2016 (9) TMI 535 - AT - Service Tax

Refund claim - refund claim was made by M/s. A. K. Associates, a proprietary firm of Shri. Kishor Hiralal Daga whereas the Service Tax for which refund was sought for was paid by Shri. Kishor Hiralal Daga - Held that - both the lower authorities seriously erred in rejecting the claim. It is a common sense that there is no separate legal status of proprietary concern. For all legal purpose, it is the proprietor only has locus standi for any operation of the proprietorship firm. Therefore, I hold that refund is not liable to be rejected on the issue of proprietor Shri. Kishor Hiralal Daga and proprietorship firm, M/s. A.K. Associates. However, one of the ground for rejection of refund is non submission of documents. The same can be submitted, if the same was not submitted earlier. However, it is made very clear that only due to non availability of all the documents refund cannot be rejected. If the payment of service tax is established even on the basis of other corroborated documents, refund can be given. Hence, the appellant is prima facie entitle for refund after verification of documents. - Appeal allowed by way of remend

Summary

Issues:
Refund claim rejection based on entity claiming refund, non-submission of original documents.

Analysis:
The appellant's refund claim was rejected by the Adjudicating Authority and upheld by the Commissioner primarily because the claim was made by M/s. A. K. Associates, a proprietary firm of Shri. Kishor Hiralal Daga, while the service tax was paid by Shri. Daga personally, and original documents were not submitted initially. The Revenue reiterated the Commissioner's findings during the appeal.

Upon review, it was noted that the main reason for rejection was the discrepancy between the entity claiming the refund and the individual who paid the tax. However, since M/s. A.K. Associates is a proprietary concern of Shri. Kishor Hiralal Daga, and both are essentially the same legal entity, the refund could rightfully be credited to either party. The PAN number being in the proprietor's name further supported this unity. The Tribunal emphasized that for all legal purposes, the proprietor has the authority over the operations of the proprietary firm, and thus, the refund should not be denied based on this ground.

Additionally, the Tribunal highlighted that the non-submission of original documents should not be the sole reason for rejecting the refund claim. If the payment of service tax can be established through other supporting documents, the refund should be granted. Therefore, the Tribunal ruled that the appellant is entitled to a refund pending verification of documents and remanded the case to the Adjudicating Authority for further review within a specified timeframe, ensuring a fair process for the appellant.

In conclusion, the Tribunal allowed the appeal, emphasizing the need for a thorough examination of the refund claim based on the legal relationship between the individual and the proprietary firm, as well as the importance of considering alternative evidence if original documents are not available.