2024 (3) TMI 1173 - AT - Service Tax

Refund claim - rejection on the ground that the appellant have not complied with the condition of N/N. 12/2013-ST clause-III sub-clause(C) in as much as the appellant have not obtained the Service Tax registration before filing the refund - HELD THAT - From the condition of the Notification, the assessee is required to obtain a registration before filling a refund claim in terms of Clause-III Sub-clause (c) of Notification. However, as per sub-clause (g) even if the appellant has not obtained the registration they may obtain registration before filing the refund claim. As per the facts of the present case the appellant though did not obtain the registration before filing the refund application but subsequently on 14.07.2015 they had obtained registration. After obtaining the registration, the condition of the Notification provided under clause (c) stands made and on that account refund could not have been rejected as at the time of rejection of claim the appellant had registration in possession. Therefore, considering the same refund should have been sanctioned. Moreover, even as per the condition the appellant is required to apply for the registration prior to filing the refund application. This condition is merely a procedural requirement and for breach of the procedural condition the substantial benefit of refund cannot rejected, particularly when the payment of service tax and use of service in the SEZ is not under dispute - Section 26 of SEZ Act provides that no tax/ duties are leviable on the input or input service received and use in the SEZ. As per this statutory provision which override any other Act, the service tax is not leviable on the service received in SEZ. Accordingly, the tax paid on the service needs to be refunded. The impugned order is set aside - appeal allowed.

Summary

Issues involved:
The appeal is against the rejection of a refund claim under Notification No. 12/2013-ST due to non-compliance with the condition of obtaining Service Tax registration before filing the refund claim.

Summary:

Issue 1: Compliance with Notification Condition
The appellant's refund claim was rejected as they had not obtained Service Tax registration before filing the claim, as required by the notification. The appellant later obtained registration, arguing that compliance was achieved post-filing. The Tribunal noted that as per the notification, registration should be obtained before filing the claim. However, since the appellant obtained registration before the rejection of the claim, the condition was met. The Tribunal held that the refund should have been sanctioned as the appellant had registration at the time of rejection.

Issue 2: Procedural Lapse and Entitlement for Refund
The appellant argued that the requirement to obtain registration before filing the refund claim was a procedural lapse. They cited judgments stating that a refund cannot be rejected merely for procedural lapses. The Tribunal agreed, emphasizing that the substantial benefit of refund should not be denied for procedural breaches, especially when the payment of service tax and use of service in the SEZ is undisputed. Additionally, the SEZ Act exempts taxes on input services used in the SEZ, supporting the appellant's entitlement to the refund. The Tribunal concluded that the appellant was legally entitled to the refund and set aside the impugned order, allowing the appeals with consequential relief.