Refund - Service Tax Practice Manual / Ready Reckoner - Service Tax

Refund A. Claim of Refund B. Who can file refund application C. Procedure for filing of refund application / claim D. Refund claim in case of Adjudication order issued E. Time limit and Relevant Date F. Doctrine of Unjust Enrichment G. Interest payable after three months from the date of application There is no independent provision for making an application and grant of refund of service tax paid in the service tax. However, section 83 of the act extends certain provisions of central excise to service tax. Accordingly the following provision related to refund has been made applicable to service tax - Section Subject matter 11B Claim for refund of duty 11BB Interest on delayed refund 12B Presumption that the incidence of duty has been passed on to the buyer 12C Consumer Welfare Fund 12D Utilisation of the Fund The above section of Central Excise Act, 1944 are applicable so far as may be, in relation to service tax as they apply in relation to a duty of excise and interest, if paid any. A. Claim of Refund According to section 11B , any person claiming for refund of any duty of service tax and interest may make an application for refund. Therefore, a person can claim refund due to various reasons: excess or payment of service tax by mistake forced by the department to pay higher service tax finalization of provisional assessment pre-deposit of service tax for appeal / duty paid under protest refund of Cenvat Credit if final product exported refund in respect of service used by SEZ / developer In case of air travel agent, the board has clarified that in respect of cancelled tickets no separate refund claim to be made. Instead based on the fortnightly returns, submitted to airline companies showing gross bookings, cancellations and net bookings, service tax can be paid only on net bookings. B. Who can file refund application Refund application can be filed by any person who has born the (incidence) burden of service tax. Accordingly:- - An assessee who has paid the service tax can file an application for refund, if he has not passed on the burden of service tax on to another person. - A person who has received the services and paid the amount of service tax on the services received from a person who has claimed in his bill which was otherwise not taxable. - In any other case, the person who is entitled to claim the refund. In all the circumstances, the person filing an application must satisfy that he has not passed on the burden of service tax to another person. C. Procedure for filing of refund application / claim Refund application in duplicate must be lodged with the Assistant Commissioner or Deputy Commissioner of Central Excise, as the case may be having the jurisdiction over the person claiming refund claim. A copy of the same, need to be marked to Range Superintendent. Refund application must be submitted with the correct jurisdiction. An application submitting with the wrong jurisdictional officer cannot be held valid and no refund claim shall be allowed to him on that basis. Refund application may be submitted in a simple letter along with Form R . It should be signed by claimant and pre receipted with revenue stamp. A person filing refund application must attach all the documents and evidences with the Form R to justify that he is entitled to claim the refund and burden has not been passed on. A link has been provided at Central board of excise custom website with regard to documents needs to be submitted with refund claim. Link http://www.cbec.gov.in/refund-rebate/refundrebate-docs.pdf . D. Refund claim in case of Adjudication order issued In case adjudication order is issued which is against the assessee, appeal need to be filed. Mere refund claim will not be sufficient. E. Time limit and Relevant Date A refund application must be filed with the prescribed time limit form the relevant date. Any application filing beyond the prescribed time limit, shall be treated as never been filed and must be rejected. Refund application must be filed within one year from the relevant date. Meaning of Relevant Date Relevant date has been defined in the Explanation B to section 11B of the C.E Act. And accordingly the relevant date shall be Situation Relevant Date In case of Export of Services The date on which services exported out of India In case service tax was paid provisionally The date of adjustment of service tax after final adjustment In any other case in the case of assessee Date of payment of service tax In case of a person other than assessee Date on which he receives the services In case refund due to consequence of judgement, decree, order or direction of appellate authority or any court Date of such judgement, decree, order or direction When time limit does not apply - Time limit does not apply if the service tax and interest, if any has been paid under protest [Filing of an appeal itself is a protest - Hutchison Max Telecom Pvt. Ltd. [2004 (1) TMI 114 - CESTAT, NEW DELHI] - In case the order has been decided in favour of the assessee. - No time limit applies for refund of penalty. F. Doctrine of Unjust Enrichment No person shall be allowed to collect the duty from the both ends. A service provider who collects the service tax from his client / customer and pays to the service tax department, is never be said as entitled to claim the refund of service tax as he has not born the incidence of service tax. Therefore, section 12B of the central excise act, 1944 presumes that every person who has paid service tax shall be deemed to have passed on the burden to his client / customer. Section 12B puts a heavy burden on the person claiming refund from the department to prove that the provisions of Section 12B are not applicable on him and he is entitled to get the refund. He has to prove that the incidence of service tax has been born by him. Excise department is not supposed to prove that incidence has been passed on to customer. In certain cases, it may happen that the levy of duty or tax has been held as unconstitutional. In such circumstances also, the refund shall be subject to doctrine of unjust enrichment. However provisions of unjust enrichment shall not be applicable in the following cases: - - In case assessee reverse the Cenvat Credit and agitates the matter for allowing the credit - Service tax, subsequently which is not passed on to the customer - Refund of Interest on delay in refund [ Ashok Iron Steel Fabricators 2005 (7) TMI 433 - CESTAT, MUMBAI ] - Refund of penalty - Refund of service tax on the services exported - Refund of amount paid under Cenvat Credit Rules - When price was inclusive of all duties and subsequently the price was reduced [ BWL Ltd. 2004 (4) TMI 334 - CESTAT, NEW DELH ] G. Interest payable after three months from the date of application According to section 11BB , if refund is not granted within three months from the date of filing of application of refund then interest shall be payable at the rate of 6%. When the matter goes into appeal / revisions etc. and order is made in favour of appellant, the interest shall be paid for the entire period beyond the three months from the date of original refund application. Refund if amount returned to the service receiver by way of Credit note Refund through credit not has been specifically recognized and permitted in service tax (refer rule 6(3) of Service tax rules). In the case of AK SPINTEX LTD., 2008 (11) TMI 89 - Rajasthan High Court , it was held that once credit note is issued to customer who has issued corresponding debit note, bill amount minus amount of debit/credit note become price of goods. In such case, incidence of duty cannot be assumed as passed on to purchaser. Doctrine of unjust enrichment does not apply, refund is not deniable.