2018 (12) TMI 381 - AT - Service Tax

Refund claim of service tax erroneously paid - case of appellant is that amount of service tax on transportation of said agricultural produce/ food grains under reverse charge mechanism was paid but the same was exempted as per N/N. 25/2012-ST dated 20.06.2012 - time limitation. Whether the appellant was rightly claiming the exemption of Notification 25/2012-ST dated 20.06.2012? - Held that - The said Notification grants exemption to the services provided by a goods transportation agency by way of transport in goods carriage of agricultural produce. Section 65B(5) of Service Tax Act, 1994 defines agricultural produce to mean any produce of agriculture on which either no further processing is done as is usually done by a cultivator or producer which does not alter its essential characteristics but makes it marketable for primary market. The processing done upon maize to extract sooji as well as atta is same and the processing is nothing more than grinding which is possible at the cultivator or the producer end. Though grinding may be a process of manufacture as far as the marketability thereof is concerned. But for the purpose of impugned exemption available towards GTA service for transporting agricultural produce. This process does not make any difference. Resultantly, both the products though acquire a distinct marketability but retains the essential characteristic of the derivatives of the agricultural produce i.e. maize. Maize sooji is a prederivative than maize atta in the process of grinding of maize - Otherwise also, the said Notification got amended vide Notification No. 03/2013 dated 01.03.2013 vide which the exemption was extended to food grains or food stuff and the transportation thereof vide its subsequent Notification No. 06/2015 of 01.03.2015. Time Limitation - Section 11B of Central Excise Act - Held that - This Section is applicable only where there is a statutory levy which is either not paid or is short paid - Section 11B of CEA was made applicable on the ground that the petitioner in that case has committed mistake of fact in understanding the Law as he assumed that the transaction for which he has paid tax is covered under law. In the present case, it is not the mistake of fact but the mistake of law that the Notifications extending exemptions to the appellant were not into his notice - the Adjudicating Authority below has committed an error while considering the claim as time barred due to non applicability of Section 11 B to the present case. Rejection of refund claim also on ground of no production of documents, nor of any evidence - Held that - In view of the admitted fact of appellant being engaged in manufacture of sooji and atta of food grains, in view of subsequent admission of Notification extending exemption to food grains/ agricultural products, in view of above discussion that sooji or food grain is also an exempted product under the said Notification, there remains no need of any evidence to be produced on record. The absence of document is a mere procedural lapse. Refund allowed - appeal allowed - decided in favor of appellant.

Summary

Issues:
Refund claim rejection on grounds of being time-barred, non-bifurcation of tax, non-production of evidence, and transport documents. Interpretation of Notification No. 25/2012-ST and subsequent amendments. Applicability of exemption to transportation of agricultural produce like maize, sooji, and atta. Claim of exemption for maize sooji under GTA service. Claim being time-barred under Section 11B of Central Excise Act. Rejection based on lack of document production and evidence.

Analysis:
The appellant, engaged in manufacturing maize, rice, channa, and wheat products, filed a refund claim for service tax paid on transportation of agricultural produce under reverse charge mechanism. The claim was rejected citing various grounds, including being time-barred and non-production of necessary evidence and documents. The appeal was partially allowed, remanding the case for denovo adjudication on the admissibility of refund for certain products. The tribunal considered the interpretation of Notification No. 25/2012-ST and subsequent amendments to determine the exemption applicability to products like maize, sooji, and atta.

The tribunal analyzed the definition of agricultural produce under Section 65B(5) of the Service Tax Act, emphasizing that processing agricultural products for marketability does not alter their essential characteristics. It was established that maize atta qualified for exemption as agricultural produce, but maize sooji was initially denied the same. However, the tribunal concluded that both products retained essential characteristics of maize and were eligible for exemption under the notifications.

Regarding the claim being time-barred under Section 11B of the Central Excise Act, the tribunal differentiated between statutory levy and payments made under a mistake of law. Citing the Mafatlal Industries Ltd. case, it clarified that the mistake of law in this scenario did not warrant application of Section 11B. The tribunal deemed the claim valid and not time-barred due to the nature of the payment made by the appellant.

Lastly, the tribunal addressed the rejection based on the non-production of documents and evidence. Given the admitted facts of the appellant's business and the exemption extension to food grains and agricultural products, the tribunal deemed the absence of documents a procedural lapse. It opined that harsh penalties were unwarranted, especially when the appellant had already deposited the amount in a timely manner. Consequently, the tribunal set aside the order and allowed the appeal, emphasizing the applicability of the exemption to maize sooji and atta under the notifications.

In conclusion, the tribunal's detailed analysis of the issues surrounding the refund claim rejection, interpretation of notifications, exemption applicability, time-barring, and document production provided a comprehensive understanding of the case, ultimately leading to the allowance of the appeal.