Refund of service tax on long-term lease remanded for verification of non-availment of CENVAT credit.

Section 104 of the Finance Act, 1994, as introduced by the Finance Act, 2017, exempted specified long-term lease transactions and provided refund of service tax collected during the relevant period. The refund claim was rejected because there was no proof that the recipient had not availed CENVAT credit on the tax paid. As the appellants were willing to furnish a certificate and supporting documents from the recipient to verify non-availment, the matter required further factual examination. The dispute was remanded to the adjudicating authority for de novo consideration and verification of the documents, with directions to grant refund and consequential relief if the claim is established.

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Issues: Whether the refund claim of service tax paid on one-time upfront amount for long-term lease to an industrial development corporation could be finally allowed or required remand for verification of non-availment of CENVAT credit by the recipient.

Analysis: Section 104 of the Finance Act, 1994, as introduced by section 128 of the Finance Act, 2017, exempted service tax on the specified long-term lease transactions and provided for refund of tax collected during the stated period. The refund claim was rejected only on the ground that there was no evidence to show that the recipient had not availed CENVAT credit on the tax paid. The record showed that the appellants were willing to produce a certificate and supporting documents from the recipient to establish non-availment of credit, and the issue was capable of reconsideration on the basis of such verification.

Conclusion: The matter was remanded to the adjudicating authority for de novo consideration and verification of the documents relating to non-availment of CENVAT credit, with directions to grant refund with consequential relief in accordance with law if the claim is established.

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