Service tax refund allowed despite six-month limitation under Section 104(3) due to unclear notification provisions and improper guidance

CESTAT Kolkata allowed the appeal and set aside the refund rejection. The appellant had paid service tax to KMDA for industrial plot lease, which was later exempted under Notification 41/2016-S.T. for the period 1.6.2007 to 21.9.2016. The refund claim was rejected for being filed beyond the six-month limitation period under Section 104(3) of Finance Act, 2017. However, CESTAT held that the appellant filed the refund claim timely with KMDA, and the delay with the service tax department was due to unclear notification provisions and improper guidance. Following the Madras HC precedent in Grand Technologies case, the tribunal ruled that the limitation period was not applicable under these circumstances and allowed the refund claim.

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Issues Involved:
1. Refund of service tax paid by the appellant.
2. Time-bar for filing the refund claim.
3. Interpretation of Section 104(3) of the Finance Act, 2017.
4. Applicability of judicial precedents.

Summary:

1. Refund of Service Tax Paid by the Appellant:
The appellant, M/s. Asian Leather Pvt. Ltd., sought a refund of service tax paid to Kolkata Metropolitan Development Authority (KMDA) on the long-term lease of industrial plots. The refund claim arose due to Exemption Notification No. 41/2016-Service Tax dated 22.9.2016, which was extended to the prior period by Section 104 of the Finance Act, 1994, as amended by the Finance Act, 2017, covering the period from 1.6.2007 to 21.9.2016.

2. Time-bar for Filing the Refund Claim:
The appellant's refund application was rejected by the adjudicating authority and upheld by the Commissioner (Appeals) on the grounds that it was filed beyond the six-month period prescribed under Section 104(3) of the Finance Act, 2017. The appellant argued that the delay was due to improper advice and inaction by KMDA and the Service Tax Department.

3. Interpretation of Section 104(3) of the Finance Act, 2017:
The appellant contended that the delay was not their fault as they made sincere efforts to file the refund claim within the prescribed time limit but were misled by KMDA and the Service Tax Department. The appellant cited the decision of the Hon'ble Madras High Court in the case of Grand Technologies, which held that the period of limitation prescribed in Section 104(3) is not applicable under similar circumstances.

4. Applicability of Judicial Precedents:
The Tribunal observed that the appellant's delay in filing the refund claim was not due to their fault but due to the ambiguity in Notification No. 41/2016 regarding the authority with whom the refund application was to be filed. The Tribunal found the decision of the Hon'ble Madras High Court in Grand Technologies to be applicable, which allowed the refund claim despite the time-bar issue. Conversely, the decision of the Hon'ble Madhya Pradesh High Court in MDP Infra (India) Pvt. Ltd., cited by the respondent, was distinguished as it involved a fault on the part of the appellant in that case.

Conclusion:
The Tribunal set aside the impugned order rejecting the refund claim on the grounds of time-bar and allowed the appeal filed by the appellant, granting consequential relief as per law. The Tribunal held that the appellant is eligible for the refund by ignoring the time-bar aspect, following the precedent set by the Hon'ble Madras High Court in Grand Technologies.

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