2023 (7) TMI 207 - AT - Service Tax

Refund of Service Tax - rejection of refund claim on the ground that the said business auxiliary service was not specified under N/N. 17/2009-ST dated 7.7.2009 - reverse charge mechanism - HELD THAT - The issue relating to the time limit set by Notification No. 41/2007 has been examined by this Bench in the case of M/S. CORE MINERALS VERSUS COMMISSIONER OF SERVICE TAX, CHENNAI (VICE-VERSA) 2023 (2) TMI 945 - CESTAT CHENNAI ) wherein it has been held that the time limit prescribed under the substantive legislation, namely, Section 11B, is applicable - the said view is agreed upon because section 11B of the Act is a substantive provision of the statute while a notification is only part of a subordinate legislation and cannot override the parent statute. When the time limit of one year has to be calculated? - HELD THAT - The said issue was also examined by a coordinate Bench of this Tribunal in BALKRISHNA TEXTILES PVT LTD VERSUS C.C.E. -AHMEDABAD-I 2022 (6) TMI 613 - CESTAT AHMEDABAD wherein it was held that the relevant date of computing six months under Notification 41/2007-ST is to be taken on the date when service tax is paid and not from the first day of the month following the quarter in which the export is made. Thus, the time limit should be construed accordingly. Claim of refund by the appellant as per Notification No. 17/2009 dated 7.7.2009, wherein duty was paid by mistake instead of availing duty exemption and are now seeking refund - HELD THAT - The duty has been paid under mistake of law because they followed the pattern of the earlier exemption Notification No. 41/2007 dated 6.10.2007, but when they realized their mistake, they have claimed a refund of duties paid. The refund of the same paid under a mistake, cannot be denied to them, when the claim is filed within time as per section 11B. The Hon ble Supreme Court in its judgement in SHARE MEDICAL CARE VERSUS UNION OF INDIA 2007 (2) TMI 2 - SUPREME COURT held that it is clear that even if an applicant does not claim benefit under a particular notification at the initial stage, he is not debarred, prohibited or estopped from claiming such benefit at a later stage - This being so, the appellants are eligible for the duty paid mistakenly when they were eligible for exemption under Notification 17/2009-ST dated 07/07/2009. Since it is found that the appellant is eligible for exemption under notification No. 17/2009-ST dated 07.07.2009, the issue of failure of the appellants to comply with the various conditions stipulated under the Notification No. 5/2006-CE (NT) dated 14.3.2006, issued under Rule 5 of CENVAT Credit Rules, 2004 does not survive - the refund claim to have been filed within time and is liable to be sanctioned as per law - appeal allowed.

Summary

Issues:
The appeal involves a dispute regarding the refund claim filed by the appellants under different notifications for service tax paid on commission to foreign agents. The main issues include the time limit for filing the refund claim under various notifications and the eligibility for refund based on the notifications.

Issue 1: Time limit for filing refund claim under different notifications:
The appellants filed a refund claim under Notification No. 17/2009-ST for service tax paid on commission to foreign agents. The Original Authority split the refund claim into two portions but rejected one portion for being filed after the stipulated time limit under Notification No. 41/2007-ST. The appellants argued that the time limit should be calculated from the date of payment of tax under reverse charge mechanism, not the quarter of export. Citing case laws, they contended that the time limit prescribed by a notification cannot be lower than that granted by the statute. The Tribunal agreed, emphasizing that the substantive provision of Section 11B prevails over subordinate legislation like notifications.

Issue 2: Eligibility for refund under Notification No. 17/2009-ST:
The appellants claimed refund under Notification No. 17/2009-ST due to mistakenly paying duty instead of availing duty exemption. The Tribunal noted that the duty was paid under a mistake of law, following the earlier exemption notification. Referring to legal precedent, the Tribunal held that the appellants are entitled to the refund as long as the claim is filed within the statutory time limit. The Tribunal concluded that the appellants are eligible for the duty paid mistakenly and set aside the impugned order, allowing the appeal with consequential relief.

Separate Judgment:
The judgment was pronounced by the Member (Technical) on 5.7.2023 at the Appellate Tribunal CESTAT Chennai. The appeal involved a detailed analysis of the refund claim under different notifications and the interpretation of time limits for filing such claims, ultimately ruling in favor of the appellants based on legal principles and precedents.