2014 (7) TMI 158 - AT - Service Tax

Tribunal grants refund claim appeal, emphasizes fair opportunity for correction in service tax exemption notification mix-up.

The Tribunal set aside the rejection of a refund claim by the Commissioner (Appeals) and the Asstt. Commissioner due to the lack of opportunity for the ... Refund of service tax - CENVAT credit reversal - exemption under Notification no. 18/2009-ST dated 7.7.2009 - natural justice - show-cause notice and personal hearing - remand for fresh consideration - interest on delayed refundNatural justice - show-cause notice and personal hearing - refund of service tax - Validity of rejection of refund claim without issuance of show-cause notice and without granting personal hearing - HELD THAT: - The Tribunal found that the refund claim was rejected by the original authority and the Commissioner (Appeals) despite no show-cause notice having been issued to the appellants and no personal hearing being afforded to enable rectification of the mistake in the notification reference. The appellants had admitted the clerical mistake and informed the Commissioner (Appeals) of the correct notification. In these circumstances the orders of the lower authorities were set aside because the appellants were not given an opportunity of being heard before rejection of their refund claim. [Paras 2]Orders rejecting the refund claim without issuance of a show-cause notice and without granting personal hearing set aside.Exemption under Notification no. 18/2009-ST dated 7.7.2009 - remand for fresh consideration - CENVAT credit reversal - Whether the refund claim should be examined under Notification no. 18/2009-ST despite initial mistaken reference to Notification no. 17/2009-ST - HELD THAT: - The Tribunal accepted that the appellants had mistakenly cited Notification no. 17/2009-ST but had contemporaneously reversed CENVAT credit and intended to claim exemption under Notification no. 18/2009-ST. Rather than adjudicating eligibility on merits, the Tribunal remanded the matter to the original authority to examine the claim under Notification no. 18/2009-ST dated 7.7.2009, directing that the claim be considered as if it had been filed under the correct notification at the initial stage. The remand is for fresh consideration of entitlement and satisfaction of conditions for refund under Notification no. 18/2009-ST. [Paras 2]Matter remitted to the original authority to decide the refund claim afresh under Notification no. 18/2009-ST, treating the claim as originally filed under that notification.Interest on delayed refund - Entitlement to interest for the intervening period where refund was not originally claimed under the correct notification - HELD THAT: - The Tribunal directed that although the claim is to be considered as if filed initially under Notification no. 18/2009-ST, the appellants had not actually claimed refund under that notification at the relevant time. In view of this, and the circumstances of the mistaken filing, the Tribunal held that the appellants would not be entitled to interest for the intervening period if the refund is ultimately found payable. [Paras 2]No interest shall be payable for the intervening period even if refund is allowed on remand.Final Conclusion: The orders of the Asstt. Commissioner and Commissioner (Appeals) are set aside; the matter is remanded to the original authority to decide the refund claim afresh under Notification no. 18/2009-ST dated 7.7.2009 as if originally filed under that notification, and no interest shall be payable for the intervening period. Issues:1. Incorrect notification mentioned in refund claim.2. Rejection of refund claim without issuing show-cause notice or granting a personal hearing.3. Applicability of Notification no. 18/2009-ST dated 7.7.2009 for service tax exemption.Analysis:1. The case involved exporters availing services of Commission Agents abroad and paying service tax on a reverse charge basis. An audit suggested reversing CENVAT credit and claiming exemption under Notification no. 18/2009-ST dated 7.7.2009. However, the refund claim mistakenly cited Notification no. 17/2009-ST instead of the correct one. The claim was rejected without issuing a show-cause notice or granting a personal hearing, leading to confusion over the correct notification for the claim.2. The Tribunal noted the appellants' admission of the error in citing the incorrect notification and the lack of opportunity to rectify the mistake before rejection of the claim. Both the Commissioner (Appeals) and the Asstt. Commissioner's orders were set aside due to the failure to provide a fair chance for the appellants to correct the error. The matter was remanded back to the original authority to re-examine the claim under the correct Notification no. 18/2009-ST dated 7.7.2009.3. The Tribunal emphasized that the original authority should reconsider the claim as if it was initially filed under Notification no. 18/2009-ST dated 7.7.2009. If the appellants meet the conditions for refund under this notification, the refund should be granted. However, due to the initial error in claiming under the wrong notification, the appellants were deemed ineligible for any interest for the intervening period. The appeals were disposed of with these directives to ensure a fair review of the refund claim under the appropriate notification.