2014 (9) TMI 856 - AT - Service Tax

Denial of refund claim - tax already paid by appellant - Goods later exempted under Notification No. 8/2005, dated 1-3-2005 - Held that - Ruling of the Hon ble Supreme Court is dated on 16-8-1988, whereas the Section 11B has been amended by Amendment Act No. 44 of 1980 wherein for the words from the date of payment the words from the relevant date was substituted. Thus, in view of the amendment made in the Section, the ruling of the Hon ble Apex Court is not applicable in the facts of the present case. Further, in the facts and circumstances of the case, I find that the Commissioner (Appeals) has erred in holding that the appeal is hit by limitation as the appellant has filed refund claim by 2 months delay from the date of deposit of the tax. Thus, the appeal is allowed and the order of Commissioner (Appeals) is set aside and the Order-in-Original is restored. It is further held that the appellant is entitled to refund of the whole amount of Service Tax paid, disallowed by Revenue audit and claimed back from appellant vide Debit Note dated 31-10-2009 - Following decision of Collector of Central Excise, Chandigarh v. Doaba Co-operative Sugar Mills 1988 (8) TMI 103 - SUPREME COURT OF INDIA - Decided in favour of assessee.

Summary

Issues:
1. Applicability of Service Tax on job work under 'Business Auxiliary Service'
2. Claim for refund of Service Tax paid by job worker
3. Interpretation of Section 11B for claiming refund within one year
4. Comparison of legal precedents on limitation period for refund claims

Analysis:
1. The appellant, a job worker engaged in machining of plastic, believed Service Tax was leviable under 'Business Auxiliary Service' for work done for a manufacturer. However, an audit revealed the activity was exempted under Notification No. 8/2005, leading to a demand for refund of wrongly collected tax from the manufacturer.

2. The principal manufacturer reversed the credit and recovered the tax amount from the appellant, who then filed a claim for refund within one year of the audit objection. The Deputy Commissioner allowed partial refund, which was challenged by the Revenue before the Commissioner (Appeals), who denied the refund citing limitation under Section 11B.

3. The appellant contended that the refund claim was made within one year from the relevant date of the audit, relying on legal precedent where tax paid but found not liable is treated as a deposit with the Government. The Tribunal noted the amendment in Section 11B, substituting 'from the date of payment' with 'from the relevant date,' and allowed the appeal, setting aside the Commissioner's order.

4. The Revenue argued for the application of general law limitation as per a Supreme Court ruling, but the Tribunal differentiated the amendment in Section 11B, emphasizing the timely filing of the refund claim by the appellant. The Tribunal held in favor of the appellant, granting a refund of the entire Service Tax amount disallowed by the Revenue audit, totaling Rs. 2,01,802.

In conclusion, the Tribunal allowed the appeal, providing the appellant with the consequential benefit of the refund claimed, highlighting the importance of understanding the amended provisions of Section 11B for timely refund claims in tax matters.