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of <h1>Tribunal upholds Commissioner's decision, rejects Department's appeal over refund claim denial.</h1> The Tribunal upheld the Commissioner (Appeals) decision, ruling in favor of the respondent and dismissing the Department's appeal against the refund claim ... Service Tax - Consulting Engineer - Services provided by foreign company having office in India to respondents - Refund of tax paid by respondents by mistake is allowable, though revenue failed to recover it from service provider Issues:Appeal against rejection of refund claim.Analysis:The appeal was directed against an order allowing the appeal against the rejection of a refund claim. The respondent had sought services from a consulting engineer in Australia for their plant in Raipur and paid the service tax. Upon learning that the consulting engineer had an office in India, the respondent filed a refund claim under Rule 2 (1) (d) (iv) of the Service Tax Rules, 1994. The claim was rejected initially, but the Commissioner (Appeals) allowed it, leading to the revenue's appeal.The Department's argument was that the refund claim should not be sanctioned as they possessed a letter from the Chennai office of the foreign consultant stating no services were provided to the respondent. They also contended that the respondent failed to inform them about the existence of the office in India to recover the service tax from the foreign consultant.The respondent's advocate argued that the Department was aware of the office's existence in India since 1994 and pointed out that a letter from the foreign consultant in April 2004 confirmed the office's presence in India. The advocate emphasized that the Department should have collected the service tax from the consulting engineer if informed in time.Upon considering the submissions and reviewing the records, the main issue was whether the respondents were eligible for the refund claimed. Reference to Rule 2 (1) (d) (iv) was crucial, which stipulates that the liability to pay service tax on services provided by a non-resident without an office in India falls on the recipient in India. It was evident from the correspondence that the foreign service provider had an office in Chennai, with the Department being in contact with them since September 2004.The Tribunal concluded that since the Department had received the service tax payment from the respondent and did not issue any show cause notice to the service provider regarding tax liability, they could not withhold the amount paid by the respondent. The Commissioner (Appeals) correctly interpreted Rule 2 (1) (d) (iv), and the revenue failed to justify the lack of a show cause notice to the service provider. Consequently, the appeal filed by the Department was dismissed for lacking merit.In summary, the Tribunal upheld the Commissioner (Appeals) decision, ruling in favor of the respondent and dismissing the Department's appeal against the refund claim rejection.
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