2022 (9) TMI 9 - HC - Service Tax

Refund claim of service tax - Benefit of exemption with retrospective effect - lease premium - time limitation - Request for refund made to wrong forum (service provider / PIPDIC ) initially and not to be service tax department - Section 104 of FA 2017 - HELD THAT - Section 104, no doubt, states that no tax shall be levied or collected as a one-time measure, in regard to the taxable services provided or agreed to be provided, by a State Government, Industrial Development Corporation or Undertaking to industrial units by grant of long term lease in excess of 30 years. It further provides that there shall be a grant of refund of any service tax collected on the aforesaid account - this is not a case where, by virtue of an amendment, by way of insertion of a provision, the charging provision is rendered unconstitutional. The provisions of Section 66/66B, insofar as applicable to this issue, have not been struck down as unconstitutional or ultravires but are merely rendered inoperative by virtue of the munificence provided by Section 104 - The notification granting such benefit would thus have to be construed strictly and it is solely upon compliance with the conditions set out therein, that the assessee would become entitled to the benefit of refund. This argument is rejected. Time Limitation for filing refund - HELD THAT - It is imperative on the part of the assessee to have complied with the conditions set out under Section 104 and in this view of the matter, the order passed by the authority, impugned in this writ petition, contains no flaw. The application for refund has been filed by the petitioner before the authorities only 18.10.2018, which is, admittedly, beyond the period of six months as prescribed under Section 104 and to this extent, the impugned order cannot also be said to be erroneous. After all, one cannot expect the authorities to take an expansive view of the matter as urged by the petitioner and consider the application filed by the petitioner before PIPDIC as a refund claim under Section 11B filed before the Authorities. In this case, the petitioner has filed the claim before PIPDIC which is altogether a different entity. However, the mere fact that the entity approached was PIPDIC and not an officer of the Department does not, in the light of the reasoning adduced, persuades to take a view adverse to the petitioner as it is believed that such a conclusion would be hyper-technical. Petition allowed.

Summary

Issues Involved:
1. Compliance with the conditions for refund claim under Section 104 of the Finance Act, 1994.
2. The appropriate limitation period for processing the refund claim.
3. The validity of filing the refund claim before PIPDIC instead of the Service Tax authorities.

Issue-wise Detailed Analysis:

1. Compliance with the Conditions for Refund Claim under Section 104 of the Finance Act, 1994:
The petitioner challenged the rejection of a refund claim for service tax paid on a one-time premium for a long-term lease. As per Section 104, no service tax shall be levied on such premiums for leases exceeding 30 years, and refunds should be granted for taxes collected during the period from June 1, 2007, to September 21, 2016. The petitioner complied with the conditions of receiving the service and paying the tax but filed the refund claim with PIPDIC instead of the Service Tax authorities.

2. The Appropriate Limitation Period for Processing the Refund Claim:
The petitioner argued that the limitation period should be three years, citing the unconstitutionality of the service tax levy on lease premiums. However, the court held that the refund was a benefit or concession, not due to any unconstitutional levy. Therefore, the petitioner was bound by the six-month period specified in Section 104.

3. The Validity of Filing the Refund Claim before PIPDIC Instead of the Service Tax Authorities:
The petitioner filed the refund claim with PIPDIC within the specified period but not with the Service Tax authorities. The court noted that Section 104 did not specify where the claim should be filed. The petitioner's actions demonstrated diligence and a legitimate interpretation that the refund should be sought from PIPDIC, the entity to which the service tax was paid. Despite the error in filing with PIPDIC, the court found the petitioner's approach reasonable and not hyper-technical.

Conclusion:
The court acknowledged the petitioner's compliance with the substantive conditions and the absence of any specification in Section 104 regarding the filing entity. It set aside the impugned order and directed the respondents to process the refund claim on its merits within four weeks, invoking powers under Article 226 of the Constitution of India. The writ petition was allowed, and no costs were imposed.