2010 (5) TMI 208 - AT - Service Tax

Service of Chartered Accountant- The appellant is a registered Chartered Accountant since 2004 and providing the service of Chartered Accountant. The refund was denied on the ground that as per the provisions of Notification No. 6/2005(ST), a service provider, who opts to pay tax in the 1st half of a financial year, cannot withdraw the option in the said financial year. The same was confirmed by the lower appellate authority. The appellant has filed this appeal against the rejection of their refund claim. Held that- lower authority rightly rejected as the appellant has not fulfilled the conditions.

Summary

Issues:
Appeal against rejection of refund claim based on Notification No. 6/2005(ST) - Entitlement to exemption limit - Applicability of unjust enrichment principle.

Analysis:
The appellant, a Chartered Accountant, filed an appeal against the rejection of their refund claim of service tax paid amounting to Rs.37960/- for the year 2006-2007. The appellant claimed that they were entitled to avail the exemption limit of Rs.4 lakhs under Notification No. 6/2005(ST) and had wrongly paid the service tax. The appellant argued that they were not liable to pay service tax during the financial year in question and hence sought a refund. It was contended that since the appellant had not recovered the service tax amount from their clients, the principle of unjust enrichment should not apply in this case.

Upon examination of Notification No. 6/2005(ST) dated 1.3.2005, it was found that the appellant had paid the service tax for the 1st half of the financial year and surrendered their registration in the 2nd half, which was not permissible as per the conditions of the notification. The notification stated that once the option to pay tax is exercised in a financial year, it cannot be withdrawn during the remaining part of that year. As the appellant failed to comply with this condition, they were not entitled to avail the exemption provided in the notification. Consequently, the lower authorities were justified in rejecting the refund claim on the grounds of violating the conditions of the notification.

In conclusion, the appellate tribunal upheld the decision of the lower authorities, stating that there was no reason to interfere with the impugned order. The appeal filed by the appellant against the rejection of their refund claim was therefore rejected.