2010 (3) TMI 137 - AT - Service Tax

Refund of excess paid service tax - Telephone services - As per the half-yearly return filed by them for the period October 2003 to March 2004 the service tax payable in respect of telephone service for the month of February 2004 was Rs. 30, 79, 422/- for taxable value of Rs. 3, 84, 92, 775/-. However they paid a higher amount (Rs.38 lakhs) for the month of February 2004 in two instalments Rs. 28 lakhs on 11.3.2004 and Rs. 10 lakhs on 26.3.2004. On 18.9.2005 they filed a refund claim for the excess amount of Rs. 7, 20, 578/- paid by them. The original authority rejected this claim as time-barred and its order was sustained by the Commissioner (Appeals) Held that appellant is not entitled to treat their assessments in question as provisional for purposes of sub-rules (4) (5) and (6) of Rule 6 of the Service Tax Rules 1994. Where a method of provisional assessment is prescribed under the statute it has to be strictly followed. - After a long period of time since then they came forward to claim refund of the differential amount. In this scenario the time-bar provisions of Section 11B(1) would be squarely applicable. As rightly found by the lower authorities the refund claim was filed after expiry of the prescribed period of one year from the relevant date. The claim was rightly rejected as time-barred. - while sustaining the rejection of refund claim as time-barred I direct the original authority to consider the question whether the excess amount of service tax paid by the assessee for February 2004 should be allowed under sub-rule (3) of Rule 6 to be adjusted against any service tax due for any subsequent period

Summary

Issues:
1. Time-barred refund claim for excess service tax paid.
2. Applicability of provisions under Rule 6 of the Service Tax Rules, 1994.
3. Entitlement to claim refund without time-bar on the premise of provisional assessments.
4. Adjustment of excess service tax against future demands under Rule 6(3).

Analysis:
1. The appellant, engaged in providing telephone services, paid excess service tax for February 2004 and filed a refund claim for the surplus amount. The claim was rejected by the original authority and upheld by the Commissioner (Appeals) as time-barred under Section 11B(1) of the Central Excise Act. The appellant contended that time-bar provisions should not apply due to the absence of a 'best judgment assessment' and referred to Finance Act provisions. The appellate authority rejected the arguments, upholding the rejection of the refund claim as time-barred.

2. The appellant's counsel argued that the assessments should be treated as provisional, citing Rule 6 provisions for provisional assessment. However, the tribunal found that the appellant did not follow the prescribed procedure for provisional assessment, leading to the rejection of this argument. The tribunal emphasized that when a method of provisional assessment is prescribed, it must be strictly adhered to, and in this case, the appellant failed to request payment on a provisional basis.

3. The appellant also raised an alternative plea based on Rule 6(3) for adjusting the excess amount against future service tax demands. The tribunal noted that this claim was not adequately presented before the lower authorities and was not emphasized in the appeal. However, considering the appellant's initial plea for adjustment before filing the refund claim, the tribunal directed the original authority to independently consider whether the excess amount could be adjusted against future service tax liabilities under Rule 6(3).

4. The tribunal highlighted that the appellant's plea for adjustment under Rule 6(3) was not seriously pursued before the lower authorities or adequately raised in the appeal. Despite this, the tribunal directed the original authority to evaluate the adjustment request under Rule 6(3) without influence from the tribunal's observations, emphasizing the need for an independent decision and providing the appellant with a fair opportunity to present their case.

This comprehensive analysis of the judgment addresses the key issues raised in the case, outlining the arguments presented by the appellant, the tribunal's findings, and the directions given for further consideration by the original authority.