Tribunal Grants Refund Claim: Timely Application Extended by Government Holiday

The Tribunal allowed the appeal, setting aside the Commissioner (Appeals) decision that rejected the refund claim of Rs. 40,70,698 under Notification No. 12/2013-ST due to a perceived delay in filing the application beyond the prescribed period. The Tribunal held that the limitation for filing the refund application was extended due to a Government holiday falling on the last day, as per Section 10 of the General Clauses Act, 1897. The Appellant, an SEZ Unit, was granted the refund amount along with applicable interest within 3 months.

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Issues:
Rejection of refund claim under Notification No. 12/2013-ST based on limitation.

Analysis:
The Appellant, an SEZ Unit, sought a refund of service tax under Notification No. 12/2013-ST. The Assistant Commissioner of Central Tax Division-V sanctioned a partial refund, but rejected a portion amounting to Rs. 40,70,698 for the period between April to June 2017 due to a perceived delay in filing the refund application beyond the prescribed period of 1 year. The Appellant challenged this decision before the forum.

The Appellant's Counsel argued on three main points: (i) the notification did not provide an absolute prohibition for filing beyond 1 year, leaving it to the discretion of the authority; (ii) invoking Section 10 of the General Clauses Act, 1897, which allows an act to be considered done in due time if done on the next working day if the last day is a holiday; and (iii) the Special Economic Zones Act, 2006, which provides an overriding effect to the Act over any other statute, contending that the limitation in the notification cannot restrict the filing period for exemption benefits.

The Appellant supported their arguments with references to various judicial decisions. The Appellant urged for setting aside the Commissioner (Appeals) order that refused the refund solely on the ground of limitation.

The Respondent, represented by the Authorised Representative, supported the Commissioner (Appeals) decision, emphasizing that discretionary power could only be exercised with sufficient cause for non-compliance. The Respondent argued that the limitation ended a day before the date mentioned in the order, and the SEZ unit's overriding effect could not bypass the stipulations in the notification enabling the SEZ unit to seek exemption through refund.

After considering the submissions and examining the case record, the Tribunal referred to Section 10 of the General Clauses Act, 1897. It noted that the last date for filing the refund application was before 30.04.2018, which fell on a Government holiday. The Tribunal found the Commissioner (Appeals) order rejecting the refund solely on the grounds of limitation as unsustainable and set it aside, allowing the appeal and sanctioning the refund of Rs. 40,70,698 with applicable interest to be paid to the Appellant within 3 months.

In conclusion, the Tribunal allowed the appeal, directing the refund of the disputed amount and setting aside the Commissioner (Appeals) order that rejected the refund based on limitation.

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