APPEAL CANNOT BE FILED AGAINST SELF ASSESSMENT

[Mr. M. GOVINDARAJAN]

The service tax concept was introduced for the first time with effect from 01.07.1994. Section 70 of the Finance Act, 1994 provides for the regular assessment of service tax assessees. The Act incorporated the provisions for best judgment assessment and re-assessment also in sections 72 and 73 respectively. The system of regular system under Section 70 was replaced with the system of self assessment with effect from 16.07.2001. Under this every assessee is required to himself assess the tax due on the services provided by him. He is also to furnish a return to the Superintendent of the Central Excise in the prescribed form in the prescribed manner and within the prescribed time. The Self assessment is complete with the filing of service tax return in Form ST-3 within the due date.

The Master Circular No. 97/8/2007-ST, dated 23.08.2007 provides that normally, under self assessment scheme, the service tax payer assesses his tax liability himself and pays the same. However, if a service tax payer is not in a position to determine the service tax liability, say, for the reason that valuation or classification of taxable service or issue of admissibility of an exemption notification cannot be determined (or any such other reason) at the time of filing the return, he may opt for assessment of service tax on provisional basis after obtaining an order from the jurisdictional Deputy Commissioner/Assistant Commissioner. The assessment shall be made in terms of the said order and would continue to be the provisional till the issue is finalized. Upon finalization, there may be additional tax liability or refund. In such cases, the tax payer would have to either pay the differential amount of tax with interest or claim refund, as the case may be. If the assessee is aggrieved against the said assessment he can file appeal challenging the said assessment.

In this article the issue taken for discussion is whether the service provider is able to get the refund of excess tax (that is not required to be paid) paid by him. For this purpose he is to challenge his own self assessment. These two issues are discussed with reference to decided case law.

In 'Premier Agencies V. Commissioner of Central Excise, Nagpur' - 2010 -TMI - 75969 - CESTAT, MUMBAI, the appellants are engaged in providing the Business Auxiliary service to M/s Hutch Ltd., They were getting commission from M/s Hutch  Ltd., and were paying service tax on such commission. From 1.1.2007 the company changed its policy and the appellants were not getting commission else they were performing the sales activities. The appellant's accountant as a matter of routine practice paid the service tax and submitted the ST-3 returns for the period from October 2006 to March 2008. The appellants filed refund claim for the said amount. The Department rejected the refund claim on the ground that it is a case of self assessment and the same has been accepted by the department, hence without challenging the same, the refund claim cannot be entertained. For this purpose the Department relied on the case 'Commissioner of Central Excise, Kanpur V. Flock (India) Private Limited' - [2008 -TMI - 45478 - SUPREME COURT OF INDIA]

The appellants filed appeal before the Commissioner of Central Excise (Appeals), who also dismissed the appeal. Aggrieved from the same, the appellants approached the Tribunal.

The appellants submitted the following:

There was no order or decision taken by any adjudicating authority and the appellants are not liable to file an appeal;

The case law relied on by the Department is not applicable in this case. In those cases there were assessments/order was passed by the Central Excise Officer/Customs Officer and without challenging the order, the assessee filed the refund claim;

When no order capable of being appealed against, had ever been passed, it cannot be said that the assessee could file appeal against the assessment order.

The department reiterated its arguments put forth before the lower authorities.

The issue involved in this case is whether the appellants are entitled for filing the refund of service tax paid as per their own assessment without challenging the same.  The refund claims were denied by the lower authorities following the rule laid down by the apex court in 'Flock India Ltd.,' (supra) and 'Priya Blue Industries Limited V. Commissioner' - 2008 -TMI - 47045 - SUPREME COURT OF INDIA. In 'Priya Blue Industries Limited' case the respondent filed the classification list, in which it was claimed that said product comes under the tariff item 22A and the Assistant Commissioner after examining the contents of the product and particulars furnished by the respondent passed an order holding that the product in question is classifiable under tariff item 22B and not under tariff item 22A and the applicable rate of duty would be 25% ad valorem. In the said order the Assistant Commissioner expressly stated that the assessee may prefer an appeal against the said order by filing any appeal nor did it pay the duty under protest. The Tribunal held that it is not the circumstances in the present case.

The Tribunal held that on going through the facts and circumstances of the case it is a case where the appellants have paid service tax on their own and on finding that they are not liable to pay the service tax, they filed a refund claim. There was neither assessment by the Central Excise Officer nor any decision taken by the Central Excise Officer and nothing is available on record. Hence the question of challenging the assessment does not arise at all. The proposition that 'assessment' includes 'self assessment' is not correct for the purpose of appeal under Section 35F of the Central excise Act. The appeal under Section 35 is preferable to the Commissioner of Central Excise (Appeals) against order/decision by subordinate Central Excise Officer. It is difficult to envisage that the said provision of law provides for an appeal against self assessment. 

There is no order or decision of the Central Excise Officer, which is to be challenged. In that situations the appellants cannot file any appeal against their own assessment. Accordingly the Tribunal set aside the impugned order and allowed the appeal.