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TMI Blog2017 (4) TMI 857X X X X Extracts X X X X X X X X Extracts X X X X ..... ow cause notice, he has contested the demand. At the level of adjudication itself, the demand in respect of the period 2005-06 was set aside as being time barred. In such a case, the appellant can claim refund of service tax as well as the interest thereon - the rejection of claim for refund of interest is improper - appeal allowed - decided in favor of assessee. - Appeal No. ST/20178/2014 - A/30461/2017 - Dated:- 7-2-2017 - Ms. Sulekha Beevi, C.S., Member (Judicial) Sh. A.S. Abdul Khader, in person for the Appellant Sh. Arun Kumar, Deputy Commissioner (AR) for the Respondent ORDER [ Order Per : Sulekha Beevi, C. S. ] 1. The above appeal is filed against the order passed by Commissioner (Appeals) who rejected the cl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... st thereon to the tune of ₹ 1,64,368/- and (iii) the penalty amount of ₹ 3,46,896/- Subsequently, the appellant revised the refund claim by confining his claim only to the interest and penalty. The original authority sanctioned the refund of penalty to the tune of ₹ 3,46,896/- but rejected the refund claim for interest of ₹ 1,64,368/-. Against this order, the appellant filed appeal before the Commissioner (Appeals) and vide order impugned herein, the Commissioner (Appeals) upheld the same. Hence this appeal. 5. On behalf of the appellant, the party in person Sh. A.S. Abdul Khader appeared and argued the matter. He submitted that he has given up the claim for refund of service tax (Rs. 2,65,129/-) for the reason th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oluntarily, and the demand not having been set aside on merits, he is not entitled for refund. When the amount is paid voluntarily the same can be retained by the department as the department is barred only from recovery of the amount. That authorities below have rightly rejected the refund claim for interest already paid by appellant. 7. I have heard the submissions made before me. 8. The appellant seeks refund of the interest paid by him on the service tax portion for the period 2005-06 which was held as time barred under law by the adjudicating authority. The contention of the department is that when a demand has been set aside on the ground of time bar, only the right to recover the amount by department is barred and the tax liab ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ise Act,1944 is to encourage payment by assesse before initiation of any proceeding and to avoid litigation. Once the department has issued show cause notice overlooking these provisions, the assesse can defend and contest the demand/determination of duty/tax. On adjudication or at any later stage, if the demand is set aside either on the ground of being time barred or on merits, the assessee is entitled for refund of the amount already paid, which is a consequence that follows the litigation. 9. The department appears to be confused with time barred civil debt and time barred demand of duty/tax , provided by statute. The remedy to recover a civil debt is extinguished by the lapse of time. Thus in the case of time barred civil debt, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eriod 2005-06 was set aside as being time barred. In such a case, the appellant can claim refund of service tax as well as the interest thereon. It is submitted by the appellant that as he later received the service tax portion from the client, he is not claiming refund of the service tax portion. The appellant has confined refund claim for the interest portion only which is borne from his own pocket. The demand for the period 2005-06 having been set aside, I am of the view, that the rejection of claim for refund of interest is improper. Had the assessee not contested the demand after making the payment voluntarily, the argument of the department could have some force. So also, if the department had not issued a show cause notice the situat ..... X X X X Extracts X X X X X X X X Extracts X X X X
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