2024 (6) TMI 623 - AT - Service Tax

Refund claim - Time Limitation - inclusion of value of material supplied free of cost by the service recipient in the assessable value - refund could be claimed without challenging the self-assessment or not - HELD THAT - The law of refund has been settled by the Apex Court that refund can be sanctioned only in pursuance of the assessment made and not de hors the assessment. The principle was laid down in the case of Priya Blue Industries versus Commissioner of Customs 2004 (9) TMI 105 - SUPREME COURT under the provisions of the Customs Act and thereafter, in the case of Collector of Central Excise versus Flock India Private Ltd. 2000 (8) TMI 88 - SUPREME COURT a case under Central Excise Act. Later, in the case of ITC Limited 2019 (9) TMI 802 - SUPREME COURT , the issue considered was whether the refund could be sanctioned without challenging the self assessment and it was conclusively held that all assessments, including self assessments are appealable and therefore, unless the same is modified, no refund could be sanctioned so as to alter the assessment on the principle that refund proceedings are in the nature of execution proceedings and they cannot be used to determine the liabilities of the parties. The facts in the present case are not disputed to the extent that both the service provider and the service recipient assessed their taxable value and paid the service tax as per their liability. The amount of service tax worked out and paid on the free of cost supplied material by the service provider and service recipient was deposited in the government exchequer on account of their service tax liability during the relevant period. Appeal allowed.

Issues Involved:
1. Whether the refund claim filed by the appellant is time-barred.
2. Whether the value of materials supplied free of cost by the service recipient should be included in the taxable value for service tax assessment.
3. Whether a refund can be claimed without challenging the self-assessment of service tax.
4. Applicability of judicial precedents to the appellant's case for claiming the refund.

Detailed Analysis:

1. Whether the refund claim filed by the appellant is time-barred:
The appellant filed a refund claim on 06.01.2016, which was rejected as time-barred. The appellant argued that the relevant date for filing the refund claim should be the date of the Apex Court's judgment in ATR Constructions (27.01.2015), making their claim within the one-year period stipulated under Section 11 B of the Central Excise Act, as applied to service tax by Section 83 of the Finance Act, 1994. However, the authorities below rejected the refund claim on the ground of latches, and this was affirmed by the Tribunal.

2. Whether the value of materials supplied free of cost by the service recipient should be included in the taxable value for service tax assessment:
The Tribunal noted that the issue of whether the value of free materials supplied by the service recipient should be included in the taxable value was settled by the Apex Court in ATR Constructions, which held that such value should not be included for service tax liability. Despite this, the appellant's assessment, which included the value of free materials, had attained finality as neither the service provider nor the recipient had challenged it.

3. Whether a refund can be claimed without challenging the self-assessment of service tax:
The Tribunal reiterated the principle that refund proceedings cannot be used to alter the assessment, including self-assessment. The Apex Court's decisions in Priya Blue Industries, Flock India, and ITC Limited established that all assessments, including self-assessments, must be appealed and modified before a refund can be sanctioned. The Tribunal emphasized that refund proceedings are in the nature of execution proceedings and cannot be used to determine liabilities or reassess the tax.

4. Applicability of judicial precedents to the appellant's case for claiming the refund:
The Tribunal referred to the Supreme Court's decision in Mafatlal Industries, which held that a person cannot claim a refund based on a decision rendered in another person's case without challenging their own assessment. The Tribunal also cited the Delhi High Court's decision in B.T. (India) Pvt. Ltd., which applied the ITC Limited ruling to service tax matters, reinforcing that self-assessed returns must be questioned or re-assessed before a refund can be entertained.

Conclusion:
The Tribunal concluded that the appellant's refund claim could not be entertained as it sought to alter the final self-assessment without challenging it. The Tribunal dismissed the appeal, affirming the order under challenge, and confirmed that the appellant is not entitled to the refund as claimed. The appeal was disposed of accordingly.

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