2026 (1) TMI 1442 - AT - Service Tax

Refund of service tax under section 73(3) after voluntary payment during departmental enquiry; appeal dismissed on legal grounds

Refund claim concerns service tax paid during a departmental enquiry under the voluntary payment regime; legal point is that voluntary payment made under ... Refund of service tax paid on alleged incorrect liability - voluntary payment u/s 73(3) of the Finance Act, 1994 - Reverse charge mechanism - bar on issuance of show cause notice after voluntary payment - place of provision of services and taxability under Place of Provision of Services Rules, 2012 - HELD THAT:- There is no illegality or irregularity in the impugned order passed by the learned Commissioner. In the impugned order, the learned Commissioner has observed that the service tax amount for which refund is claimed by the appellant came to be paid by them during the course of an enquiry initiated against them by the department. The appellant paid the service tax involved in the impugned transactions alongwith interest and penalty and informed the same to the department vide their letter dated 29.08.2019 and requested that in terms of provision of Section 73(3) of Chapter 5 of Finance Act, 1994 and as per the instructions contained in Board’s letter F. No. 137/46/2015-Service Tax dated 18.08.2015. There is no merit in the appeal filed by the appellant and the impugned order passed by learned Commissioner (Appeals) is in accordance with the provisions of Section 73(3) of the Finance Act, 1994 and no interference is called for. Therefore, the appeal is liable to be dismissed and the impugned order passed by learned Commissioner is liable to be upheld. Appeal is dismissed and the impugned order is upheld. Issues: Whether the appellant is entitled to refund of service tax, interest and penalty paid voluntarily during departmental inquiry for FY 2014-15 and 2015-16, or whether the voluntary payment and intimation under Section 73(3) of the Finance Act, 1994 concludes proceedings and precludes refund.Analysis: The issue is governed by Section 73(3) of the Finance Act, 1994 which permits a person to pay service tax on his own ascertainment and inform the Central Excise Officer, and provides that on receipt of such information no notice under subsection (1) shall be served in respect of the amount so paid; the proviso preserves the officer's right to determine any short payment and recover it with the limitation period counted from receipt of the information. The appellant paid service tax with interest and penalty during the course of an inquiry and informed the department seeking closure under Section 73(3) and relying on departmental instructions. Prior Tribunal precedent was applied to hold that once proceedings are concluded by voluntary payment and intimation under Section 73(3), the issue stands closed, the department cannot issue a notice in respect of the amount so paid, and the assessee cannot later seek refund of that amount. The appellant's reliance on the Delhi High Court decision cited was found factually distinguishable and inapplicable.Conclusion: The voluntary payment and intimation under Section 73(3) concludes the proceedings and precludes the refund claim; appeal dismissed. (In favour of Revenue)