2019 (8) TMI 428 - AT - Service Tax

Refund of service tax - excess payment of service tax - time limitation - section 11B of CEA - HELD THAT - In the present case, the appellant has deposited ₹ 22,49,339/- towards service tax and ₹ 5,74,130/- towards interest liability. After appropriation of the tax liability and interest demand for the normal period, the appellant has applied for refund of a total amount of ₹ 11,84,105/-. Thus, when computed from the date of adjudication by the Additional Commissioner, who is directed to re-quantify the demand for normal period, the refund claim is filed within time. It is also to be considered that the amount deposited during pendency of the litigation is nothing but a pre-deposit. It is incumbent for the department to conduct an adjudication for quantifying the demand pursuant to the directions of the CESTAT. Thus, only after the adjudicating authority re-quantifies the amount for the normal period, the appellant would be eligible for refund. In case, there is no excess amount, the appellant would not be eligible for refund. Thus, it is only after re-quantification as per the direction of the Tribunal, the issue of refund would arise. Appeal allowed by way of remand.

Summary

Issues:
1. Refund claim rejection based on limitation period calculation.

Analysis:
The case involved the appellant, engaged in providing Business Auxiliary Service, facing proceedings for the short payment of service tax under BAS. The Tribunal's Final Order set aside the demand for the extended period and directed the original authority to quantify the demand within the normal period. The Additional Commissioner quantified the demand and interest liability, leading to the appellant filing a refund claim due to the excess amount paid. The original authority rejected the claim citing limitation from the date of the Tribunal's order, a decision upheld by the Commissioner (Appeals).

The appellant argued that the refund claim was timely as it was filed within 9 days of the Additional Commissioner's order quantifying the demand. They contended that the refund eligibility arises only after re-quantification by the adjudicating authority, as directed by the Tribunal. Additionally, they relied on a Board's Circular stating that Section 11B does not apply to pre-deposits made during litigation, asserting that the amount deposited was a pre-deposit and not subject to limitation.

On the other hand, the department argued that the refund computation should start from the date of the Tribunal's final order, as the refund arose consequent to that decision. The department supported the rejection of the refund claim by the lower authorities.

Upon review, the Member (Judicial) found that the Tribunal had directed re-quantification of the demand for the normal period, making the appellant eligible for a refund only after such re-quantification. The appellant had deposited amounts towards service tax and interest liability, leading to a refund claim of the balance. The Member noted that the refund claim was filed within time when computed from the date of adjudication by the Additional Commissioner, who was tasked with re-quantifying the demand for the normal period. Emphasizing that the deposited amount during litigation was a pre-deposit, the Member allowed the appeal, setting aside the order denying the refund and granting consequential relief as per law.