2024 (9) TMI 684 - AT - Service Tax

Refund of service tax paid by them on the ocean freight - barred by time limitation in terms of Section 11B(5)(B)(ec) of the Central Excise Act, 1994 made applicable to Finance Act, 1994 vide Section 83 of the Finance Act, 1994 - aplicability of Section 142(3) of the CGST Act, 2017 - HELD THAT - The refund application was filed by the Appellant on 23.11.2020 in pursuance of decision of Hon ble Gujarat High Court in case of SAL Steel Ltd. dated 06.09.2019 2019 (9) TMI 1315 - GUJARAT HIGH COURT . In this view of the fact, the revenue authorities were of the view that the refund claim filed by the Appellant is time barred as per the provisions of Section 11B of the Central Excise Act, 1944 made applicable to Finance Act, 1994 vide Section 83 of the Finance Act, 1994. Hon ble Supreme Court dismissed the civil appeal filed by the revenue department on 01.09.2023 in case of M/s. Kiri Dyes Chemicals Ltd. 2023 (9) TMI 305 - SC ORDER holding that levy of service tax is not maintainable. Therefore, it was possible for the Appellant to file the refund claim within one year from 01.09.2023 i.e. up to 31.08.2024. Admittedly in the facts of the present case the Appellant have filed the refund claim on 23.11.2020 i.e. much before 31.08.2024. It is noted that the time limit of one year from the relevant date for filing of refund claim is only in Section 11B(1) of the Central Excise Act, 1944. The provisions of Section 142(3) of the CGST Act, 2017 states that only provisions of sub-section (2) of Section 11B of the Central Excise Act, 1944 is to be looked in to process the refund. For this reason also the rejection of the refund claim in the facts of the present case is not sustainable. Thus, the Appellant is entitled to refund of service tax paid by them on the ocean freight during the period of dispute in the present case even in terms of Section 142(3) of the CGST Act, 2017 - the impugned order is set aside - appeal allowed.

Summary

Issues:
1. Refund claim filed beyond the specified period.
2. Applicability of Section 142(3) of the CGST Act, 2017 for refund claims.
3. Interpretation of the time limit for filing refund claims under Section 11B of the Central Excise Act, 1944.

Analysis:
The appeal was filed against the rejection of a refund claim of Rs.1,85,79,431/- by the first appellate authority. The Appellant, a steamer agent, was made liable to pay service tax under reverse charge mechanism for the period 22.01.2017 to 22.04.2017. The levy of service tax on ocean freight charges was challenged before the Hon'ble Gujarat High Court, which held the levy as ultra vires. The Appellant filed a refund application based on this decision, but it was rejected on the grounds of being time-barred under Section 11B of the Central Excise Act, 1944.

The Appellant argued that the time limit should be considered from 01.09.2023, as the Hon'ble Supreme Court dismissed a civil appeal by the revenue department on that date, holding the levy of service tax as not maintainable. The Appellant filed the refund claim on 23.11.2020, well within the extended time limit. The Tribunal found merit in this argument and noted that the provisions of Section 142(3) of the CGST Act, 2017 allow for refund claims filed before or after the introduction of GST laws. The Tribunal referred to a decision by the Hon'ble Bombay High Court, emphasizing that any amount eventually accruing should be paid in cash, as per Section 142(3) of the CGST Act, 2017.

The Tribunal held that the rejection of the refund claim based on the time limit specified in Section 11B of the Central Excise Act, 1944 was not sustainable. It further emphasized that only the provisions of sub-section (2) of Section 11B of the Central Excise Act, 1944 should be considered for processing refunds, as per Section 142(3) of the CGST Act, 2017. The Tribunal allowed the appeal, stating that the Appellant is entitled to a refund of the service tax paid on ocean freight charges during the disputed period, in line with the provisions of Section 142(3) of the CGST Act, 2017.

In conclusion, the Tribunal set aside the impugned order and allowed the appeal, granting the Appellant the refund of the service tax paid on ocean freight charges during the disputed period. The decision was pronounced in the open court on 10.09.2024.