2024 (11) TMI 990 - AT - Service Tax

Refund claim filled by service receiver - jurisdiction of Mumbai Service Tax authority or Kolkata Service Tax authority to deal with the refund application of the appellant - action of the Deputy Commissioner in returning the refund claimed filed by the Appellants, in terms of Section 103 of Finance Act 1994, as inserted by the Section 159 of the Finance Act, 2016 - Difference of opinion among members of bench - difference of opinion between learned Member (Technical) and learned Member (Judicial) on the findings pertaining to jurisdiction of Mumbai Service Tax authority or Kolkata Service Tax authority to deal with the refund application of the appellant, filed in terms of Section 103 of the Finance Act, 1994. Appellants have challenged this action, arguing that since the appellant was registered in the jurisdiction of Deputy Commissioner, Division 9, Service Tax VII, thus they had rightly filed the refund claim in the jurisdiction where they were registered for payment of service tax - Whether the Deputy Commissioner, Division-9, Service Tax-VII, action in returning the refund claim that has been upheld by the Commissioner (Appeals) is to be upheld by the CESTAT as opined by Member (Technical) or is to be set aside as opined by Member (Judicial)? HELD THAT - In the present case, due to non-obstante clause in Section 103 (1) of the Act of 1994, the charge of service tax itself and the assessment, if any, stands nullified by the legislated Act of the Parliament and thus, there is no need of ascertaining the fact, as to who would be considered as the jurisdictional proper officer for grant the refund of the service tax amount. In fact, Section 103(2) of the Act of 1994 mandates that refund shall be made of all such service tax, which has been collected, but which would have not been so collected, had sub-section (1) been in full force at all times. Section 103 of the Act of 1994 is a complete code in itself and it does not mandate for filing of the refund claim at any specified jurisdiction. Once it is admitted that the recipient of the service is eligible to file refund claim, it is beyond the mandate of the law to insist that such claim should be filed with the proper officer, having jurisdiction over the service provider. Section 103(3) of the Act of 1994 also starts with a non-obstante clause and puts only condition that the refund application should be filed within six months. Thus, there is no other condition imposed, as to the specific officer, before whom the refund claim should be filed with. The appellants in the present case have filed their refund claim before their own jurisdictional Service Tax divisional office, where they used to file the service tax returns. Even Section 11B of the Act of 1944, which has been strongly relied upon in the Interim Order, also does not mandate that the claim should be filed before the service provider's jurisdictional officer alone. In fact, the principle laid down in Canon India 2021 (3) TMI 384 - SUPREME COURT would support the appellant's case inasmuch as in the event of any erroneous grant of refund, the proper officer to issue the show cause notice for recovery of such erroneously granted refund would be the jurisdictional officer at the appellant s end, and not the jurisdictional officer at the service provider s end. Thus, as per the reasoning given by the Hon'ble Member (Technical), the jurisdictional officer of the service provider will not have even geographical jurisdiction to issue any show cause notice to the appellants herein. Therefore, the expression the assessing officer , in the present case, would mean the jurisdictional officer of the appellants, and not that of the service provider. In any case, the appellants would not have any locus standi to file their refund claim before the jurisdictional officer of the service provider, as they are not registered in that jurisdiction. In the present case, interpretation of the provisions of Section 27 (supra) is not in question and there is no dispute that the appellants have filed the refund claim within 6 months of the Presidential assent to Section 103 of the Act of 1994 and as such, is within the schedule time frame. Thus, recourse cannot be had to the provisions of 1872 Act or the 1963 Act. The appellant's right to seek refund arose out of an act of the Parliament, by way of granting retrospective exemption, which overrides all assessments and hence, there is no question or need for seeking any re-assessment. In paragraph 4.32 of the Interim Order, learned Member (Technical) has observed that Section 103 of the Act of 1994 or Section 11B of the Act of 1944, did not permit for filing of the refund claim in multiple jurisdictions. In the present case, it is not the case of the appellants that they wanted to file the claim in multiple jurisdictions. The appellants have in fact, filed the refund claim application only with their jurisdictional officer. Therefore, this finding is of no relevance in the present context. In fact at the end of this paragraph, it is stated that we have no hesitation in agreeing to the observations made by the Tribunal to the effect that both the jurisdictions cannot refuse to entertain the refund claim filed by the recipient of service. If this be so, then the appellants are correct in filing the claim with their own jurisdiction. It is also stated in the said paragraph that filing of claim in multiple jurisdictions, will amount to double benefit in respect of the same transaction. In the present case, the appellants have filed the claim only in one jurisdiction and in any case, it is not the case of Revenue or of the Adjudicating or First Appellate Authority that the appellants is taking double benefit. Such a remark is unwarranted in the present case. Thus, in agreement with the learned Member (Judicial) that the impugned order is required to be set aside and the appellants should be entitled to get the refund at Mumbai. In view of the majority opinion, the impugned order is set aside and the appeal is allowed in favour of the appellants.

Summary

Issues Involved:
1. Whether the service receiver can file a refund claim.
2. Whether the refund claim was filed outside the jurisdiction.
3. Whether the action of returning the refund claim by the adjudicating authority was proper.
4. Application of Section 14 of the Limitation Act to exclude the period covered in the entire process of litigation.

Issue-wise Detailed Analysis:

1. Eligibility of Service Receiver to File Refund Claim:
- The Tribunal considered whether the service receiver, rather than the service provider, could file a refund claim. The Commissioner (Appeals) held that the legal positions do not bar the appellant service receiver from filing a refund claim. The Tribunal agreed with this view, noting that Section 11B of the Central Excise Act, 1944, as applied to service tax, allows "any person" to claim a refund, thus not restricting the claim to the service provider alone.

2. Jurisdiction for Filing Refund Claim:
- The core issue was whether the refund claim should be filed in the jurisdiction of the service provider or the service recipient. The original authority and Commissioner (Appeals) held that the refund should be filed where the service tax was paid, i.e., the service provider's jurisdiction. The Tribunal, however, found that Section 103 of the Finance Act, 1994, does not specify jurisdictional requirements for filing refund claims. It emphasized that the refund claim could be filed in the jurisdiction where the service recipient is registered, especially when the service recipient is the one seeking the refund.

3. Action of Returning the Refund Claim:
- The Tribunal examined whether the Deputy Commissioner was correct in returning the refund claim without adjudication. The majority opinion, led by the Member (Judicial), found no statutory provision authorizing the return of a refund claim without a decision. It was noted that the refund application should be processed and decided upon by the jurisdictional officer where the service recipient is registered, aligning with the provisions of Section 103 of the Finance Act, 1994.

4. Application of Section 14 of the Limitation Act:
- The Tribunal addressed whether Section 14 of the Limitation Act, which allows for the exclusion of time spent in proceedings conducted in good faith in a court that lacks jurisdiction, should apply. The Member (Judicial) opined that the benefit of Section 14 should be extended, citing the Supreme Court decision in M.P. Steel Corporation, which supports the exclusion of such time. However, this issue was deemed academic since the majority found the refund claim was correctly filed in the jurisdiction of the service recipient from the outset.

Conclusion:
The Tribunal set aside the impugned order, allowing the appeal in favor of the appellants. It was determined that the service recipient could file the refund claim in their jurisdiction, and the Deputy Commissioner should have processed the claim rather than returning it. The Tribunal's decision emphasized the legislative intent behind Section 103 of the Finance Act, 1994, and the broad allowance for "any person" to claim refunds under Section 11B of the Central Excise Act, 1944, as applicable to service tax.