Mandatory refund debit requirement under service tax refund rules must be satisfied; substantial compliance was not accepted.

Refund of unutilized service tax credit under Rule 6A and Notification No. 27/2012-C.E. (N.T.) dated 18.06.2012 depended on compliance with the prescribed debit requirement at the time of filing the refund application. The record showed no debit entry in the Cenvat credit ledger, no reflection in the ST-3 returns, and no established debit from the service tax ledger, so the condition in paragraph 2(h) was not satisfied. The plea of substantial compliance was rejected because the procedural requirement was mandatory. The refund claim was therefore not admissible on the stated record.

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Issues: Whether refund of unutilized service tax credit could be allowed when the prescribed debit under the refund notification was not made in the manner required.

Analysis: The refund claim arose under Rule 6A of the Service Tax Rules, 1994 and was governed by paragraph 2(h) of Notification No. 27/2012-C.E. (N.T.) dated 18.06.2012, which required debit of the amount while filing the refund application. The record showed that no debit entry was made in the Cenvat credit ledger or reflected in the ST-3 returns, and the claimed debit from the service tax ledger was not established on record. The plea of substantial compliance was not accepted in view of the admitted non-compliance with the mandatory procedural requirement.

Conclusion: The refund claim was rightly rejected for non-compliance with the notification condition, and the appeal failed.

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