2017 (11) TMI 409 - AT - Service Tax

Refund claim - service tax paid erroneously - export of services - time limitation - Section 11B of the CEA, 1944 - Held that - The Department instead of asking the appellant to file fresh application seeing refund should have refunded the amount - the second application which was filed by the appellant was not required to be filed and therefore the question of time-bar does not arise in this case and therefore the impugned order dismissing the refund claim of the appellant on time-bar is not sustainable in law. Entitlement to interest - Section 11BB of the CEA - Held that - reliance placed in the decision of the Allahabad High Court in the case of Siddhant Chemicals Vs. Union of India 2014 (5) TMI 59 - ALLAHABAD HIGH COURT wherein it has been held that interest has to be paid automatically under Section 11BB of the CEA and the payment of interest is not dependent on claim by the party instead authority is statutorily obligated to pay the interest - interest allowed. Appeal allowed - decided in favor of appellant.

Issues:
1. Rejection of refund claim on the grounds of time-bar under Section 11B of the Central Excise Act, 1944.
2. Applicability of exemption under Export of Services Rules, 2005 to service tax on commission received for Business Auxiliary services provided.
3. Requirement of filing a second refund application after the Commissioner (Appeals) allowed the refund.
4. Entitlement to interest on delayed payment of refund under Section 11BB of the Central Excise Act, 1944.

Analysis:

1. The appeal was against the rejection of a refund claim amounting to service tax paid erroneously on commission received for Business Auxiliary services provided, which were considered exports. The initial refund claim was for a higher amount, but the Order-in-Original wrongly mentioned a lower sum. The rejection was based on the grounds that services were performed in India, thus not qualifying for the exemption under Export of Services Rules, 2005. The subsequent appeal led to the original order being set aside, recognizing the service activity as an export. However, a second refund application was rejected as time-barred under Section 11B of the Central Excise Act, 1944, due to a delay in filing after the appeal decision.

2. The appellant argued that the rejection of the refund claim was contrary to facts and law. They contended that after the Commissioner (Appeals) decision in their favor, there was no need for a second refund application. The Department's directive for a new application was deemed unnecessary, leading to the time-bar issue. The appellant highlighted that both authorities wrongly applied Section 11B, citing a relevant case law to support their position.

3. The tribunal found the impugned order unsustainable as the second refund application was unnecessary after the Commissioner's decision. The Department should have refunded the amount based on the earlier ruling, eliminating the time-bar concern. The appellant was deemed entitled to interest on the delayed refund payment, as per Section 11BB of the Central Excise Act, 1944. Legal precedents were cited to support the entitlement to interest automatically under the statute, emphasizing the obligation of the authority to pay interest beyond a specified period.

4. Ultimately, the tribunal set aside the impugned order, allowing the appeal with interest on the delayed refund payment. The decision was based on the understanding that the second refund application was redundant, and the appellant was entitled to interest as per the legal provisions and relevant case laws cited during the proceedings.

The judgment addressed the rejection of a refund claim, the applicability of service tax exemptions, the necessity of a second refund application, and the entitlement to interest on delayed refund payments under the Central Excise Act, 1944, providing a detailed analysis of each issue raised during the appeal process.

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