2015 (7) TMI 1040 - AT - Service Tax

Refund - determination of relevant date - Banking and other financial service - Held that - From the proceedings initiated resulting in the OIO, it is seen that the Department had reopened the assessment for the entire period from 2001 onwards. Ultimately, the service itself was held not liable to tax at all. Having reopened the assessment in its entirety, demanding the entire amount of tax payable and appropriating whatever already has been paid, the net result is that the Departmental officers have reopened the entire assessment and therefore the refund claim filed by the assessee after the Final Order was passed by this Tribunal holding that no tax was liable to be paid, has to be considered as one arising as a result of the Tribunal order and therefore the time limit cannot be accounted from the date of payment of tax. - Decided against Revenue.

Summary

Issues:
1. Refund claim for service tax paid under hire purchase finance scheme.
2. Rejection of refund claim based on limitation under Section 11B of Central Excise Act, 1944.
3. Eligibility for refund based on the date of passing of the Tribunal order.
4. Consideration of refund claim in relation to the assessment reopening and final Tribunal order.

Analysis:
1. The case involved a registered assessee providing financial services like hire purchase and leasing, brought under service tax purview from 16/07/2001. The initial dispute arose when the Revenue alleged non-payment of full tax amount due to certain charges not being included. A Tribunal order clarified that the services fell under hire purchase finance scheme, not hire purchase scheme, relieving the assessee from service tax liability.

2. Subsequently, the assessee filed a refund claim for service tax paid from 16/07/2001 to 30/09/2005, amounting to Rs. 23,76,101. However, the claim was challenged under Section 11B of the Central Excise Act, 1944, due to being time-barred. A show-cause notice proposed rejection of Rs. 14,40,303 from the claim, citing limitations.

3. The Commissioner (Appeals) ruled in favor of the assessee, stating that the refund claim, filed within one year of the Tribunal order, was valid. The payment of service tax from 2001 onwards was considered unauthorized, leading to the conclusion that rejection based on limitation was unsustainable. The Revenue appealed against this decision.

4. Upon review, it was noted that the Revenue had reopened the assessment for the entire period from 2001 onwards, despite the final Tribunal order absolving the assessee of tax liability. The reassessment and appropriation of already paid amounts led to the conclusion that the refund claim was a result of the Tribunal order, altering the time limit calculation. Consequently, the Revenue's claim of limitation was rejected, and the appeal was dismissed along with the disposal of cross objections.