2023 (10) TMI 1303 - AT - Service Tax

Refund - Period of Limitation - service tax paid under the reverse charge mechanism (RCM) - Later since services were not rendered assessee claimed refund of the same. Refund rejected on the ground that it was filed after one year from the date of payment of the service tax and hence it was hit by limitation under section 11B of the Central Excise Act 1944 as made applicable to the service tax by section 83 of the Finance Act 1994. HELD THAT - Section 11B applies to service tax matters so far as may be. In other words wherever necessary the references to excise duty manufacture manufacturer etc. must be read as corresponding terms with reference to service tax. Otherwise application of section 11B to service tax itself becomes absurd and impossible. The term manufacturer in central excise corresponds to service provider in service tax i.e. the one carrying out the taxable event which is manufacture in the case of excise and the provision of service in case of service tax - In this case since the services rendered by OPHJ to the respondent were unsatisfactory it waived the invoices in March 2014. In other words the sale and purchase of services had not taken place at all. Therefore the relevant date had not yet begun when the appellant filed the refund application on 8 September 2014. The Commissioner (Appeals) has correctly held that the claim of refund is not hit by limitation. Revenue sought to distinguish this case from M/S. OSWAL CHEMICALS FERTILIZERS LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE BOLPUR 2015 (4) TMI 352 - SUPREME COURT . on the ground that this is a service tax matter. This submission cannot be accepted. If section 11B applies to service tax matters as far as may be there is no reason why the ratio of this judgment does not apply. The impugned order is upheld and Revenue s appeal is dismissed

Summary

Issues involved:
The issues involved in the judgment are the admissibility of a refund claim for service tax paid under reverse charge mechanism, the application of limitation under section 11B of the Central Excise Act, 1944 to service tax provisions, and the interpretation of relevant dates for refund claims by persons other than the service provider.

Admissibility of refund claim:
The respondent sought a refund for service tax paid on invoices issued by a service provider located outside India. The service provider waived its service charges due to non-delivery of services, prompting the refund claim. The Assistant Commissioner initially rejected the refund as time-barred under section 11B, but the Commissioner (Appeals) allowed the refund, ruling that the limitation does not apply to refund claims by persons other than the service provider.

Application of limitation under section 11B:
The Revenue challenged the Commissioner (Appeals) decision, arguing that the refund claim was time-barred as it was filed after two years from the date of payment of service tax. The Revenue contended that the relevant date for limitation should be the date of payment of service tax, not the date of purchase of the service. However, the Commissioner (Appeals) held that the limitation period should be reckoned from the date of purchase of the service by the claimant, not the service provider.

Interpretation of relevant dates for refund claims:
The Tribunal analyzed the applicability of section 11B to service tax matters and emphasized the need to interpret terms like 'manufacturer' as 'service provider' and 'goods' as 'services' in the context of service tax. The Tribunal concluded that in cases where services are not rendered and payments are waived, the relevant date for refund claims by persons other than the service provider is the date of purchase of the service, not the date of payment of service tax. The Tribunal upheld the Commissioner (Appeals) decision, dismissing the Revenue's appeal.