2023 (8) TMI 470 - AT - Service Tax

Refund of Service Tax - taxability of chit fund - relevant date for computation of time limitation - HELD THAT - As per the documents produced by the appellant, appellant is a Member of All Kerala Chitty Formen s Association who is one of the petitioner in Writ Petition No.32097 of 2007 and revenue had filed an appeal against judgment of the Ld. Single bench to clarify as to whether the decision of the Hon ble Supreme court in the case of Margadarshi Chit Funds 2017 (7) TMI 224 - SUPREME COURT applies to the period post introduction of Negative list in 2012. Thus the entire issue regarding taxability on chit fund attained finality only as per the judgment dated 14.03.2018 and not w.e.f 04.07.2017 as held by adjudication authority. As per the judgment dated 14 March, 2018, Hon ble High court specified that the limitation for filing refund application will be extended for one year from 14.03.2018 - However, Commissioner (Appeals) has not extended the period of limitation on the ground that the appellant was not party to the proceedings pending before the Hon ble High Court. Such finding is unsustainable. It is evident that Appellant is a Member of All Kerala Chitty Formen s Association who is one of the petitioner in Writ Petition No.32097 of 2007 and revenue had filed an appeal against judgment of the Ld. Single bench to clarify as to whether the decision of the Hon ble Supreme court in the case of Margadarshi Chit Funds applies to the period post introduction of Negative list in 2012. Thus the entire issue regarding taxability on chit fund attained finality only as per the judgment dated 14.03.2018 and not w.e.f 04.07.2017 as held by adjudication authority. The appellant are eligible to claim the benefit of extended period of limitation for one year from 14.03.2018. Since there is no other issue raised by the Adjudication/Appellate Authority, the appeal is allowed.

Summary

Issues involved:
The issues involved in the judgment are the taxability of chit fund services, the application of limitation for filing refund claims, and the eligibility of the appellant to claim benefits based on the judgments of the Hon'ble High Court of Kerala.

Taxability of Chit Fund Services:
The appellant, providing services under the category of 'Banking & other Financial Services', faced a challenge regarding the taxability of chit fund transactions. The issue was under scrutiny before the Hon'ble Supreme Court and the Hon'ble High Court of Kerala. The Hon'ble High Court of Kerala, in a judgment dated 14th March, 2018, directed assesses to file refund claims for amounts paid, considering the tax collected from individual subscribers. The appellant, a member of the All Kerala Chitty Foremen's Association involved in the Writ Petition, filed a refund application for service tax paid from June 2007 to June 2013, amounting to Rs. 18,39,643. The adjudication authority considered the issue of unjust enrichment but rejected the claim based on the commencement of the limitation period.

Limitation for Filing Refund Claims:
The adjudication authority rejected the appellant's refund claim on the grounds of limitation, stating that the period should commence from the date of the Hon'ble Supreme Court judgment on 04.07.2017, not from the judgment on 14.03.2018. The appellant, aggrieved by this decision, approached the Hon'ble High Court of Kerala through a Writ Petition, which directed the appellant to file an appeal before the Appellate Authority. The Appellate Authority dismissed the claim based on the appellant not being the petitioner who filed the appeal as a member of the association, citing limitation as a reason for rejection.

Eligibility for Extended Period of Limitation:
The matter was brought before the Tribunal, where the appellant provided documents proving their association membership and involvement in the Writ Petition proceedings. The Tribunal acknowledged the appellant's membership in the association and their involvement in the relevant proceedings. It noted that the entire issue regarding taxability of chit funds was finalized only as per the judgment dated 14.03.2018, extending the limitation for filing refund applications. The Tribunal found the appellant eligible to claim the benefit of the extended period of limitation as per the guidelines issued by the Hon'ble High Court, allowing the appeal with consequential relief.