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2024 (11) TMI 10 - AT - Service TaxValidity of Order-in-Original rejecting the refund claim - HELD THAT - As admitted fact that case of M/s SAL Steel Ltd. 2019 (9) TMI 1315 - GUJARAT HIGH COURT has held that the levy is ultra-vires on 06.09.2019 once the duty was held to be ultra-vires. Thereafter, the appellant filed the refund claim on 27.11.2020. It is a fact that the Preventive Officers of the Department asked the appellant to deposit the amount after the decision of the Hon ble Gujarat High Court. Once the levy has been held to be ultra-vires then the Department is not justified to demand the tax after 06.09.2019 whereas in this case, the appellant is directed to deposit the amount after the decision of the Hon ble Gujarat High Court. Both the authorities have rejected the refund on the ground that the said decision of the Hon ble Gujarat High Court has not been accepted by the Revenue and they have filed the appeal before the Hon ble Apex Court against the said decision. It is also a fact that no stay has been granted by the Hon ble Apex Court in the judgment of Hon ble Gujarat High Court cited supra. In view of this, the decision of the Hon ble Gujarat High Court is binding on the Department. We find that amount which was deposited by the appellant on regular basis during the month of June 2017 and July 2017 as service tax under the relevant accounting head and duly reflected in their service tax returns. Appellant has not applied for refund within a period of one year from the date of the High Court s order dated 06.09.2019. Therefore to the extent of refund claim it is hit by limitation and is liable to be rejected. As regards the refund which was deposited by the appellant vide challan dated 30.11.2019 was not liable to be paid by him because by that time, judgment of the Hon ble High Court has come holding the levy as ultra-vires. Revenue has no right to retain the same and is liable to be refunded back to the appellant and order that the appellant is entitled to the refund along with applicable interest as prescribed by law.
Issues:
Refund claim rejection based on Order-in-Original upheld by Commissioner (Appeals) - Applicability of Hon'ble Gujarat High Court decision on levy of service tax under Reverse Charge Mechanism - Time limitation for refund claim - Authority of Central Government to retain tax collected post High Court decision - Applicability of High Court decisions on Department - Refund eligibility for amount paid post High Court decision - Validity of Show Cause Notice post full payment of liability. Analysis: The appeal challenged the rejection of a refund claim of Rs.16,44,980/- by the Commissioner (Appeals) based on an Order-in-Original. The appellant, engaged in manufacturing vegetable oils, filed the refund claim due to service tax paid under Reverse Charge Mechanism. The claim was related to transportation of goods by vessel from outside India to Customs Station in India. The appellant argued that the levy was ultra-vires based on the Hon'ble Gujarat High Court decision, making the tax collection unauthorized post that judgment. The Department contended that the refund claim was time-barred for an amount paid pre-decision and that full payment of liability waived the need for a Show Cause Notice. The Tribunal noted that the Hon'ble Gujarat High Court's decision on the levy being ultra-vires was on 06.09.2019, and the refund claim was filed on 27.11.2020. The appellant was directed to deposit Rs.11,16,335/- post the High Court decision, which was deemed unjustified post the ultra-vires ruling. The Department's argument that the refund claim for Rs.5,28,645/- was time-barred was accepted since it was not filed within one year of the High Court's decision. However, the amount of Rs.11,16,335/- deposited post the High Court's judgment was deemed eligible for a refund, as the Revenue had no right to retain it. The Tribunal allowed the appeal partially, ordering the refund of Rs.11,16,335/- with applicable interest. The decision highlighted the significance of High Court rulings on tax levies, the limitation period for refund claims, and the obligation of the Revenue post a High Court judgment. It clarified that amounts paid post a High Court decision deeming a levy ultra-vires are eligible for refund, emphasizing the binding nature of High Court decisions on the Revenue. The judgment also underscored the importance of timely refund claims and the impact of full payment of liabilities on the necessity of Show Cause Notices.
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