High Court affirms Tribunal's decision on Service tax refund, citing credit notes & lack of service provided.Original authority granted the refund - but revisional authority reversed the same holding that the refund granted was erroneous and directed to re-credit – on appeal, Tribunal held that since the respondent issued credit notes towards refund of service tax, the refund order passed by the original authority is legal and proper - No questions of law much less the substantial questions framed in the appeal arise for consideration – appeal of revenue is devoid of merit and liable to be dismissed... ... ... Issues:
1. Correctness of the order passed by the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) regarding the refund of Service tax.
2. Whether the respondent is liable to pay Service tax.
3. Validity of the Tribunal's decision based on the issuance of credit notes for the refund.

Analysis:
1. The appeal before the High Court questioned the correctness of the order dated 22-2-2007 passed by the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) regarding the refund of Service tax amounting to Rs. 5,69,259/- claimed by the respondent. The original authority had granted the refund, but the Commissioner later held it to be erroneous and directed to re-credit the amount. The Tribunal, however, allowed the appeal on the grounds that the respondent issued credit notes towards the refund of service tax, making the refund order legal and proper.

2. The High Court analyzed that the respondent had paid the service tax based on a wrong assumption of liability. The original authority found that the respondent had not rendered any service, leading to the refund claim. However, the revisional authority reversed this finding. The Tribunal, in its decision, relied on the case of Mohd. Ekram Khan & Sons v. Commissioner of Trade Tax, where it was established that the issuance of credit notes for the refund of service tax justified the legality of the refund order. The High Court concurred with the Tribunal's decision, emphasizing that Service Tax is payable by a service provider, and since the respondent issued credit notes, the refund was deemed valid.

3. In conclusion, the High Court found no grounds for interference in the Tribunal's decision. It stated that the order under appeal was legally sound, citing the reliance on the precedent mentioned. The High Court held that no questions of law, especially substantial ones, arose for consideration in the appeal. Consequently, the appeal was deemed devoid of merit and dismissed accordingly. Original authority granted the refund - but revisional authority reversed the same holding that the refund granted was erroneous and directed to re-credit – on appeal, Tribunal held that since the respondent issued credit notes towards refund of service tax, the refund order passed by the original authority is legal and proper - No questions of law much less the substantial questions framed in the appeal arise for consideration – appeal of revenue is devoid of merit and liable to be dismissed COMMR. OF SERVICE TAX, BANGALORE Versus SHIVA ANALYTICALS (I) LTD.
Service Tax
2007 (11) TMI 292 - KARNATAKA HIGH COURT - 2009 (14) S.T.R. 301 (Kar.) , 2009 (92) RLT 664 (Kar.) , [2009] 21 STT 328 (KAR.)
KARNATAKA HIGH COURT - HC
Dated:- 16-11-2007
104 of 2007 - -
Service Tax
V. Gopala Gowda and Arali Nagaraj, JJ. Shri N.R. Bhaskar, Advocate, for the Appellant. None, for the Respondent. [Judgment per : V. Gopala Gowda, J.]. - The correctness of the order dated 22-2-2007 passed by the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) is questioned in this appeal. 2. The respondent claimed refund of Service tax amounting to Rs. 5,69,259/-. The same was granted by an order dated 9-1-2004 by the original authority. It was the subject matter of revision before the Commissioner, who, by his order dated 27-1-2005, held that the refund granted was erroneous and directed to re-credit the amount. The respondent questioned the same before the CESTAT. The Tribunal allowed the appeal vide order dated 1-3-2007. The correctness of the same is questioned in this appeal. 3. We have carefully gone through the orders passed by the authorities. The service tax was paid by the respondent on wrong assumption that they are liable to pay it. Having realised their mistake, refund was claimed. Service Tax is payable by a service provider. The original authority found that respondent has not rendered any service. The revisional authority reversed the same. The Tribunal held that since the respondent issued credit notes towards refund of service tax, the refund order passed by the original authority is legal and proper. To arrive at that conclusion, the Tribunal relied upon the decision in the case of Mohd. Ekrarn Khan & Sons v. Commissioner of Trade Tax reported in 2004 (6) SCC 1083-SC. The order under appeal is perfectly legal and valid and does not call for interference. No questions of law muchless the substantial questions framed in the appeal arise for consideration. The appeal is devoid of merit and liable to be dismissed. 4. Accordingly, the appeal is dismissed.
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