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2024 (11) TMI 10 - AT - Service Tax


Issues:
Refund claim rejection based on Order-in-Original upheld by Commissioner (Appeals) - Applicability of Hon'ble Gujarat High Court decision on levy of service tax under Reverse Charge Mechanism - Time limitation for refund claim - Authority of Central Government to retain tax collected post High Court decision - Applicability of High Court decisions on Department - Refund eligibility for amount paid post High Court decision - Validity of Show Cause Notice post full payment of liability.

Analysis:
The appeal challenged the rejection of a refund claim of Rs.16,44,980/- by the Commissioner (Appeals) based on an Order-in-Original. The appellant, engaged in manufacturing vegetable oils, filed the refund claim due to service tax paid under Reverse Charge Mechanism. The claim was related to transportation of goods by vessel from outside India to Customs Station in India. The appellant argued that the levy was ultra-vires based on the Hon'ble Gujarat High Court decision, making the tax collection unauthorized post that judgment. The Department contended that the refund claim was time-barred for an amount paid pre-decision and that full payment of liability waived the need for a Show Cause Notice.

The Tribunal noted that the Hon'ble Gujarat High Court's decision on the levy being ultra-vires was on 06.09.2019, and the refund claim was filed on 27.11.2020. The appellant was directed to deposit Rs.11,16,335/- post the High Court decision, which was deemed unjustified post the ultra-vires ruling. The Department's argument that the refund claim for Rs.5,28,645/- was time-barred was accepted since it was not filed within one year of the High Court's decision. However, the amount of Rs.11,16,335/- deposited post the High Court's judgment was deemed eligible for a refund, as the Revenue had no right to retain it. The Tribunal allowed the appeal partially, ordering the refund of Rs.11,16,335/- with applicable interest.

The decision highlighted the significance of High Court rulings on tax levies, the limitation period for refund claims, and the obligation of the Revenue post a High Court judgment. It clarified that amounts paid post a High Court decision deeming a levy ultra-vires are eligible for refund, emphasizing the binding nature of High Court decisions on the Revenue. The judgment also underscored the importance of timely refund claims and the impact of full payment of liabilities on the necessity of Show Cause Notices.

 

 

 

 

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