2024 (12) TMI 603 - AT - Service Tax

Refund of service tax suffered on the specified services used for the authorized operations of the SEZ - rejection on the ground of time limitation - HELD THAT - The appellant while admitting the delay in filing the refund claims within the normal has pointed to the fact that clause 3(iii)(e) of Notification No. 12/2013-ST allows the Assistant Commissioner of Central Excise or the Deputy Commissioner of Central Excise to extend the time limit however no decision was rendered to their request for extension. When a discretionary power is conferred on an Authority the power must be exercised in a reasonable transparent and rational manner free from whims vagaries and arbitrariness. It is a part of the Authority s public duty to do so. It goes without saying that the discretion has to be exercised judiciously within the four-corners of the statute. The Authority empowered to use his discretion cannot ignore and remains silent when a request is made. One of the safeguards to ensure that discretion is exercised reasonably and judiciously is to give a reasoned order on the issue for which the power is being exercised. From the admission made by the appellant it is clear that there is some negligence on their part. The question is whether the degree of negligence is so high as to close the door of refund on the assessee- appellant especially when the law permits that the normal period of filing a refund claim can be extended by the appropriate authority. To take a view that failure to comply with the time limit would result in dismissal of the appeal involving a fairly large sum is to put procedural requirement on a high pedestal and that too in this case without even attempting to examine the remedy available in law. This omission would hinder justice. No business man would knowingly file a belated claim. However long delays are also not in the interest of finalizing the rights and liabilities of both the appellant and revenue expeditiously and statutory authorities along with the applicants are bound by the timelines as mentioned in the Act or notification under which the refund is being processed. In the instant case the Original Authority is not seen to have examined the appellants request for extension of time as permitted by the notification and to that extent the order is unthinking and arbitrary. The portion of the impugned orders in as far as they relate to rejecting the refund claims on the question of time bar are set aside and remanded to the Ld. Original Authority to examine the appellants request for considering their refund claim in terms of clause 3(iii)(e) of Notification No. 12/2013-ST afresh - Appeal disposed off by way of remand.

Issues Involved:

1. Eligibility and timeliness of refund claims for service tax on services used for authorized operations in a Special Economic Zone (SEZ).
2. Discretionary power of authorities to extend the time limit for filing refund claims.
3. Procedural lapses and their impact on substantive rights.
4. Adherence to principles of natural justice in adjudicating refund claims.

Detailed Analysis:

1. Eligibility and Timeliness of Refund Claims:

The core issue revolves around the appellant's eligibility to claim refunds for service tax paid on services used for authorized operations within an SEZ. The claims were filed under Notification No. 40/2012-ST and its successor, Notification No. 12/2013-ST. The adjudicating authority initially rejected the refund claims on the grounds of being time-barred. The appellant argued that the delay was due to administrative changes and health issues within their tax department, which resulted in the late filing of claims. The Commissioner (Appeals) partially upheld this rejection but also remanded parts of the claims for reconsideration. The tribunal noted that the law permits the extension of the filing period by the appropriate authority, emphasizing that procedural requirements should not overshadow substantive rights, especially when the notification itself allows for such extensions.

2. Discretionary Power of Authorities:

A significant point of contention was the discretionary power granted to the Assistant Commissioner or Deputy Commissioner of Central Excise to extend the time limit for filing refund claims. The tribunal highlighted that this discretion must be exercised judiciously, transparently, and reasonably. The original authority's failure to consider the appellant's request for an extension was deemed arbitrary and contrary to the principles of fair adjudication. The tribunal cited precedents emphasizing that discretion must be free from arbitrariness and exercised within the statutory framework.

3. Procedural Lapses and Substantive Rights:

The appellant contended that the delay in filing should be considered a procedural lapse, which should not negate their substantive right to a refund. The tribunal agreed, reiterating that procedural infractions should not result in the denial of substantive benefits. The tribunal emphasized that the business entity's intent was not to file belated claims knowingly, and the law provides mechanisms to address such delays through discretionary extensions.

4. Adherence to Principles of Natural Justice:

The tribunal identified breaches of natural justice in the original orders, as decisions were made without adequate notice or personal hearings. The tribunal stressed the importance of a reasoned order, which ensures transparency and accountability in decision-making. It directed that any further adjudication must adhere to these principles, providing the appellant with a fair opportunity to present their case.

Conclusion:

The tribunal remanded the matter back to the original authority, instructing them to reconsider the appellant's request for an extension of the filing period under Notification No. 12/2013-ST. It emphasized the need for a reasoned and judicious exercise of discretion and adherence to natural justice principles. The tribunal also directed that any ineligible portions of the refund claims be addressed through a fair process, allowing the appellant to present their arguments comprehensively. The appeals were disposed of with these directions, ensuring that the appellant's substantive rights are protected while maintaining procedural integrity.

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