2014 (12) TMI 784 - AT - Service Tax

Revision of service tax return after 90 days to avail and utilize cenvat credit - refund claim filed for claiming service tax paid in cash - Held that - Service tax liability was discharged by the appellants in the month of October, 2009 and S.T.-3 return was filed on 24-4-2009. At that particular point of time, their CENVAT account was nil. Subsequently, the entries made in the CENVAT account was checked by them and certain mistakes were detected, resulting in availability of CENVAT credit. They subsequently sought revision of the same on 21-12-2011, i.e., after a period of 2 years and 8 months which according to the lower authorities was not in accordance with law inasmuch as Rule 7B of the Service Tax Rules, 1994 allows any revision to correct a mistake or omission within a period of 90 days of the filing of such return. Though the correction of entries in the CENVAT account is not the subject matter of the present appeal, but the same are inter-connected and inter-related to the issue of refund. Appellants having paid the duty through cash, at the relevant time and having duly reflected the same in their S.T.-3 return, has to be treated as the correct payment of duty. Subsequently, correction of CENVAT account resulting in availability of CENVAT credit cannot be held to be a ground for refund of the cash deposit and acceptance of the tax through cash. Even the fact of correction of entries in CENVAT account does not stand accepted by the Revenue. I find no justification for refund of the cash deposit, which were, when made, were correct. No justifiable reason for grant of refund of service tax paid in cash. However, as the appellants have also paid the service tax again through CENVAT credit, they are entitled to the correction of entries, by correcting the second time reversal in their CENVAT account. - Decided against assessee.

Summary

Issues:
Refund of service tax paid in cash due to mistake in CENVAT credit account.

Analysis:
The appellants were engaged in providing taxable services and were registered with the Revenue. They availed CENVAT credit for service tax paid on input services. However, an error in maintaining the CENVAT credit account led to the appellants mistakenly paying service tax in cash for a period. Subsequently, they corrected the mistake in the CENVAT account and claimed a refund of the amount paid in cash. The authorities rejected the refund claim, leading to the present appeal.

The appellants initially discharged their service tax liability through cash as their CENVAT account showed a nil balance. Upon discovering the mistake in the CENVAT account, they rectified it by debiting the service tax again through the CENVAT account and applied for a refund of the amount paid in cash. The authorities rejected the refund claim, citing a delay in seeking revision beyond the permissible period under Rule 7B of the Service Tax Rules, 1994, which allows revisions within 90 days of filing the return. The correction of entries in the CENVAT account, although not directly part of the appeal, was deemed relevant to the refund issue.

The Tribunal noted that the original payment of service tax through cash, duly reflected in the returns, was considered correct at the time of payment. The subsequent correction in the CENVAT account, leading to the availability of CENVAT credit, was not deemed a valid ground for refunding the cash deposit. The Revenue did not accept the correction of entries in the CENVAT account. Consequently, the Tribunal found no justification for refunding the cash deposit, as the original payment was considered correct when made.

While denying the refund of service tax paid in cash, the Tribunal acknowledged that the appellants had also paid the service tax through CENVAT credit. Therefore, the Tribunal allowed the correction of entries to reflect the second payment through CENVAT credit in the CENVAT account. The appeal was disposed of accordingly, with the decision pronounced on 31-1-2014.