2022 (6) TMI 613 - AT - Service Tax

Refund claims of accumulated credit - service tax paid on Commission Agent s service - rejection of refund on the ground of time limitation - relevant date for computing six months periods under N/N. 41/2007-ST - Section 11B of the Central Excise Act, 1944 - HELD THAT - There is no dispute of the fact that the goods have been exported by the appellant during the period April 2008 to March 2009 by utilizing the services on which service tax was payable for the exported goods. The assessees have raised the contention that payment of service tax on commission agent service was made only on 31-3-2008 and 21.04.2010 and therefore refund claim is within the time limit of one year from the date of payment of service tax. A similar issue came up before Tribunal in the case of COMMISSIONER OF CENTRAL EXCISE AND SERVICE TAX, KANPUR VERSUS M/S PACIFIC LEATHER FINISHERS 2016 (2) TMI 727 - CESTAT ALLAHABAD where it was held that limitation cannot start to run unless right to receive a claim or refund crystallized. In the present case, the right to claim/refund under Notification No. 41/2007-S.T. crystallized only when the service tax was deposited in October, 2008. Thus, the refund claim was filed within six months on 30-3-2009. Accordingly, we hold that the refund claim is within time. As issue has already been settled in favour of the appellant wherein it has been held that the relevant date for computing six months periods under Notification No. 41/2007-ST to be taken the date when service tax paid and not first day of month following quarter in which export made. Therefore, merely on the ground of limitation refund cannot be rejected. Appeal allowed - decided in favor of appellant.

Summary

Issues:
Claim of refund on service tax paid for Commission Agent's service under Notification No. 41/2007-ST dated 06.10.2007 read with Notification No. 17/08-ST dated 01.04.2008. Rejection of refund claims on the grounds of time bar under Section 11B of the Central Excise Act, 1944.

Analysis:

Issue 1: Claim of Refund on Service Tax Paid for Commission Agent's Service
The appellants, engaged in the manufacture of Woven Fabrics, filed refund claims for accumulated credit during April 2008 to March 2009 for service tax paid on Commission Agent's service used for exporting goods. The Department issued Show Cause Notices alleging non-fulfillment of conditions under the relevant Notifications. The refund claims were rejected by the Commissioner (Appeals) on merit and time bar under Section 11B of the Central Excise Act, 1944. The appellant contended that they were unaware of the service tax liability on such services and paid the due amount upon notification. They argued that the denial of refund claims on the grounds of time bar was unjust as the claims were filed within the prescribed time limit.

Issue 2: Time Bar under Section 11B of the Central Excise Act, 1944
The appellant argued that the refund claims were not time-barred as they were filed within the limitation period prescribed by Section 11B of the Central Excise Act, 1944. They highlighted that the right to claim refund crystallized only upon payment of service tax, which was done within the stipulated time frame. Citing relevant case laws, the appellant emphasized that the limitation for claiming a refund on commission agent service cannot be computed before the date of payment. The Tribunal, relying on precedent, held that the refund claim was within time and dismissed the appeal of the Revenue, granting relief to the appellant.

Conclusion
The Tribunal set aside the impugned orders rejecting the refund claims and allowed the appeals with consequential relief. The decision was based on the finding that the refund claims were filed within the prescribed time limit as per the relevant Notifications and statutory provisions. The judgment clarified the interpretation of the time bar provision under Section 11B and emphasized that the right to claim refund arises upon the payment of service tax, ensuring that the appellant's claims were not time-barred.