Service tax refund due to wrong interpretation of Law

[RAM SHARMA]

Dear Experts,

We have deposited service tax due to wrong interpretation of law. Now, how can we take refund from service tax department. Please tell the procedure.

Thanks & Regards

[KASTURI SETHI]

Sh.Ram Sharma Ji,

Pl. elaborate your query. Deposit due to wrong interpretation means ST was not required to be paid as per law. There are so many case laws which consider such deposit as un-constitutional. On such deposits time-bar is also not applicable.You must apply for refund to the the jurisdictional A.C./DC.

[MUKUND THAKKAR]

Agree with Sh. Kasturi sethiji

In addition is if by forcefully during the course of audit directed by the auditor to pay. you may mention all episode clearly in your refund application..

[Ganeshan Kalyani]

I agree with the views of the experts.

[YAGAY and SUN]

Do not forget Section 11B to file refund claim within prescribed time limit.

[RAM SHARMA]

Dear Experts,

One of our consignment agent located in non taxable territory Jammu & Kashmir. He is selling our goods on commission basis and we are paying service tax under reverse charge not 30/2012-st from Non Taxable territory to Taxable territory. Now, audit department has raised the query that under not 14/2014-st place of provision of services has been shift from taxable territory to non taxable territory by including the term supply of goods in this notification. Hence you are not liable to pay service tax under reverse charge and cenvat thereon. They said that you will have to reverse cenvat credit and will go to department for refund.

Please clarify.

Thanks & Regards

[Rajagopalan Ranganathan]

Sir,

In my opinion the Department's view is correct. You can pay service tax on reverse charge mechanism and avail the credit of the same only when you receive service from service provider in non-taxable territory (import of service). In your case the service provider in non-taxable territory provided service to you, namely selling of your goods on commission basis. In this case you need not discharge service tax on reverse charge mechanism and you cannot take the credit. You have paid service tax wrongly and the proper way is to claim the refund of the same.

[Ganeshan Kalyani]

Revenue neutral to the government.

[YAGAY and SUN]

For Government Taxes can't be revenue neutral, its only for assessee, tax payers and service providers etc.

AI Summary

Service tax refund: recover tax paid due to wrong interpretation; file timely and reverse charge inapplicable for non taxable territory services.
Service tax paid under an incorrect legal interpretation may be recovered by filing a refund claim with the jurisdictional A.C./D.C.; payments later held not payable (including unconstitutional levies) may escape time bar limits, but proper procedural narrative is required. Reverse charge applies only for imported services from a non taxable territory provider; commission sales by an agent in a non taxable territory do not attract reverse charge, so any cenvat credit must be reversed and the wrongly paid tax claimed back.