2014 (7) TMI 830 - AT - Service Tax

Refund claim of service tax paid earlier - unjust enrichment - assessee is entitled for self adjustment u/r 6(3) of excess service tax paid - revenue argued that assessee did not opt for provisional assessment u/s 6(4) - appellant has already refunded the excess service tax along with credit bill to its customers. - Period of limitation for self adjustment - Held that - Rule 6(3) is applicable not only to the case of excess payment of service which can be made good in subsequent period and bit also to the case where taxable values are not ascertainable for longer period - sub-rule 6(3) is not dependent on provision of sub-rule 6(4). Moreover there is no time limit prescribed under sub-rule 6(3) for making adjustment - Matter remanded back - Decided in favour of assessee.

Summary

Issues:
Refund claim rejection as time-barred and unjust enrichment leading to appeal.

Analysis:
The appeal was filed against the rejection of a refund claim by M/s Central Mine Planning and Design Institute for service tax paid during a specific period. The adjudicating authority rejected a portion of the claim as time-barred and sanctioned the rest but transferred it to the Consumer Welfare fund due to unjust enrichment concerns. The appellant contended that they had already refunded the excess service tax to their customers and were entitled to adjust the excess payment under Rule 6(3) of the Service Tax Rules. The appellant argued that there was no time limit specified under this rule for making adjustments and that unjust enrichment did not apply in their case.

The Revenue, represented by the DR, argued that the appellant had not requested provisional assessment as per Rule 6(4) and that refund claims beyond one year were rightly rejected as time-barred. The Revenue also emphasized the need to address the issue of unjust enrichment before claiming a refund. The core contention revolved around the interpretation of Rule 6(3) of the Service Tax Rules, with the appellant asserting its applicability and the Revenue disputing it.

Upon examining Rule 6(3) of the Service Tax Rules, the Tribunal found that the excess service tax paid could be adjusted against the subsequent service tax liability if the taxable value and service tax had been refunded to the recipient. The Tribunal disagreed with the Commissioner (Appeal)'s interpretation that the rule only applied to cases where excess payment could be rectified in the subsequent period. The Tribunal concurred with the appellant's argument that Rule 6(3) was not dependent on Rule 6(4) and noted the absence of a time limit for making adjustments under Rule 6(3).

Consequently, the Tribunal set aside the previous order and remanded the matter to the original authority for reevaluation, specifically instructing them to consider the appellant's claim under Rule 6(3) of the Service Tax Rules after providing an opportunity for the appellant to present their case. The appeal was disposed of through remand, indicating a need for further review and assessment based on the Tribunal's interpretation of the relevant rule.