service tax refund, Service Tax

[Yagnadatt Brahmakshatriya]

Dear All expert,

My client unit audited by Central excise dept. during the course of audit , officer are advise and giving the memo for the payment of service tax under RCM (man power Supply) during the year 2012-13 and 2013-14.along with interest and penalty, in the month of 25.05. 2014. and same is continue by unit, and taking cenvat credit for the payments made by unit,

After period of one year again dept audt conduct on 01.06.2015 and issue the memo for wrong avialment of cenvat credit of RCM ( Man power Supply) saying that you are not Body corporate company but partnership firm. as per RCM notification 30/2012 dated 20.06.2012 sr.no 8 of the said notification you are not falling under the category of RCM and not liable to pay service tax. and eligible to take cenvat credit.. on bases of auidt memo duty reversed creidt.on dated 01.06.2015

on bases of two contradictory input from dept. my client had file the refund case and dept rejected on the ground of limitation of time filling the claim.

please giving your inputs/ guidance for file reply to dept.

Posts / Replies

[ashish chaudhary]

You should indicate that payment of liability has been made on insistence by department producing the letter issued by department based on which payment was made.

There are many judgments where it has been held that if amount paid is not "tax", time limit of one year as provided under section 11B does not apply. In your case, as service tax is not applicable under reverse charge, erroneous payment of the same cannot be said to be payment of "tax". Hence, time limit not applicable. You may refer latest judgment in case of M/s Geojit BNP Paribas Financial Services Ltd 2015­TIOL­1602­HC­KERALA-ST. = 2015 (7) TMI 635 - KERALA HIGH COURT

[Rajagopalan Ranganathan]

Sir,

As per clause a (v) of Notification No. 30/2012-Service Tax dated 20^th June, 2012 taxable services provided or agreed to be provided by way of renting of a motor vehicle designed to carry passengers to any person who is not in the similar line of business or supply of manpower for any purpose or security services or service portion in execution of works contract by any individual, Hindu Undivided Family or partnership firm, whether registered or not, including association of persons, located in the taxable territory to a business entity registered as body corporate, located in the taxable territory. RCM is applicable only when the service provider is individual, Hindu Undivided Family or partnership firm, whether registered or not, including association of persons, located in the taxable territory and the service receiver is a business entity registered as body corporate, located in taxable territory. In your case since you are a partnership firm you need not pay service tax on RCM basis.

Therefore the memo issued by the audit on 1.6.2015 is correct and you need not pay service tax on RCM basis. However, you had paid the service tax as per the directions of previous audit conducted on 25.5.2014. This you have done on the basis of the direction given by the department and hence taking the credit of service tax paid by you on RCM basis is correct and now the subsequent audit cannot ask to to reverse the credit taken by you. You reply on the above lines to the audit memo dated 1.6.2015. since you have reversed the credit on the basis of memo dated 1.6.2015 you apply for the refund of credit reversed. You have to file refund claim within one year from date of reversal of the credit.

[Hardik Shah]

Section 11B of Central Excise Act (as made applicable to Service Tax) provides for refund of duty and prescribes the time limit of 1 year from the relevant date for filing the claim for refund. The provision of time period has been widely litigated and various Courts & Tribunal has held that if any amount was paid to the Government Treasury which was not payable, then the said payment would be treated as payment of amount and not payment of tax. Accordingly, it has been held in these cases that the provision of time period would be applicable only in the cases of refund of taxes and not refund of amounts. There is a probability that range authorities may not accept this and hence, it is suggested that an appeal should be filed with higher authorities from where you can anticipate appropriate relief.

Regards,

Hardik Shah.