2021 (8) TMI 803 - AT - Service Tax

Tribunal grants appeal for refund claim delay, citing diligence and legislative intent for fair tax treatment

M/s. Shree Mahabir Builders Versus Commissioner of CGST & CX, Kolkata South Commissionerate

The Tribunal allowed the appeal, setting aside the rejection of the refund claim due to a 1-day delay in filing. The decision was based on the Appellant's ... Delay in filing of claim of refund of Service Tax - time limit of six months from the date of enactment of the Finance Act, 2016, i.e. 14.05.2016 - non-compliance of conditions and non-observance of procedures - N/N. 9/2016-ST dated 01.03.2016 - HELD THAT:- It is not in dispute that the appellant had paid tax, which by virtue of the Notification was refundable to the appellant. Further, in the present case, the incidence of tax has been passed on to the buyer, i.e. Ministry of Defence. Therefore on account of the delayed filing of the refund claim by the appellant, the ultimate sufferer is going to be the Ministry of Defence, Govt. of India. The Notification as notified by the Finance Act, 2016 was brought into force to restore the benefit of exemption and to refund the tax paid by the assesses. Therefore, the intention of the legislature was not to deprive the bona fide assessee, who has discharged tax diligently. Further, in the present facts and circumstances, it would not be just to penalize the Ministry of Defence for want of due care on the part of the Appellant. The delay of 1(one) day in filing the refund claim be condoned and the refund claim of the appellant be considered on merits. The appellant is directed to remit forthwith the refund amount to the Ministry of Defence, in the event that such refund is found to be eligible on merits and is granted to the appellant - Appeal allowed - decided in favor of appellant. Issues:Refund claim rejection for delay in filing within the prescribed timeline.Analysis:The Appellant, engaged in construction services for MES, deposited Service Tax post-exemption withdrawal in April 2015. However, a subsequent notification restored exemption for contracts pre-March 2015, allowing refunds if tax was paid. The Appellant filed a refund claim on 15.11.2016, a day late from the 6-month deadline after the Finance Act 2016's assent. The claim was rejected for non-compliance. The Tribunal noted the tax incidence passed to MES and the Appellant's diligence, deciding to condone the 1-day delay in filing. The Appellant was directed to refund MES if found eligible, setting aside the rejection and allowing the appeal.This judgment primarily addresses the issue of a delayed refund claim filing by the Appellant. The Tribunal highlighted the Finance Act 2016's provision requiring refund claims within 6 months post-assent, which the Appellant missed by a day. Despite the delay, the Tribunal considered the Appellant's unawareness of the notification until informed by MES, the buyer, and the passed-on tax burden to MES. This led to the Tribunal's decision to condone the delay, emphasizing the legislative intent to restore exemptions and refund taxes to diligent assesses, ensuring the Ministry of Defence, as the ultimate sufferer, is not penalized due to the Appellant's oversight.In conclusion, the Tribunal's decision to allow the appeal and set aside the rejection of the refund claim showcases a balanced approach considering the circumstances. By condoning the 1-day delay and emphasizing the legislative intent behind the notification, the Tribunal ensured fairness by directing the Appellant to refund MES if found eligible. This judgment serves as a reminder of the importance of timely compliance with refund claim procedures while also recognizing genuine cases deserving leniency to prevent unjust consequences for parties like MES.