section 11B of the Central Excise Act, 1944: The appellant contended that even if the entire service tax was adjusted under Rule 6(3), they were still eligible for a refund under Section 11B of the Central Excise Act, 1944. They argued that the incidence of service tax had not been passed on to customers, and thus, the question of unjust enrichment did not arise. The Commissioner (Appeals) rejected this argument, stating that the appellant was attempting to derive double benefit by seeking a refund while also taking credit of the same amount. Procedural and Clerical Errors in Tax Returns: The Tribunal found that the original authority's reasoning was unsound and that the rejection of the refund claim based on an erroneous data entry in the ST-3 Return was unjustified. The Tribunal emphasized that the Revenue Department cannot retain an amount due to an inadvertent error in the Return when the claim is otherwise eligible. The Tribunal also noted that the Hon'ble New Delhi Tribunal had held that there can be no levy of service tax on the activity of transportation of gas up to the delivery point at customers' premises, further supporting the appellant's eligibility for a refund. Conclusion: The Tribunal set aside the impugned order, allowed the appeal with consequential relief, and directed the Revenue to verify the mathematical accuracy in computing the refund claim before sanctioning it. The appeal was disposed of accordingly.
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