2026 (2) TMI 1020 - AT - Service Tax

Limitation for service tax refund under reverse charge is one year from date of payment; procedural shipping bill omissions condonable.

The note addresses refund claims of service tax paid under reverse charge, holding that the governing limitation is the statutory one year period under ... Applicability of Section 11B to service tax refund claims - Relevant date - date of payment of tax for computation of limitation - Subordinate legislation cannot override parent statute - Crystallisation of right to claim refund upon payment under Reverse Charge Mechanism - Procedural non-compliance - non mention of commission in shipping bill is venial/condonable - Applicability of Section 11B to service tax refund claims - HELD THAT:- It is pertinent to note that the notification No.17/2009 dated 07.07.2009 which superseded the Notification No.41/2007-ST, has prescribed a time limit of one year. It appears therefore that the legislature has consciously taken steps to remedy the incongruity between the notification provisions and the statutory time limit prescribed under Section 11B. The Ld. Counsel has rightly placed reliance on the decisions in JVS Export v Commissioner of GST & Central Excise,[2023 (7) TMI 207 - CESTAT CHENNAI] and Balakrishna Textiles Pvt Ltd v. CCE, [2022 (6) TMI 613 - CESTAT AHMEDABAD] in this regard. Therefore, this Tribunal has no hesitation to hold that the relevant date for calculation of the time limit would be the date on which the service tax was deposited and the time limit from such date within which the claim has to be filed would be one year as has been prescribed under Section 11B as made applicable to the Finance Act 1994 by virtue of Section 83 of the Finance Act ibid. Procedural non compliance - non mention of commission in shipping bill is venial/condonable - HELD THAT:- The same has been settled in the Appellant’s favour as can be seen from the decision of a coordinate bench of this Tribunal in Faizan Shoes P Ltd v CST, Chennai [2012 (9) TMI 702 - CESTAT, CHENNAI] held that “6. As regards the non-mention of the commission amounts in the shipping bill, this is a mere procedural condition and the refund claims can be considered if there is documentary evidence regarding the amount of service tax paid on the actual amounts of commission disbursed.” Indisputably, there is no finding rendered by the Ld. Appellate Authority or the Ld. Adjudicating Authority that the date of payment of service tax is different from that as contended by the Appellant. That the appellant has received the specified services and used the same for export of the goods is undisputed. That the appellant has actually paid the service tax on the services used in the export of the goods and had also not availed cenvat credit, too remain undisputed facts. Thereby it is evident that the appellant has satisfied the substantial conditions of para 1 of the Notification 41/2007-ST ibid. Therefore, this Tribunal concurs with the view expressed in the judicial decisions cited above and hereby holds that the non-mentioning of the commission amount in the shipping bills is only a venial technical breach that is condonable, when the other substantial conditions of the notification stood complied with. Thus, this tribunal holds that the rejection of the refund claim preferred by the appellant is incorrect and resultantly the impugned order is untenable and liable to be set aside. Ordered accordingly. Issues: (i) Whether the time limit for claiming refund of service tax paid under reverse charge is governed by Section 11B of the Central Excise Act, 1944 (as applied by Section 83 of the Finance Act, 1994) and hence one year from the relevant date (date of payment of tax), or by the six-month period prescribed in Notification No.41/2007-Cus dated 06.10.2007; (ii) Whether non-mentioning of commission amounts in shipping bills is a substantive condition attracting denial of refund or a procedural/technical defect which can be condoned when substantial conditions are satisfied.Issue (i): Whether the limitation for refund of service tax paid on commission under reverse charge is one year from the relevant date (date of payment) under Section 11B of the Central Excise Act, 1944 as applied to service tax by Section 83 of the Finance Act, 1994, or the six-month period in Notification No.41/2007-Cus dated 06.10.2007.Analysis: The Tribunal examined binding precedents including the Supreme Court's interpretation of Section 11B (as applied to rebate/refund) and held that a substantive provision in the parent statute (Section 11B) cannot be overridden by subordinate legislation. The Tribunal noted subsequent legislative amendment by Notification No.17/2009 prescribing one year, supporting the view that the statutory one-year period is applicable. The Tribunal also followed earlier decisions holding that the relevant date for accrual of the right to claim refund is the date when the tax was paid under reverse charge, i.e., when the right to claim crystallises.Conclusion: The time limit for claiming refund of service tax paid under reverse charge is governed by Section 11B of the Central Excise Act, 1944 (as made applicable by Section 83 of the Finance Act, 1994) and is one year from the relevant date, which for the present case is the date of payment of service tax under reverse charge. The appellant's claim falls within this one-year period.Issue (ii): Whether non-mentioning of commission amounts in the shipping bills is a fatal defect warranting denial of refund.Analysis: The Tribunal considered authorities holding that conditions which are procedural or technical in nature and do not go to the root of the entitlement to a beneficial exemption/refund may be condoned where the substantive conditions are satisfied. It noted undisputed facts that the appellant paid the service tax on the commission, used the services for export, and did not take cenvat credit, thereby satisfying the substantial requirements of the refund notification. The Tribunal relied on coordinate decisions treating non-declaration of commission in shipping bills as a venial/technical defect amenable to condonation when documentary evidence establishes the actual payment and compliance with substantive conditions.Conclusion: Non-mentioning of the commission amount in the shipping bills is a procedural/technical lapse which is condonable where the substantial conditions of the refund notification are met; hence such omission does not justify denial of the refund in this case.Final Conclusion: The Tribunal sets aside the impugned order rejecting the refund claims, holds that the refund claims are within the statutory limitation period (one year from date of payment of service tax) and that the procedural omission in shipping bills is condonable, and allows the appeal with consequential reliefs.Ratio Decidendi: Section 11B of the Central Excise Act, 1944 (as applied to service tax by Section 83 of the Finance Act, 1994) prescribes the governing limitation period for refund claims (one year from the relevant date), which subordinate notifications cannot override; the relevant date for service tax paid under reverse charge is the date of payment, and procedural omissions such as non-mention of commission in shipping bills are condonable where substantive conditions for refund are fulfilled.