2024 (5) TMI 369 - AT - Service Tax

Refund of Service tax paid - time limitation - application rejected as not filed within one year from the payment of the service tax as laid down in section 11B of CEA - HELD THAT - The nature of assessment and refunds were examined by the Supreme Court in Priya Blue Industries vs Commissioner of Customs (Prev) 2004 (9) TMI 105 - SUPREME COURT which was a Customs case and Collector of Central Excise vs Flock (India) Pvt. Ltd. 2000 (8) TMI 88 - SUPREME COURT which was a central excise case. In both judgments, the Supreme Court held that refund can only be sanctioned in pursuance of the assessment not such as to have the effect of changing the assessment. After these judgments, there have been changes in the law and self-assessments were introduced. The question which arose is if there was only self-assessment and no re- assessment by the officer, if the refund could be sanctioned contrary to the self assessment. This was answered by a larger bench of Supreme Court in negative in ITC Ltd. vs Commissioner of Central Excise, Kolkata IV 2019 (9) TMI 802 - SUPREME COURT . It has been held that all assessments, including self-assessments are appealable and unless the assessment is modified, no refund could be sanctioned so as to change the assessment. The reason for this is the refund proceedings are in the nature of execution proceedings and they cannot be used to re-determine the liabilities - Thus, it was held that through refund proceedings, the assessment (including self-assessment) cannot be modified. Through ITC Ltd., a batch of matters were disposed of. The discussion in this judgment was largely based on the provisions of Customs Act but the principle laid down was clear that refund proceedings are only in the nature of execution proceedings and cannot change the assessment. The legal position is loud and clear. Refund proceedings are in the nature of execution proceedings and they cannot modify an assessment including self-assessment. Refund can only be sanctioned or denied as per the assessment- be it self-assessment by the assessee or the best judgment assessment by the officer. This legal position will not and cannot vary depending on which side it favours. The law laid down in ITC Ltd. and BT (India) Pvt. Ltd. applies whether the claimant will get refund as a result or will be denied refund as a result. In neither case can the refund, which is in the nature of an execution proceeding be used to alter the assessment. Thus, the order of the Larger bench of this Tribunal in Balaji Warehouse interpreting the applicability of ITC Ltd. to service tax matters relied upon by the appellant has been clearly overturned by the High Court of Delhi in BT (India) Pvt. Ltd. Clearly, ITC Ltd. applies to service tax matters also. Since the appellant had self-assessed service tax without applying the notification and the assessment has not been modified, it cannot be modified now in the refund proceedings. As per the self-assessment, the appellant was not entitled to the refund. The impugned order is upheld - appeal dismissed.

Summary

Issues involved: Appeal against rejection of refund application u/s 11B of the Central Excise Act, 1994 for service tax paid beyond the prescribed time limit.

Summary:
The case involved an appeal by M/s. Kalyan Toll Infrastructure Ltd. against the rejection of their refund application for service tax paid beyond the stipulated time limit. The appellant provided services to Madhya Pradesh Power Generating Company Ltd. and self-assessed and paid service tax under notification no. 25/2012-ST. The refund application was filed after one year from the payment of service tax, leading to its rejection by the original authority.

Appellant's Submissions:
The appellant contended that the impugned order was arbitrary and without merit, arguing that the amount paid should be considered a deposit as no tax was payable. They also claimed that the time limit under section 11B should not apply to their case, citing relevant legal precedents to support their position.

Revenue's Response:
The Revenue representatives supported the impugned order, asserting that the service provided was taxable, and the appellant was entitled to an exemption notification which they had not claimed. They highlighted that the decision of a Larger bench had been overruled by the High Court of Delhi, emphasizing the applicability of section 11B in full force.

Findings and Decision:
After considering both sides' submissions, the Tribunal noted that the appellant had self-assessed and paid service tax without claiming the exemption notification. Referring to relevant legal judgments, including ITC Ltd. and BT (India) Pvt. Ltd., the Tribunal emphasized that refund proceedings cannot modify an assessment, whether self-assessed or officer-assessed. The Tribunal upheld the impugned order, stating that the appellant was not entitled to a refund as per their self-assessment, and the assessment had not been modified. The appeal was rejected based on these findings.

This comprehensive summary outlines the key issues, arguments presented by both parties, relevant legal precedents, and the Tribunal's decision based on the facts of the case and applicable legal principles.