2026 (3) TMI 150 - AT - Service Tax

Limitation defence absent from notice cannot sustain rejection of refund claims; orders set aside for deficient pleading.

Issue concerns refund claims under SEZ-related notification rejected as time-barred though show-cause notices did not plead limitation. Legal principle ... Rejection on ground of limitation beyond scope of show-cause notice - beyond the period of 6 months prescribed - refund claims filed under Notification No.9/2009-ST (as amended by Notification No.15/2009-ST)​​​​​​​ - show-cause notice as foundational pleading requirement. Rejection on ground of limitation beyond scope of show-cause notice - HELD THAT:- Both the original authority and the Commissioner (Appeals) rejected the refund claims on the ground that they were filed beyond the six-month period prescribed by the Notification. The show-cause notices issued to the appellant, however, did not allege that the refunds were barred by limitation; they related to the use of services within the SEZ and deficiencies in documentary proof. The Tribunal applied the settled principle that the allegations in the show-cause notice form the foundation of the case and an order cannot be sustained on a ground not pleaded in the notice, relying on the reasoning of the Supreme Court in cases in the case of Commissioner of Central Excise Versus Gas Authority of India Ltd. [2007 (11) TMI 276 - SUPREME COURT]. Since the limitation ground was not part of the show-cause notices, the authorities erred in rejecting the claims on that basis. [Paras 5, 6] Impugned orders rejecting the refund claims on the ground of limitation are unsustainable and are set aside. Final Conclusion: The Tribunal set aside the impugned orders and allowed the appeals because the rejection of refund claims on limitation was beyond the scope of the show-cause notices; other grounds were left unexamined by the lower authority. Issues: (i) Whether the refund claims filed under Notification No.9/2009-ST (as amended by Notification No.15/2009-ST) can be rejected on the ground of limitation when the show-cause notices did not allege delay or non-compliance with the time limit.Analysis: The appeals concern refund claims for services purportedly consumed within a Special Economic Zone and filed under Notification No.9/2009-ST dated 03.03.2009 as amended by Notification No.15/2009-ST dated 20.05.2009. The lower authorities rejected the refund applications on the ground that the claims were filed beyond the six-month period prescribed by the proviso to the notification. However, the show-cause notices issued to the appellant did not allege that the claims were time-barred; instead they specified deficiencies relating to substantiation, payment evidence, utilisation details, returns and invoices, and the nexus of services with authorised operations in the SEZ. Established principle requires that the allegations in the show-cause notice constitute the foundation of the demand; a ground of rejection which is not pleaded in the show-cause notice cannot be invoked against the respondent/claimant. The Tribunal relied on controlling authority that where the show-cause notice does not plead a particular ground, the adjudicatory order cannot be based on that ground.Conclusion: The impugned orders rejecting the refund claims on the ground of limitation are unsustainable because limitation was not alleged in the show-cause notices; the appeals are allowed in favour of the assessee and the impugned orders are set aside.