2018 (1) TMI 1389 - AT - Service Tax

Appeal granted for Service Tax refund, misapplication of legal principles clarified.

M/s Bayer Crop Science Limited Versus Commissioner of CGST & Central Excise, Lucknow

M/s Bayer Crop Science Limited Versus Commissioner of CGST & Central Excise, Lucknow - TMI Issues:Refund claim rejection based on registration status and time limitation; Applicability of Section 11B of the Central Excise Act; Interpretation of Section 66D Clause (d) regarding Service Tax exemption for agricultural services; Relevance of the ruling in the case of Collector of Central Excise, Kanpur Versus Flock (India) Pvt. Ltd.; Appeal against rejection of refund claim by the Commissioner (Appeals) based on the Flock (India) Pvt. Ltd. ruling.The appeal in question addressed the rejection of a refund claim by the lower court. The appellant, engaged in producing hybrid seeds for agricultural purposes, sold seeds to government agencies through an agent who charged Service Tax. The appellant later realized that the Service Tax was not applicable due to Section 66D Clause (d) exemptions. The initial refund application was returned for lack of Service Tax department registration. A subsequent claim was filed but faced rejection on the grounds of time limitation under Section 11B of the Central Excise Act and the Flock (India) Pvt. Ltd. ruling, which stated that assessment cannot be challenged through a refund claim. The Commissioner (Appeals) allowed the refund claim but rejected it based on the Flock (India) Pvt. Ltd. ruling. The appellant contested this decision, arguing that there was no appealable order in place. The Tribunal held that the Flock (India) Pvt. Ltd. ruling was wrongly applied, as there was no appealable order, thus allowing the refund claim and directing its timely processing with interest.The first issue revolved around the rejection of the refund claim due to the appellant's lack of registration with the Service Tax department. The subsequent claim faced rejection based on Section 11B of the Central Excise Act, which sets a time limit for refund claims. However, the Tribunal found that the rejection on these grounds was not valid, as the appellant was entitled to the refund due to the incorrect application of Service Tax.The second issue involved the interpretation of Section 66D Clause (d) regarding the exemption of Service Tax for agricultural services. The appellant's claim for refund was based on this exemption, as the services provided by the agent fell under the negative list of services related to agriculture. The Tribunal agreed with this interpretation, further supporting the appellant's entitlement to the refund.The third issue centered on the relevance of the ruling in the case of Collector of Central Excise, Kanpur Versus Flock (India) Pvt. Ltd. The Commissioner (Appeals) had relied on this ruling to reject the refund claim, citing that challenging an assessment through a refund claim was not permissible. However, the Tribunal disagreed, stating that the ruling was misapplied in this case, as there was no appealable order for the appellant to challenge.In conclusion, the Tribunal allowed the appeal, setting aside the impugned order and directing the Adjudicating Authority to process the refund within 60 days with interest. The judgment clarified the misapplication of legal principles and upheld the appellant's right to the refund of wrongly paid Service Tax.