2022 (3) TMI 1323 - AT - Service Tax

Refund of Service Tax - Foreman Commission - amount paid under VCES would partake the character of tax or it is only a deposit - tax dues under Section 73A of the Finance Act, 1994 - Section 11B of the Central Excise Act, 1944 - HELD THAT - The claim of the appellant is not a refund under Section 11B ibid. simplicitor , the appellant was tempted by the Scheme introduced whereby, in compliance with the payment of taxes, certain benefits would pass on to such taxpayers. Hence the decisions / orders relied on by the appellant which are mainly on Section 11B per se are not applicable to the facts of the present case. It is clear that no amount paid by an assessee in terms of the above Scheme shall be refunded under any circumstances, which is quite obvious since, the Scheme would also pass on some benefits to the taxpayer like reduction in interest or waiver of penalty, etc. as the case may be. Clearly there was no compulsion on any of the assessees and hence, it was a voluntary option exercised by the assessee to opt for the Scheme perhaps because of other benefits that would ensue. Having opted, the rules and regulations prescribed thereunder alone are very much applicable and, because of it being a special enactment, the same excludes the applicability of general law governing the refund provisions. Appeal dismissed.

Summary

Issues:
Whether the authorities were correct in rejecting the refund claim made under Section 11B of the Central Excise Act, 1944?

Analysis:
The appellant, holding service tax registration under Banking and Other Financial Services and Renting of Immovable Property services, sought a refund of &8377; 5,09,815/- for service tax, cess, and interest paid on "Foreman Commission" following a Supreme Court decision. A show-cause notice was issued proposing rejection of the refund claim due to a declaration made under the Voluntary Compliance Encouragement Scheme, 2013 (VCES). The appellant argued that the amount paid under VCES was not akin to tax and thus refundable. The appellant contended that the VCES should not apply as no taxes were due, and the payment was made pending a Supreme Court decision. The appellant's appeal was rejected at the lower levels, leading to the current appeal.

The appellant's advocate argued that the VCES payment did not constitute tax and should be refundable, emphasizing that the declaration under VCES should be considered void due to no taxes being due. The advocate also claimed that the VCES did not authorize refund rejection and highlighted the payment's timing concerning the pending Supreme Court decision. The advocate cited various decisions in support of these contentions. On the other hand, the Revenue supported the lower authorities' findings, citing Section 109 of the VCES, which prohibits refunds under the Scheme.

The Tribunal noted that the appellant's claim was not a straightforward refund under Section 11B but was influenced by the VCES benefits. Section 109 of the VCES clearly stated that amounts paid under the Scheme were non-refundable under any circumstances, as the Scheme offered benefits like interest reduction or penalty waiver. The Tribunal emphasized that the VCES was a voluntary option with specific rules and regulations, excluding general refund provisions. Citing a Mumbai Tribunal order, the Tribunal upheld the rejection order, dismissing the appeal.

In conclusion, the Tribunal found no grounds to overturn the rejection order, as the VCES's specific provisions precluded refunds, and the appellant voluntarily opted for the Scheme. The appeal was consequently dismissed.