2021 (3) TMI 786 - AT - Service Tax

Appellant's Refund Claim Upheld: Time Bar Not Applicable to Advance Deposits

The Judicial Member ruled in favor of the appellant, setting aside the Commissioner (Appeals)' decision to reject the refund claim. It was held that the ... Refund of service tax paid - time limitation - quarter April 2017 to June 2017 as per Rule 6(1A) of Service Tax Rules, vide challan Nos. 1420 and 9589 in June 2017 - HELD THAT:- Following the introduction of GST w.e.f. 01.07.2017, the appellant on 10.01.2018 filed a refund claim of ₹ 3,79,85,793/- being excess advance tax lying to their credit in terms of transitional provisions in Section 142 of the CGST Act 2017 deposited as service tax in advance under Rule 6(1A) of the Service Tax Rules, 1994 - as per the decision in the case of FLUID CONTROLS PVT. LTD. VERSUS COMMR. OF C. EX. & S.T., PUNE-I [2018 (3) TMI 1857 - CESTAT MUMBAI] and decision in the case of R.S. CHEMICALS VERSUS COMMISSIONER OF CENTRAL EXCISE, NOIDA [2017 (4) TMI 884 - CESTAT ALLAHABAD], time bar of Section 11B(1) of the Central Excise Act is not applicable to advance/deposits, wrong remittance of tax not payable and other payments which are not in the nature of taxes or duties. The other ground for rejection of the claim was that the appellant has not given intimation of advance deposit of ₹ 15,00,000/- as required under Rule 6(1A) of Service Tax Rules, 1994. This issue has been considered by various Benches of the Tribunal and has been consistently held to be a procedural formality and merely non-observance of the procedure laid down in the said Rule cannot be a ground for denial of substantive benefit - as per Section 142(1) of CGST Act which provides for cash refund in situations specified in Section 11B(2) of the Central Excise Act and the appellant’s case is squarely covered by Clause B of proviso to Section 11B(2) which provides for cash refund of balance in account current. Appeal allowed - decided in favor of appellant. Issues:1. Rejection of refund claim by Commissioner (Appeals) based on time-barred payment.2. Applicability of Section 11B of the Central Excise Act to advance deposits.3. Interpretation of Section 142(5) of the CGST Act, 2017 for refund claims.4. Compliance with Rule 6(1A) of the Service Tax Rules, 1994 for advance deposits.Issue 1:The appeal was against the rejection of a refund claim by the Commissioner (Appeals) due to time-barred payments. The appellant had filed a refund claim for an amount deposited as advance payment under Rule 6 of the Service Tax Rules. The Deputy Commissioner held that certain payments were time-barred under Section 11B of the Central Excise Act, 1944, as prescribed intimation was not given. The Commissioner (Appeals) upheld this decision, leading to the present appeal.Issue 2:The appellant argued that the impugned order was not sustainable as the refund application was filed within the prescribed time frame. They contended that the time-bar under Section 11B(1) of the Central Excise Act did not apply to advance deposits or wrong remittance of tax not payable. Citing legal precedents, the appellant emphasized that the refund claim was valid and not time-barred.Issue 3:Regarding the interpretation of Section 142(5) of the CGST Act, 2017, the appellant highlighted that the claim for refund of service tax paid under the Finance Act 1994 should be governed by sub-section (2) of Section 11B of the Central Excise Act. They argued that the provisions of Section 142(5) allowed for cash refund in specific situations, which applied to their case.Issue 4:The appellant also argued that non-compliance with Rule 6(1A) of the Service Tax Rules, 1994 should not be a ground for denial of adjustment. They contended that the inclusion of advance deposits in ST-3 Returns was sufficient compliance and that denial of adjustment would unjustly enrich the government. Citing relevant decisions, the appellant stressed that procedural formalities should not hinder substantive benefits.In the final judgment, the Judicial Member found in favor of the appellant, setting aside the impugned order. The Member noted that the time bar under Section 11B(1) of the Central Excise Act did not apply to advance deposits. Additionally, non-observance of the procedure under Rule 6(1A) was considered a procedural formality, not a ground for denial of substantive benefit. The appellant's refund claim was deemed valid under Section 142(5) of the CGST Act, and the appeal was allowed.