2019 (7) TMI 907 - AT - Service Tax

Refund of Service tax - period of limitation due to retrospective exemption - main crux of the arguments of the assessee through its Ld. Advocate is that Section 104 is under Chapter VA of the Finance Act, 1994, whereas Section 83 falls under Chapter V of the Finance Act, 1994, and therefore, the right of the service recipient to claim refund is governed by Section 83 read with Section 11B of the Central Excise Act, 1944 and not by Section 104 (3) ibid. - HELD THAT - A harmonious reading of the provisions points to one and only conclusion that though Section 104 is a special provision, it is practically dependent on Section 11B and Section 83 connects both the above provisions and thus, all procedures as in Section 11B would apply. There may be applications within six months, as contemplated in Section 104 (3), but that cannot take away the applicability of Section 11B. Interpretation of statute - the word shall used in Section 104 (3) - HELD THAT - When the power itself not being there to collect the tax, retention of such tax collected is the challenge. The purpose of the very insertion of Section 104 would become redundant if such an artificial fetter is allowed to prevent the administration of beneficial legislation, by which the very purpose gets defeated. Hence, shall could and is only directory - Section 104 is not a self-contained one even though it is a special provision since filing application for refund and the Form required thereto not being prescribed, it rests on Section 11B and the rules and regulations therein. It is a special provision for extending the benefit and hence, when the eligibility otherwise is not questioned, the benefit cannot be denied. It cannot be said that only the limitation clause applies and not when it comes to the Form of application since it is the settled position of law that a Section has to be applied in full and that there is no scope for selective application. The time-limit prescribed under Section 104 (3) is only directory, but however, the time as well as the procedure prescribed under Section 11B applies in full. The Adjudicating Authority is therefore required to grant refund if the refund application is within the time-limit prescribed under Section 11B and not otherwise - appeal allowed in part and part matter on remand.

Summary

Issues Involved:
1. Denial of refund under Section 104 of the Finance Act, 2017.
2. Applicability of time-limit for refund claims under Section 104 (3) versus Section 11B.
3. Interpretation of procedural requirements for refund claims.

Detailed Analysis:

1. Denial of Refund under Section 104 of the Finance Act, 2017:
The appellant was allotted and leased an industrial plot by SIPCOT for 99 years, with a one-time development charge collected towards Service Tax. Section 104 of the Finance Act, 2017, introduced a retrospective exemption from taxability on these charges for the period from 01.06.2007 to 01.09.2016. The appellant claimed a refund based on a "no objection" letter from SIPCOT dated 12.09.2017. However, the Department issued a Show Cause Notice on 14.03.2018, proposing to deny the refund as time-barred under Section 104 (3).

2. Applicability of Time-Limit for Refund Claims:
The appellant argued that the refund claim should be governed by Section 11B of the Central Excise Act, 1944, read with Section 83 of the Finance Act, 1994, which provides a one-year time limit, rather than the six-month limit under Section 104 (3). The Revenue contended that Section 104 being a special provision, the six-month time limit should prevail. The Tribunal noted that Section 104 starts with a non obstante clause, excluding the charging sections but not the procedural sections. Therefore, the Tribunal concluded that the time-limit under Section 104 (3) is directory, not mandatory, and the procedural requirements under Section 11B apply.

3. Interpretation of Procedural Requirements for Refund Claims:
The Tribunal emphasized that Section 104 does not prescribe a specific format for refund claims, necessitating reliance on Section 11B for procedural compliance. The Tribunal cited the Supreme Court's judgment in M/s. JK Jute Mill Mazdoor Morcha Vs. Juggilal Kamlapat Jute Mills Company Ltd., emphasizing that procedural laws are meant to serve justice and should not obstruct it. The Tribunal concluded that the refund application must include all necessary documents and evidences, and the Adjudicating Authority must determine if the application meets the time-limit under Section 11B.

Conclusion:
The Tribunal set aside the impugned order and partly allowed and partly remanded the appeal. The Adjudicating Authority was directed to ascertain if the refund application was within the time-limit prescribed under Section 11B and, if so, to grant the refund with consequential benefits as per law. The order was pronounced in the open court on 17.07.2019.