2013 (6) TMI 511 - AT - Service Tax

Natural justice principles breached in refund claim appeal process

The case involved a refund claim by M/s. Nirma Limited for services used in exporting excisable goods. The Assistant Commissioner rejected part of the ... Rectification of mistake - Refund - export of services - Notification No.41/2007-ST - Held that:- It is the submission of the Revenue that the decision of the Tribunal was based on incorrect facts and if the Tribunal was aware about the department having accepted the Order-in-Appeal dated 27/02/2011 which had upheld sanction of refund by Assistant Commissioner, the decision would have been different. It is settled law that for consideration of application for rectification of mistake, error has to be apparent from the record and should not require any detailed discussion. The very fact that the whole history of the case involved in two rounds of litigation up to the level of Commissioner (A) and one round before this Tribunal has to be reproduced and finally it had to be submitted that if the Tribunal was aware of the acceptance of the Order-in-Appeal by Revenue decision would have been different itself and would know their own error apparent from the order or record in this case. It cannot be a mistake on the part of the Tribunal having not been aware of acceptance of Order-in-Appeal, but in fact, the mistake on the part of the Revenue to have accepted the order-in-original without thinking of the consequences. - application for rectification rejected. Issues:1. Refund claim rejection without following principles of natural justice.2. Appeal against rejection of refund claim.3. Department's appeal against the order of refund sanction.4. Appeal dismissal by CESTAT on the grounds of in-fructuousness.5. Application for rectification of mistake by Revenue.Issue 1: Refund claim rejection without following principles of natural justiceThe case involves M/s. Nirma Limited filing a refund claim for services used for export of excisable goods. The Assistant Commissioner rejected a part of the claim without issuing a show-cause notice or providing a personal hearing to the assessee, violating natural justice principles. The department accepted the order, leading to finality of the sanctioned refund amount.Issue 2: Appeal against rejection of refund claimThe assessee appealed to the Commissioner (Appeals) solely on the grounds of natural justice violation, resulting in the appeal being allowed without discussing the merits of the refund claim. The department then appealed before CESTAT, arguing that the Commissioner (A) should have assessed the merits of the claim instead of solely focusing on procedural issues.Issue 3: Department's appeal against the order of refund sanctionWhile the department's appeal was pending, the adjudicating authority sanctioned the remaining refund amount. The department challenged this sanction, claiming it was premature as their appeal against a previous order was still unresolved. The Commissioner (A) rejected the department's appeal, emphasizing that the correctness of the refund sanction would be determined based on the pending appeal before CESTAT.Issue 4: Appeal dismissal by CESTAT on the grounds of in-fructuousnessCESTAT dismissed the department's appeal as in-fructuous since the refund had already been sanctioned by the lower authority. The decision was based on the fact that if the Revenue disagreed with the refund sanction, a separate appeal needed to be filed. The department argued for a rectification of mistake, claiming the Tribunal would have decided differently if aware of their acceptance of a previous order, but the application was rejected.This detailed analysis covers the progression of the case from the initial refund claim rejection to the final dismissal of the department's appeal by CESTAT, highlighting the key legal issues and outcomes at each stage of the judicial process.