2017 (5) TMI 51 - AT - Service Tax

Refund claim by the percipient of services - service tax was paid by the provider of the services - rejection on the ground that classification of service has never been disputed by the service provider, and as such, the appellant has no locus standi as a recipient of service to claim the refund on service tax paid by the service provider - time limitation - Held that - The service provider has never disputed that they have wrongly classified the service and never filed any refund application before the jurisdictional service tax authorities. Thus, in absence of dispute regarding the classification of service by the service provider who has discharged the service tax liability, the appellant in the capacity of recipient of service, in our opinion, has no locus standi to file the application claiming refund on a different classification of service that on what was paid by the service provider - as per the mandates of Section 11B, any amount claimed as refund, has to pass the test provided therein and since condition of limitation is one of the ground mentioned therein, the same cannot be overlooked for consideration of the refund application - appeal dismissed - decided against appellant.

Summary

Issues:
Refund claim rejection based on statutory provisions and locus standi of the appellant.

Analysis:
The appeal challenged the rejection of a refund claim by the Commissioner (Appeals) concerning service tax paid by the appellant to a service provider for services related to mining activities. The appellant, a mining company, contended that the rejection of the refund claim was not in line with statutory provisions. The appellant argued that as a recipient of services, they were entitled to claim a refund of the service tax paid to the service provider, even though the service provider had classified the service under a taxable category. The department rejected the refund claim citing reasons such as lack of locus standi for the appellant to claim a refund on a different service classification and being time-barred under Section 11B of the Central Excise Act, 1944.

The appellant's advocate asserted that since the service provider's activities were outside the scope of taxable services, the amount paid by the appellant should not be considered as service tax. Therefore, the limitation period under Section 11B should not apply. On the contrary, the respondent's representative supported the findings of the impugned order. The Tribunal examined the records and noted that the service provider was registered under a taxable category and had paid the service tax on the services provided to the appellant without disputing the classification. Given this, the appellant, as the recipient of services, lacked the standing to claim a refund based on a different service classification. The Tribunal emphasized that Section 11B required refund claims to be made within the stipulated time frame and that the limitation period could not be disregarded. Consequently, the Tribunal concluded that the appellant's refund application failed on both merit and limitation grounds, leading to the dismissal of the appeal.

In summary, the Tribunal upheld the rejection of the refund claim, emphasizing the importance of compliance with statutory provisions, including the requirement of timely refund claims and the significance of the service provider's classification in determining the appellant's locus standi for claiming a refund.