Service tax refund

[avneesh kumar]

I person deposited service tax by mistake now he made application to A.CC after 1 year for refund but A.C refused to grant refund on the basis that refund is time barred, plz tell me whether A.C. is wrong or right, there is any case law

[KASTURI SETHI]

Service Tax collected/deposited without authority of law is 'an amount' and not Service Tax. It is unconstitutional. Hence no time limit. Time limit is for Section 11 B of the Central Excise Act.(Made applicable to service tax. Here it is not applicable. There are so many case laws.You can search on google easily. If not found, let me know.

[Rajagopalan Ranganathan]

Sir,

With due respects to the views of Shri. Seth my view is that you have to file an appeal to the appropriate authority and challange the order of A.C of Central Excise that service tax paid is by mistake and hence limitation prescribed under Section 11B if Central Excise Act, 1944 as made applicable to Finance Act, 1994 is not applicable and hence you are eligible for refund since the amount depo0sited is not service tax as per law and it is a mere deposit of amount.

[CS RAHUL AGARWAL]

To add on to what Kasturi Sir said, where the amount of tax was not liable to be taxed the time limit made applicable to refund shall not be applicable as it would be deemed to hold as deposit by the department.Ab-initio, the subject sum was in hold as "deposit" by the department. You can get ample of ruling in support of this and department is bound to refund back.

[avneesh kumar]

Further I would like tell you that the A.C. has issued show cause with denying to grant refund and ask in this show cause notice to reply within 30 days but assessee could not reply within such period then what will be impact of non reply of SCN .Plz tell me-: 1-in this case assess can file appeal or not.2-on the basis of this SCN or final order of A.C3- to whose authority the appeal can file

[avneesh kumar]

thank to all of you who are give me their valuable suggestions

[CS RAHUL AGARWAL]

even though they do not replied to SCN so issued, and still demand order is not adjudged, reply to SCN can be made stating any reasonable ground for such delay in response.

Further, appeal can only be filled only when the final demand order is given under seal by A.C/D.C. Moreover, appeal to to such order-in-original can be made before Commissioner(Appeal). So before you are expecting order copy, immediately file reply to SCN

[avneesh kumar]

Thanks sir

[KASTURI SETHI]

I agree with Sh.CS Rahul Aggarwal and Sh. Rajagopalan Ranganathan. The assesse has to file reply to the SCN. He should apply for extension period for filing reply. Thereafter, SCN will be adjudicated and then appeal can be filed with the Commissioner (Appeals). You cannot file appeal against the SCN direct. In case of non-reply to the SCN, the case will be adjudicated ex parte. Non-filing will weaken your claim of refund.

[CS RAHUL AGARWAL]

Thank you so much Kasturi Sir for sharing your highly valuable and enriched knowledge with us. Sir, cant the reply to SCN in such cases, be made belatedly with a strong reasonable ground ? Is it compulsory to apply for extension before filing reply?? What if i file reply with delayed period but before adjudication. I belive that even belatedly, still it is good in law and binding to the adjudicating authority. There is ofcourse time limit for appeal or revision but omission to respond SCN would not invalidate proceeding if a reasonable ground is assigned and thus SCN cant be said to be barred by limitation i think so. We would be fortunate enough if you could please share your expertise.

Others view also solicited.

[Rajagopalan Ranganathan]

Dear Shri. Rahul.

Even if the assessee fails to reply to the SCN Department will give him an opportunity to file his reply. Even then if he fails to file his reply the adjudicating authority will fix a date for personal hearing and ask the assessee to file his reply on the date hearing. Even then the assessee did not file his reply and not appeared for personal hearing the adjudicating authority is not barred from passing order on the basis of evidence available on record.

[CS RAHUL AGARWAL]

Thank you so much Ranganathan Sir.

[KASTURI SETHI]

Agreed with Sh.Ranganathan and thanks for exact elaboration.

[YAGAY andSUN]

Generally, under the provisions of Natural Justice, Department grants three chances or gives three opportunities to the noticees to appear before the adjudicating authority. If noticees does not appears before the AA then adjudication is done on the basis of merits of the case/matter.

AI Summary

Mistaken tax deposit may be refundable as a deposit, permitting challenge to denial and appeal after adjudication. Mistaken deposits paid without authority are treated as deposits, not service tax, and therefore limitation under Section 11B should not bar refund claims. The taxpayer must reply to the show cause notice, seek extension if delayed, and await adjudication; appeal lies only from the final adjudicated order to the appellate forum. Failure to reply can lead to ex parte adjudication and weaken the refund claim, while principles of natural justice and documented reasonable grounds for delay should be invoked.