2023 (8) TMI 704 - AT - Service Tax

Refund of the amount already paid on demand made by the Authorities - taxability of chit fund - Applicability of CBEC Circular No. 96/7/2007-S.T (Circular No. 034-04) dated 23.08.2007 - HELD THAT - As per the decision in ALL KERALA ASSOCIATION OF CHIT FUNDS (STATE UNIT OF THE ALL INDIA ASSOCIATION OF CHIT FUNDS, NEW DELHI) AND ST. GEORGE CHITTIES (KARAKKATT) PRIVATE LIMITED VERSUS UNION OF INDIA, REPRESENTED BY THE SECRETARY TO GOVERNMENT, DEPARTMENT OF THE REVENUE MINISTRY OF FINANCE, NEW DELHI, CENTRAL BOARD OF EXCISE AND CUSTOMS, NEW DELHI, DIRECTOR GENERAL OF SERVICE TAX, MUMBAI, CHIEF COMMISSIONER OF CENTRAL EXCISE AND CUSTOMS, COCHIN, RESERVE BANK OF INDIA, REPRESENTED BY THE ASSISTANT GENERAL MANAGER, MUMBAI 2018 (10) TMI 902 - KERALA HIGH COURT , Hon ble High court specified that the limitation for filing refund application will be extended for one year from 14.03.2018. However, Adjudication/Appellate Authorities have not extended the period of limitation on the ground that the appellant was not party to the proceedings pending before the Hon ble High Court. Such finding is unsustainable. If benefit can be denied on the ground that appellant is not a party to such a proceeding, Adjudication/appellate authority have no reason to consider even the date of judgment of Hon ble Supreme Court on 4.07.2017 as date of commencement of the period of limitation since appellant was not party to proceedings before the Hon ble Supreme Court also. When the Hon ble High Court specifically ordered that limitation if any permitted for refund application would arise from the date of order i.e. 14.03.2018, it is applicable to members of the litigant i.e. All Kerala Association of Chit Funds. On perusal of the documents produced by the appellant, it is evident that they were members of the association since 09.04.2009 and still continues as members as per the communication issued by the All Kerala Association of Chit Fund vide letter dated 20.04.2023. Thus there is no reason of justification to reject the extended period of limitation as per judgment of Hon ble High Court in appellant s case. As per impugned order, Adjudication authority considered the issue regarding unjust enrichment and given a finding that question of unjust enrichment does not arise in appellants case. Appeal allowed.

Summary

Issues Involved:
The issues involved in the judgment are the taxability of chit fund transactions under the category of 'Banking & other Financial Services' and the applicability of the limitation period for filing a refund application based on the judgment of the Hon'ble High Court of Kerala.

Taxability of Chit Fund Transactions:
The appellant was providing services under the category of 'Banking & other Financial Services' and was paying service tax regularly. The taxability of chit fund transactions was under challenge before the Hon'ble Supreme Court in a specific case. The Hon'ble High Court of Kerala disposed of a writ appeal based on the law laid down by the Hon'ble Supreme Court in the mentioned case. The appellant, being a member of All Kerala Association of Chit Funds, filed a refund application which was rejected by the Adjudicating Authority citing limitation as the grounds for rejection.

Applicability of Limitation Period for Refund Application:
The Hon'ble High Court directed the appellant to file a claim for refund within a specified period from the date of the order. The appellant filed the refund application after the specified date, leading to rejection by the Adjudicating Authority and the Appellate Authority on the grounds of limitation. The appellant contended that the limitation period should not apply where the levy is illegal, citing relevant legal precedents. The appellant also argued that the department erred in demanding and collecting service tax on chit fund business, making a rightful claim of refund necessary. The Adjudicating Authority and the Appellate Authority did not extend the period of limitation, stating that the appellant was not a party to the proceedings before the Hon'ble High Court. However, it was argued that the limitation period should be applicable to members of the litigant association, of which the appellant was a member. The Tribunal found no justification to reject the extended period of limitation and allowed the appeal with consequential relief, as no other issue regarding unjust enrichment was raised by the authorities.