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TMI Blog2020 (4) TMI 308X X X X Extracts X X X X X X X X Extracts X X X X ..... red by Table-ll of Form A-4 of the said notification, to be convincing; has not dealt with this aspect in these proceedings as it did not find any infirmity in the adjudicating authority having granted refund by following the practice and precedence set by his predecessors. Whether the Tribunal was right in holding that the adjudicating authority has exercised discretion to allow filing of refund claim beyond one year by the respondent, when the adjudicating authority had not recorded any reasons to condone such delay? - HELD THAT:- In the absence of any facts coming on record, it is not clear, as to whether or not any previous order contains reasons for extending the period for filing refund claims - Be that as it may, considering the fact that the adjudicating authority was conscious about the fact that in case of refund claims falling under Table-II, some claims were filed beyond a period of one year from the date when the ISD made actual payment to the registered service provider, it cannot be said that the view adopted by the Tribunal is not a plausible view so as to give rise to a question of law, much less, a substantial question of law. Whether the Tribunal has the po ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... distributor under rule 4A of the Service Tax Rules. Therefore, an invoice issued by the input service distributor is proof of payment having been made to the service provider and can be said to be a taxpaying document. However, while such document is proof of payment of tax, the date which such document bears is not the date of actual payment of service tax as contemplated in clause (e) of paragraph 3(III) of Notification No.12/2013-ST dated 01.07.2013 - Clause (e) of paragraph 3(III) of Notification No. 12/2013-ST dated 01.07.2013, postulates that the claim for refund shall be filed within one year from the end of the month in which actual payment of service tax was made by such Developer or SEZ Unit to the registered service provider or such extended period as the Assistant Commissioner of Central Excise or the Deputy Commissioner of Central Excise, as the case may, shall permit. Customs, Excise and Service Tax Tribunal was not justified in holding that in case of ISD invoices, for all purposes, be it cenvat or refund, the ISD invoice is deemed to be taxpaying document, and hence, the date of that invoice has to be taken even for computing the one year stipulated in clause (e) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) Whether the Hon'ble Tribunal has the power (or) jurisdiction to condone the delay in filing the refund claim as per clause (e) of the Para 3(III) of the Notification No. 12/2013-ST dated 01.07.2013, which is vested with the Assistant/Deputy Commissioner of Central Excise? 2. Since the facts and contentions in both the appeals are common and the parties are also common, the same were taken up for hearing together and are decided by this common judgment. 3. The facts stated briefly are that the respondent Reliance Industries Ltd. filed refund claims under Notification No.12/2013-ST dated 01.07.2013 in the prescribed form, claiming refund of service tax paid under reverse charge mechanism for taxable services received for carrying out authorized operations in the SEZ under Table-II of the application; and also claimed refund of service tax paid along with cesses on specified services that are common to the authorized operations of the SEZ and the operations in the domestic tariff area distributed to SEZ units under ISD (Input Service Distributor) invoices under rule 7 of the Cenvat Credit Rules, 2004 (hereinafter referred to as the CC Rules ) under Table-II. In Tax Ap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... use (e) never occurred in respect of services covered under Table-II. It was further submitted that assuming for the sake of argument that clause (e) applies to services covered under Table-II, the order of the adjudicating authority does not deserve to be interfered with as he has adopted the consistent approach as adopted by his predecessors for prior periods. 3.3 The Commissioner (Appeals) found force in the submission of the respondent that insofar as refund of service tax paid on the specified services distributed by input service distributor is concerned, the invoices of such services have been issued by the registered service provider in the name of the input service distributor and payment of value of service along with service tax is also made by the input service distributor to the registered service provider, therefore, the condition prescribed by clause (e) of paragraph 3(III) of the notification cannot be made applicable to such cases. He further found that in case of invoices issued in the name of the input service distributor office of the respondent, the input service distributor office is liable to make payment of service tax to the service provider and, therefo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vant period shall be- (a) if the assessee has turnover in the financial year preceding to the year during which credit is to distributed for month or quarter, as the case may be, the said financial year; or (b) If the assessee does not have turnover for some or all the units in the preceding financial year, the last quarter for which details of turnover of all the units are available, previous to the month or quarter for which the credit is to be distributed. 4.2 It was contended that it was possible for the headquarters to issue ISD invoice for every month that it paid service tax. According to the learned counsel, the available turnover has to be taken into consideration and the ISD invoice has to be issued at the end of every month and no artificial distinction can be drawn. 4.3 It was argued that clause (e) of paragraph 3(III) of the above notification is a mandatory condition and there is no such relaxation for granting refund by considering the date of ISD invoice as the relevant date for filing refund within one year with respect to Table-II, Form A-4 of the refund claim. It was submitted that the input service distributor is an office of the manufacturer o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f, which reads thus: 9. (1) The cenvat credit shall be taken by the manufacturer or the provider of output service or input service distributor, as the case may be, on the basis of any of the following documents, namely:- Xxxx (g) an invoice, bill or challan issued by an input service distributor under rule 4A of the Service Tax Rules, 1994. It was submitted that, thus, an invoice issued by an input service distributor is in the nature of taxpaying document. 5.1 It was further submitted that clause (e) of paragraph 3(III) of Notification No.12/2013-Service Tax dated 01.07.2013, permits the Assistant Commissioner of Central Excise or Deputy Commissioner of Central Excise, as the case may, to extend the time for filing claim of refund. It was submitted that such permission does not have to be prior permission and such permission can be granted even while considering the refund claim. In support of such submission, the learned counsel placed reliance upon the decision of the Supreme Court in the case of LIC v. Escorts Ltd., (1986) 1 SCC 264 , wherein, it has been held thus: 62. We do not propose to refer to any dictionary to find out the meaning of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... purchase shares in Indian companies. The object of the Foreign Exchange Regulation Act, as already explained by us, undoubtedly, is to earn, conserve, regulate and store foreign exchange. The entire scheme and design of the Act is directed towards that end. Originally the Foreign Exchange Regulation Act, 1947 was enacted as a temporary measure, but it was placed permanently on the Statute Book by the Amendment Act of 1957. The Statement of Objects and Reasons of the 1957 Amendment Act expressly stated, India still continues to be short of foreign exchange and it is necessary to ensure that our foreign exchange resources are conserved in the national interest. In 1973, the old Act was repealed and replaced by the Foreign Exchange Regulation Act, 1973, the long title of which reads: An Act to consolidate and amend the law regulating certain payments, dealings in foreign exchange and securities, transactions indirectly affecting foreign exchange and the import and export of currency and bullion, for the conservation of foreign exchange resources of the country and the proper utilisation thereof in the interest of the economic development of the country . We have already referred ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... service distributor in the DTA distributes the tax pertaining to invoices under which services common to the SEZ and DTA units have been received; and that it is only after the input service distributor issues the invoice distributing the tax credit, that the SEZ unit is made aware of the tax liability pertaining to such invoices, of which it can claim refund. 6.1 The Tribunal further noted that the order passed by the adjudicating authority categorically records that the refund in cases covered by Table-lI of Form A-4 under Notification 12/2013 have been preferred within one year from the date of the lSD invoices issued in favour of the SEZ unit. In other words, the refund has been filed within one year from the earliest point of time that the SEZ unit became aware of the tax attributable in respect of the service rendered to it which were common to the authorised operations of the SEZ and in the DTA. The Tribunal noticed that clause (e) of paragraph 3(lll) of Notification No.12/2013-Service Tax dated 1st July, 2013 provides for discretion to the adjudicating authority to permit filing of refund claim even beyond one year from the end of the month in which actual payment of se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reasonable cause for such delay inasmuch as, in case of ISD invoices for all purposes, be it cenvat or refund, the ISD invoice is deemed to be taxpaying document and the date of that ISD invoice has to be taken even for computing the one year stipulated in the notification. Therefore, as long as the SEZ unit files the claim for refund within one year from the input service distributor unit distributing credit to it, it is reasonable to condone the delay, if any, in filing the claim for refund from the time period of one year from the end of the month in which tax payment is made to the service provider as envisaged in clause (e) of paragraph 3(lll) of the notification. According to the Tribunal, any other view would do violence to the objective with which the entire exemption mechanism by way of refund has been put in place inasmuch as the legislature has provided that there cannot be any tax incidence on any service which is used by an SEZ unit for undertaking its authorized operations, in line with which the Central Government has formulated a refund mechanism in respect of services which are common to both, DTA and SEZ units, and the earliest point of time when the SEZ unit can ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e were some instances where on the date of filing of the refund claim, the payment date to the service provider by the ISD invoice of common services was beyond one year from the date of such payment. According to the Tribunal, the adjudicating authority was conscious of this fact which reflects application of mind to the factor of delay and shows that it has condoned the delay in filing the refund applications covered by Table ll of Form A-4. In this regard, a perusal of the order passed by the adjudicating authority shows that there is no reference therein to the contents of the covering letter. However, in paragraph 13 of its order, the adjudicating authority has noted that the refund claim based on ISD invoices has been made within one year from the date of ISD invoices issued to the SEZ unit. Therefore, the adjudicating authority was conscious of the fact that the refund claim based on ISD invoices had been filed within a period of one year from the date when the ISD invoices were issued to the SEZ unit and not within one year from the date of actual payment. Having regard to the facts of the present case, wherein, it appears that in earlier cases relating to the respondent, t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s. The time-limit is prescribed by rule 12(7) of the Central Sales Tax (Registration and Turnover) Rules, 1957. The source of this rule is to be found in the proviso to section 8(4) of the said Act, as amended with effect from 1st April, 1973. In terms of rule 12(7), C form shall be furnished up to the time of assessment by the first assessing authority . However, there is a provision for allowing further time on sufficient cause, which is found in the proviso to section 8(4) of the said Act. It was the case of the revenue that with the completion of the assessment the time limit for filing C forms expires. The appellate authority comes on the scene only after the assessment is over. Under the relevant statutory provisions, an assessing authority alone can allow further time. The appellate authority is different from an assessing authority. Therefore, the appellate authority cannot allow further time and receive C forms at the appellate stage, subsequent to the assessment. The court did not accept the contention of the revenue that the appellate authority cannot be brought within the meaning of the expression assessing authority . The court held that in one sense, an appeal may b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ory provision expressly naming the appellate authority in that behalf. It goes without saying that an appellate authority, engaged as it is in precisely the same task under the fiscal statute as that of the assessing authority must also be possessed of like powers as those of the assessing authority. It is implicit in the very nature of the appellate jurisdiction, as well as the purposes for which that jurisdiction is created by the statute, that the appellate authority will have to function, in the very image of the assessing authority. Appellate proceedings are often truly described as an extension of the assessment proceedings, or as a continuation of the assessment proceedings. In this context, therefore, it does not matter that a power is conferred, by any provision in the taxing statute or in the statutory rules, eo nomine on the assessing authority, and is silent about the appellate authority or any other authority under the Act. Since the enabling section, or the rule, as the case may be, expressly refers to the assessing authority, as the repository of the power, it is elementary construction to hold that such power can be, and is intended to be, exercised by the assessing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tant Commissioner so as to prevent him from exercising the power under the proviso to Section 13. The restriction, if any, must be inferred from the language of the proviso itself. It is contended that the use of the words in the opinion of the Income Tax Officer in the second part of the proviso to Section 13 suggests a complete elimination of the Appellate Assistant Commissioner s jurisdiction to decide for the first time that the method of accounting is such that the income, profits and gains cannot be properly deduced therefrom. It is true that the decision as to the method of accounting is to be arrived at first by the Income Tax Officer after a careful scrutiny of the accounts whether they are simple or complicated, and the power is to be reasonably and judicially exercised, which excludes any subjective or arbitrary decision by the Income Tax Officer. It cannot, however, be said that a power so exercised is clothed with finality and would be excluded from review by the Appellate Assistant Commissioner; and in reviewing the order the Appellate Authority can exercise the same powers which the Income Tax Officer could exercise. Our attention has been drawn to the difference i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... late authority being an extension of the powers of the assessing authority, any order that could be passed by the assessing authority can be passed by the appellate authority. Under the circumstances, no infirmity can be found in the view of the Tribunal that if the adjudicating authority has not exercised the discretion to condone the delay, the Tribunal can exercise such discretion. 11. Insofar as proposed question (ii) is concerned, it does not properly bring out the controversy in issue, but does give rise to substantial questions of law, hence, Admit. The following substantial questions of law arise for consideration: (A) Whether the Customs, Excise and Service Tax Tribunal was justified in holding that in case of ISD invoices, for all purposes, be it cenvat or refund, the ISD invoice is deemed to be taxpaying document, and hence, the date of that invoice has to be taken even for computing the one year stipulated in clause (e) of paragraph 3(III) of Notification No.12/2103-ST dated 1st July, 2013? (B) Whether the Customs, Excise and Service Tax Tribunal was justified in holding that no reasons are required to be assigned for extending the period for filing refund c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as the case may be, challan issued under sub-rule (1); (ii) The name and address of the said input service distributor; (iii) The name and address of the recipient of the credit distributed; (iv) The amount of credit distributed. 11.6 Thus, under sub-rule (1) of rule 4A of the Service Tax Rules, the input service distributor receives invoices issued by the service provider towards purchases of input services; and in turn, under sub-rule (2) of rule 4A, the input service distributor issues invoices for the purposes of distributing the credit of service tax paid on the such services to each of the recipients of the credit distributed. 11.7 Rule 7 of the CC Rules provides for the manner of distribution of credit by input service distributor and reads as under: 7. The input service distributor shall distribute the CENVAT credit in respect of the service tax paid on the input service to its manufacturing units or unit providing output service or an outsourced manufacturing units, as defined in Explanation 4, subject to the following conditions namely:- (a) the credit distributed against a document referred to in rule 9 does not exceed the amount of servic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vice distributor. Explanation 3. For the purposes of this rule, the 'relevant period shall be,- (a) if the assessee has turnover in the 'financial year preceding to the year during which credit is to be distributed for month or quarter, as the case maybe, the said financial year; or; (b) if the assessee does not have turn over for some or all the units in the preceding financial year, the last quarter for which details of turnover of all the units are available, previous to the month or quarter for which credit is to be distributed.... 11.8 On a plain reading of rule 7 of the CC Rules, it is evident that the same only provides for the manner of distribution of credit by the input service distributor and does not provide for any period of limitation for distribution of credit. 11.9 Rule 9 of the CC Rules bears the heading, 'Documents and accounts'. Sub-rule (1) thereof provides that the CENVAT credit shall be taken by the manufacturer or the provider of output service or input service distributor, as the case may be, on the basis of the documents enumerated thereunder. Clause (g) of sub-rule (1) of rule 9, which is relevant for the prese ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t the cost of repetition, it may be noted that the Tribunal, in the impugned order, has held that as the refund in respect of services covered in Table-II of Form A-4 can be preferred by the SEZ unit only after the input service distributor in the DTA distributes the tax pertaining to invoices under which services common to the SEZ and DTA units have been received, the approach, adopted by the adjudicating authority is correct. The Tribunal has further noticed that it is only after the input service distributor issues the invoice distributing the tax credit, that the SEZ unit is made aware of the tax liability pertaining to such invoices of which, it can claim refund. The Tribunal has further observed that, it is an undisputed position that the legislature has provided that there cannot be any tax incidence on any service which is used by an SEZ unit for undertaking its authorized operations. In line with its objective, the Central Government has formulated a refund mechanism in respect of services which are common to both the DTA unit and the SEZ. Qua such services, which are common to the SEZ unit and DTA unit, the earliest point of time when the SEZ unit can claim such refund is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... where the refund claim is filed within a period of one year from the end of the month in which the ISD invoice is issued, the period for filing refund claim has to be extended as the same would amount to reading into clause (e) of paragraph 3(III) of Notification No.12/2013-ST dated 01.07.2013 something that the authority which issued the notification did not intend. 11.15 The learned Senior Standing Counsel for the appellant has submitted that in some cases, the ISD invoices have been issued in respect of payment made more than two years ago. If that be so, such delay in issuing ISD invoices is required to be explained and the SEZ unit is required to request the Assistant Commissioner or Deputy Commissioner, as the case may be, to extend the time for filing the refund claim. In the opinion of this court, the time limit for filing the refund claim cannot be extended in such a casual manner by adopting a thumb rule that in all cases, where refund claim is filed within a period of one year from the end of the month when the ISD invoice is issued, the refund claims have to be accepted. 11.16 Moreover, the order passed by the adjudicating authority has to reflect application of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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