Customs, Excise and Services Tax Appellate Tribunal
Case BriefsTribunals/Commissions/Regulatory Bodies

   

Customs, Excise and Services Tax Appellate Tribunal (CESTAT): The coram of Dilip Gupta (President) and Subba Rao (Technical Member) allowed an appeal holding that appellant is entitled to claim refund of the service tax deposited by the appellant on construction of individual/independent residential houses. The appeal was filed assailing the order by the Commissioner (Appeals) where he had upheld the order of adjudicating authority rejecting the refund claim of Rs. 21,33,490/-.

The main issues to be decided were whether the appellant was entitled to claim refund of the service tax deposited by the appellant on construction of individual/independent residential houses and whether the refund was hit by the principles of unjust enrichment.

The appellant constructed individual/independent residential houses as per the work order given by the Rajasthan Housing Board. According to the appellant, service tax was deposited by the appellant on such constructed houses by mistake and even the Housing Board deposited 50% of the service tax under reverse charge mechanism. The appellant further claimed that construction of the individual/ independent residential houses was not subject to levy of service tax prior to 01-07-2012 and even after 01-07-2012 it was exempted under the Exemption Notification dated 20-05-2012. The Commissioner (Appeals) had denied the refund of service tax paid and rejected the refund claim on the ground of unjust enrichment.

Chartered Accountant appearing for the appellant submitted that the appellant was clearly entitled to exemption under the Exemption Notification since individual/independent houses were constructed by the appellant and levy of service tax was exempted under the Exemption Notification.

The Tribunal firstly examined the position regarding levy of service tax as it existed prior to 01-07-2012 and discussed the definition under Finance Act, 1994 of “Construction of complex” under Section 65(30a),”taxable service” under section 65(105)(zzzh), “residential complex” under section 65(91a). It was noted that the definition of a “residential complex” leaves no manner of doubt that it would be a complex comprising of a building or buildings, having more than twelve residential units. In other words, a complex may have a building having more than twelve residential units or a complex may have more than one building each having more than twelve residential units. Independent buildings having twelve or less than twelve residential units would not be covered by the definition of “residential complex”. The Tribunal considered the appellant’s contention that independent residential houses were built, each having a separate entry with separate electricity and water connection and a single building did not have more than twelve residential units which is why houses constructed by it for the Rajasthan Housing Board will not be covered by the definition of a “residential complex” and, therefore, would not be taxable also relying on the judgment of Macro Marvel Projects Ltd. v. Commr. of Service Tax, 2008 (12) STR 603 (Tri-Chennai), Lakhlan & Qureshi Construction Company v. Commissioner of Central Excise and Service Tax, 2019 SCC OnLine CESTAT 6884, A.S. Sikarwar v. CCE, Indore, 2012 SCC OnLine CESTAT 1098.

The Tribunal allowed the appeal and held that w.e.f 01-07-2012 “construction of complex” is a declared service, but the Exemption Notification exempts services by way of construction, erection, commissioning or installation of original works pertaining to a single residential unit otherwise than as a part of a residential complex have been exempted. It was further held that the Commissioner (Appeals) was also not justified in holding that the refund was hit by the principles of unjust enrichment. As per the work orders, service tax was to be borne by the appellant and the Commissioner (Appeals) has also found, as a fact, that the contract awarded by the Housing Board to the appellant mentions that service tax shall be borne by the contractor.

[Quality Builders & Contractor v. Commr. of CG&ST, 2022 SCC OnLine CESTAT 582, decided on 05-09-2022]


Advocates who appeared in this case :

O.P. Agarwal, Chartered Accountant, for the Appellant;

Ravi Kapoor, Authorised Representative of the Respondent.


*Suchita Shukla, Editorial Assistant has reported this brief.

Case BriefsHigh Courts

Madras High Court: Dr Anita Sumanth, J., expressed that with the inception of Section 74(5)of GST Act, it is the case of the revenue that the collection of amounts in advance has attained statutory sanction, provided the same are voluntary in Form GST-DR03.

Merely because an assessee has, under stress of investigation, signed a statement admitting tax liability and has also made a few payments as per the statement, cannot lead to self-assessment or self-ascertainment.

In the present matter, mandamus was sought to restrain the first respondent from harassing the petitioner baselessly without addressing its grievance petition and refund claim pending before the respondents.

The petitioner was registered as a Small-Scale Industry under the MSME Act and was an assesseee under the provisions of all the Goods and Service Tax Act, 2017. An investigation was conducted on the premises of the petitioner and various documents and registers were seized. Further, during the investigation, a statement was recorded from one S.A Kumar, who also deposed to the affidavit filed in support of the present petition, to the effect that the petitioner had not discharged its GST liability correctly.

The Managing Director had signed the undertaking and in line with the same, the petitioner remitted a sum of Rs 1 crore.

Petitioner stated that it had no liability to tax, that the MD and Officials were forced to accept liability to tax and the admission was by no means, voluntary.

Further, the petitioner had made serious allegations about the high handedness of the authorities during the conduct of search and the scant regard expressed for the sentiments of the family of the MD and employees of the petitioner.

Whether the collection of any amount during the process of investigation is statutorily permitted?

Whether the products sold are branded or unbranded?

If unbranded then there is no liability to GST.

Whether the petitioner is entitled to the refund of the amounts paid during investigation and the revenue relies upon the provisions of Section 74(5) of the Act?

Section 74 provides for a determination of tax not paid or short paid or erroneously refunded or the wrongful availment or utilization of Input Tax Credit by reason or fraud, willful misstatement or suppression of facts.

The remittance under Section 74(5) is in terms of Rule 142 of the Central Goods and Services Tax Rules, 2017 and has to be made in Form GST DRC-03.

It was noted that the payment was ‘voluntary’ and the same procedure had been followed in regard to the second instalment as well.

“Prior to the inception of the GST Act, instances were rife when officials of DRI and Customs Department were infamous for collecting advance payments of tax from assesses, many a time under coercion, and in the course of investigation itself.”

Thus, according to the revenue, the remittances made by the petitioner during the investigation in terms of Section 74(5) amount to ‘self-ascertainment’. Having remitted two instalments of tax as per is own ascertainment, it cannot pray for a mandamus seeking a refund of the amount.

“No collection can be insisted upon prior to a final determination of liability being made.”

Further, the Bench added that, what Section 74(5) provides is the first opportunity for an assessee to pay tax, interest and penalty liability even prior to the issuance of a show-cause notice and such acceptance will have to be in the form of either self-ascertainment or an ascertainment by the proper officer.

In the present matter, the enquiry and investigation were on-going, personal hearings had been afforded and both the parties were fully geared towards issuing/receiving a show-cause notice and taking matters forward.

Hence, the understanding and application of Section 74(5) was wholly misconceived.

Therefore, the mandamus as sought for by the petitioner was issued and the amount collected of Rs Two Crores shall be refunded to the petitioner within a period of four weeks.[Shri NandhiDhall Mills India (P) Ltd. v. Senior Intelligence Office, WP No. 5192 of 2020, decided on 7-4-2022]


Advocates before the Court:

For Petitioner: Mr.Hari Radhakrishnan

For Respondents: Mr.V.Sundareshwaran (for R1 to R3 & R5)

Senior Panel Counsel R4 – Given up

Customs, Excise and Services Tax Appellate Tribunal
Case BriefsTribunals/Commissions/Regulatory Bodies

Customs, Excise and Service Tax Appellate Tribunal, Chennai: While taking into consideration various of kinds of charges and whether they would qualify to be eligible for CENVAT Credit, P. Dinesha (Judicial Member) held that Membership Subscription charges are essential for business promotion and hence eligible for refund claim.

In the present matter, the assessee was aggrieved with the orders passed by the Commissioner of Central Tax (Appeals-II): C.G.S.T. and Central Excise, leading to filing of the present appeal and the common issue to be decided was the denial of a refund claim under Rule 5 of the CENVAT Credit Rules, 2004 of the unutilized credit on the inputs used for providing output services.

Appellant submitted that the Adjudicating Authority had granted a substantial refund, but however, rejected a part of it, which order came to be upheld by the Commissioner (Appeals).

Analysis, Discussion and Decision

Coram noted that the following were the services against which the CENVAT Credit was rejected:

  • Cleaning Service
  • Plant Rental Charges
  • Freight Charges
  • Installation Charges
  • Pest Control Charges
  • Car parking charges, terrace charges, terrace and car-bike charges
  • Auditorium Charges
  • Event Management Charges
  • Purchase of air conditioning – Civil Work
  • Membership subscription

On analyzing, the Tribunal in view of decisions of this Tribunal, cleaning services essential for providing output services and hence the same would qualify as input service and hence eligible for refund.

Therefore, the denial of CENVAT Credit on this service is bad.

On Plant Rental Charges, the appellant claimed that the said service was akin to Gardening Services, but however, it appeared that the appellant did not file any details as to the nature of service.

However, it is seen that since services of renting of equipment’s for organizing events are allowed as valid input service, the same logic should apply here and accordingly, in principle, the denial of CENVAT Credit is held bad.

With regard to Freight Charges, the appellant claimed that the said charges were incurred on a day-to-day basis for carrying the inputs used for providing output services and the said charges were paid to the vendor for inward transportation.

Tribunal added that the definition of “input service” under Rule 2 (l) of CENVAT Credit Rules, 2004 and hence the denial by the lower authorities was bad.

Moving on to the Installation charges, no details were furnished hence it required to be re-adjudicated.

On Pest Control Charges, the assessee claimed that the said issue was akin to Cleaning Services, which was very much essential to keep the business premises safe and clean and hence, the denial was clearly uncalled for.

With respect to the Car Parking Charges., terrace charges, car-bike charges, Coram found that the said charges were an essential service provided to all the employees and used by them during the course of employment, therefore it formed as an essential service, hence denial of CENVAT Credit on the said charges was held to be bad.

Talking about the Auditorium charges, Bench found the said service also essential and since the training were provided for the employees of the appellant or business meetings were held, hence CENVAT Credit denial was not justified for this.

Moving on to the Event Management Charges, it was the case of the appellant that the above services were used for promoting the brand name of the company and the expenses relating to advertisements or sales promotions were specifically covered within the scope of the definition of “input service” under Rule 2 (l). Thus, CENVAT Credit denial was held to be bad.

Denial of CENVAT Credit for the purchase of air condition was also held to be bad.

Lastly, the Tribunal noted that regarding Membership Subscription, assessee submitted that being part of a multi-national company, the appellant is required to subscribe to various business magazines and register as a member with various business associations for promoting the appellant’s business; membership subscription charges were paid towards obtaining corporate membership subscription of American Chamber of Commerce in India, which are purely incurred for the purpose of the appellant’s business.

Hence, Coram remarked that business promotion was an essential for the survival of every company and the said membership only expands the reach, hence it is a way of marketing the brand, which was an essential service.

Therefore, charges incurred were eligible for CENVAT Credit as per the definition of “input service” under Rule 2 (l) of the CENVAT Credit Rules, 2004.

In view of the above discussion, appeal were partly allowed and partly remanded. [Trimble Information Technologies India (P) Ltd. v. Commr. Of GST and Central Excise, 2021 SCC OnLine CESTAT 204, decided on 12-4-2021]


Advocates before the tribunal:

Shri Joseph Prabakar, Advocate for the Appellant

Shri L. Nandakumar, Authorized Representative (A.R.) for the Respondent

Case BriefsTribunals/Commissions/Regulatory Bodies

Customs, Excise & Service Tax Appellate Tribunal (CESTAT): Sulekha Beevi C.S., J. (Judicial Member) allowed an appeal wherein the refund was rejected on the ground of limitation.

In this pertinent matter, the appellant filed the request for cancellation / surrender of Centralized Service Tax Registration in Tirupur Range as they have shifted their business activities to Ahmedabad and had already obtained Centralized Registration Certificate in Ahmedabad. A reply was issued to the appellant by e-mail wherein it was informed to the appellant that their request for surrender has been approved by the department. Thereafter, the appellant discharged the service tax liability and filed ST-3 returns under the new registration number under the jurisdiction of Ahmedabad Service Tax Commissionerate. But, while paying service tax for the period October to December 2014, they mentioned the registration number pertaining to Tirupur Commissionerate in their challan for payment of service tax of Rs.3,07,838/-. After scrutiny, the error was observed  in mentioning the registration number in the challan and requested that payment has to be made in regard to registration number of Ahmedabad Commissionerate. However, the department denied to accept their request and directed to make payment of service tax along with applicable interest and penalty again and furnish the proof of payment to the Ahmedabad Commissionerate.

Resultantly, it was held that though the department agreed that the earlier payment made by challan on the service tax registration number of the Tirupur Commissionerate was incorrect, they had neither adjusted the amount nor refunded the amount. Instead, the appellant had been directed to make the payment once again. Hence, it was clear that the department had collected service tax twice from the appellant, which not permissible under law.[Suraj Forwarders & Shipping Agencies v. Principal Commissioner of GST & CE, 2021 SCC OnLine CESTAT 2668, dated 10-12-2021]


Suchita Shukla, Editorial Assistant has reported this brief.

Case BriefsTribunals/Commissions/Regulatory Bodies

Customs, Excise and Services Tax Appellate Tribunal (CESTAT): Anil Choudhary (Judicial Member) allowed an appeal which was filed bearing the issue as to whether the refund claim under Rule 5 of Cenvat Credit Rules read with Notification No.27/2012-CE (NT) can be rejected on the ground that the appellant did not debit the amount of refund claimed at the time of fling the refund claim, but have debited such amount subsequent to the filing of the refund claim but before adjudication.

Appellant is the exporter of taxable services. They also received various input services, on which they paid tax and taken credit being entitled to the same. The appellant could not utilise the cenvat credit as the exports were not taxable. They had filed for refund claim under Rule 5 of CCR read with Notification No.27/2012-CE. Show cause notice was issued pursuant to scrutiny as it appeared that the appellant has not debited the refund claim amount at the time of making the claim, as required under Condition No.2 (h) of Notification No.27/2012. Original refund claim was rejected observing that the appellant has not debited the amount of refund claimed in cenvat credit account, as required under Condition 2 (h) of the Notification.

Commissioner (Appeals) ignored the order of the Hon’ble Supreme Court in the case of Hari Chand Shri Gopal – 2010 (260) ELT Page 3 (SC), wherein the doctrine of substantial compliance was explained stating that it is a judicial invention, equitable in nature, designed to avoid hardship in cases where a party does all that can reasonably be expected of it, but failed or faulted in some minor or inconsequent aspects, which cannot be described as the “essence” or the “substance” of the requirements. Substantial compliance means “actual compliance in respect to the substance essential to every reasonable objective of the statute”.

Counsel for the appellant, Shri Abhinav Kalra, Chartered Accountant urges that the admitted fact is that the appellant have exported 100% of their services. Further, admittedly, the appellant have not carried forward the unutilised cenvat credit to the GST Regime. Under such circumstances, the appellant can no longer use the balance of cenvat credit as on 30.06.2017 for the purpose of the payment of GST, if any.

The Tribunal held that the debit of the amount of refund claim in the cenvat credit account suo moto before the adjudication, is sufficient compliance Condition No.2(h) of the Notification No.27/2012-CE it further held that the Commissioner (Appeals) have mis-conceived and mis-directed himself by ignoring the ruling of the Hon’ble Supreme Court, which is both judicial indiscipline and also in violation of Article 141 of the Constitution of India.[Porteck India v. Commr. Of CGST and CE, 2021 SCC OnLine CESTAT 2609, decided on 14-10-2021]


Suchita Shukla, Editorial Assistant has reported this brief.

Case BriefsTribunals/Commissions/Regulatory Bodies

Customs, Excise and Services Tax Appellate Tribunal (CESTAT): Anil Choudhary (Judicial Member) allowed the appeals which were filed against the common Order-in-Appeal which dealt with the issue as to whether the services provided by the appellant to its parent company in Hong Kong, could be treated as export of services, and if the answer was in affirmative, whether the refund of amount paid under mistake of law by treating such export of services, as taxable service, could be denied by the revenue.

Appellant (M/s CHF Industries India (P) Ltd.) was a wholly owned subsidiary of M/s CHF International Limited, Hong Kong. The appellant was incorporated under the Companies Act, 2013, and was having service tax registration. They provided services in the nature of „assistance in procurement of goods‟ by the parent company in Hong Kong, directly from third parties in India during October, 2015 to March, 2016 and April, 2016 to September, 2016. For the services so provided, the appellant raised invoice for reimbursement of expenses, without charging any service tax and payment for the same was received by the appellant in convertible foreign exchange. The appellant erroneously paid service tax of Rs. 12,84,404/- for the period October, 2015 to March, 2016 and Rs. 9,82,965/- for the period April, 2016 to September, 2016 on wrong legal advice. Subsequently, appellant filed revised returns for both the periods and the entire amount received in convertible foreign exchange was claimed exempt, against “export of services”. The refund claims were rejected by the Assistant Commissioner on the ground that clause (d) & (f) of Rule 6A(1) of Service Tax Rules, 1994, were not fulfilled i.e. place of provision of service was not outside India, and the provider of service and recipient of service were establishments of same person, under Explanation 3(b) of clause (44) of Section 65B of the Act. The appeals of the same were dismissed by Commissioner (Appeals), thus the instant appeal was filed.

The Tribunal concluded that the appellant as well as its parent company in Hong Kong were separate legal entities and therefore they cannot be treated as “same person”. Merely because the parent company in Hong Kong is a holding company of the appellant, the same does not means that the appellant and its parent company are same “person”. The Tribunal relied upon the Supreme Court judgment in Vodafone International Holdings BV v. Union of India, (2012) 6 SCC 613 where it was held,

72. The approach of both the corporate and tax laws, particularly in the matter of corporate taxation, generally is founded on the abovementioned separate entity principle i.e. treat a company as a separate person. The Income Tax Act, 1961, in the matter of corporate taxation, is founded on the principle of the independence of companies and other entities subject to income tax. Companies and other entities are viewed as economic entities with legal independence vis-à-vis their shareholders/participants. It is fairly well accepted that a subsidiary and its parent are totally distinct taxpayers. Consequently, the entities subject to income tax are taxed on profits derived by them on stand-alone basis, irrespective of their actual degree of economic independence and regardless of whether profits are reserved or distributed to the shareholders/participants. Furthermore, shareholders/ participants that are subject to (personal or corporate) income tax, are generally taxed on profits derived in consideration of their shareholding/participations, such as capital gains. Nowadays, it is fairly well settled that for tax treaty purposes a subsidiary and its parent are also totally separate and distinct taxpayers.”

The Tribunal further added that in the present case appellant is neither arranging nor facilitating provision of service between the parent company at Hong Kong and the third parties in India but is providing its services directly, on its own account, on principal to principal basis, hence appellant is not an “intermediary” and services provided by the appellant to its parent company in Hong Kong cannot be categorized as “intermediary services”.

The Tribunal allowing the appeals finally held that Rule 2(f) read with Rule 9 of Place of provision of Service Rules, 2012, clearly provides that „intermediary‟ which means one who procure or an agent, does not include a person who provides the main service or supply of goods on his account directing the Adjudicating Authority to grant the refund within a period of thirty days from the date of receipt of this order, alongwith interest @12% per annum.[CHF Industries India (P) Ltd. v. Commr. Of CGST, Service Tax Appeal No. 70457 of 2020, decided on 08-10-2021]


Suchita Shukla, Editorial Assistant has reported this brief.

Case BriefsTribunals/Commissions/Regulatory Bodies

Customs, Excise and Services Tax Appellate Tribunal (CESTAT): Suvendu Kumar Pati (Judicial Member), dismissed an appeal which was filed with the rejection of refund claims of the Appellant, an 100% EOU, filed for the period between April 2013 and December 2014 amounting to Rs 13,53,058/-, under Rule 6 A of the Service Tax Rules, 1994 on the ground of non-compliance.

Counsel for the appellant, Mr Sandip Batwal submitted that if appellant had debited the claim amount in his account, it would be sufficient compliance of condition 2 (h) of Notification No. 27 of 2012 since the doctrine of substantial compliance was equitable in nature designed to avoid the hardship of the assessee. Counsel for the respondent, Mr Onil Shivadikar submitted that it was not for an exemption notification to provide benefit necessarily to the assessee and therefore when the appellant had not debited Cenvat credit ledger in compliance to Rule 2 (h) it was not entitled to derive the benefits by refund of unutilized Cenvat credit.

The Tribunal observed that going by the case of record it was established by the DR that an e-mail claiming such debit was sent to the adjudicating authority just two days prior to passing of the Order-in-Original on dated 04-12-2015, which was not placed on record and Commissioner (Appeals) had clearly placed in his order that he found no debit entry made in any of the ST-3 returns. The Tribunal held that the appellant had tried to tune the legal procedure to the point of no return in not preferring to make the necessary debit even on a future day thought Notification No. 27 of 2012 had made it obligatory to debit the same while filing refund application.

The Tribunal while dismissing the appeal held that the appellant was not entitled to get the refund as claimed by it for non-compliance with the procedure.[Steel Plantech (India) (P) Ltd. v. Commr. Of CGST, 2021 SCC OnLine CESTAT 155, decided on 23-03-2021]


Suchita Shukla, Editorial Assistant has reported this brief.

Case BriefsTribunals/Commissions/Regulatory Bodies

Customs, Excise and Services Tax Appellate Tribunal (CESTAT): Ashok Jindal (Judicial Member) allowed an appeal which was filed against the impugned orders wherein their refund claim lying unutilized in their cenvat credit account was denied to the appellant on the ground that the service on which they are taken the cenvat credit is not input service in terms of Rule 2(l) of the Cenvat Credit Rules, 2004.

Appellant was a provider of output services, providing these services required certain services to be availed from outside on which (being an EOU) the appellant was required to pay service tax under reverse charge mechanism. They paid service tax under reverse charge mechanism and took the cenvat credit of the same in their cenvat credit account. Periodically the appellant filed the refund claims for the cenvat credit lying unutilized in their cenvat credit account. The cenvat credit was sanctioned partly but the cenvat credit pertained to ‘rent a cab service’ was denied holding that the vehicles which have taken on rent by the appellant are not registered in the name of service provider, therefore, they were not entitled to take the cenvat credit on the same in terms of Rule 2(l) of the Cenvat Credit Rules, 2004 as these were not capital goods, therefore the refund claim was denied, thus the instant appeal.

The Tribunal observed that the appellant had taken the cenvat credit on rent a cab service where the service provider had charged the service tax from them and for the remaining invoices, they have paid the service tax under reverse charge mechanism and availed the cenvat credit of the same. The Tribunal further observed that dispute in the matter was of sanction of refund claim of unutilized cenvat credit in their account not the issue of availment of the cenvat credit on the input service; therefore, the Revenue had fell in error and wanted to raise the issue of availment of the cenvat credit while entertaining the refund claim.

The Tribunal allowed the appeal holding that at the time of entertaining the refund claim, the issue of admissibility of the cenvat credit cannot be raised.[C N S Comnet Solution (P) Ltd. v. Commr. Of CE & ST, Service Tax Appeal No. 60001 of 2020, decided on 03-02-2021]


Suchita Shukla, Editorial Assistant has put this story together.

Case BriefsTribunals/Commissions/Regulatory Bodies

Customs, Excise and Services Tax Appellate Tribunal (CESTAT): Ashok Jindal (Judicial Member) allowed an appeal against the impugned order wherein the refund claim filed by the appellant had been dismissed as time-barred.

The appellant had filed a refund claim for the period April-June, 2012. The said refund was entertained and was rejected on 30-10-2015. On appeal before the Commissioner (Appeals) the claim was allowed. Further, the appellant had made request for sanctioning of refund claim on 9-8-2016 but the Revenue had filed appeal against the order of sanctioning of refund claim on 22-3-2016 and this Tribunal dismissed of appeal filed by the Revenue. Thereafter, on persuasion by the department, the appellant had again filed application for sanctioning of refund claim on 13-2-2018 (who was forced to file). The said application was entertained, the refund claim was allowed on 9-04-2018 by the adjudicating authority. Thereafter, the Commissioner had reviewed the order of sanctioning the refund claim on 12-7-2018. The department had filed appeal before the Commissioner (Appeals) who held that the refund filed by the appellant was time-barred by limitation by order dated 28-11-2018, thus the instant appeal was filed.

The counsel for the appellant had submitted that as the Revenue continued to contest the issue before this Tribunal and this Tribunal had passed final order dated 11-3-2019 and he also submitted that they had filed refund claim initially on 29-6-2012 within the period of limitation and further after the order of this Tribunal, suo-moto the department was required to sanction the refund claim to the appellant but on the persuasion of the department, the appellant was forced to file refund claim again which was also within one year of the order of this Tribunal.

The Tribunal allowed the appeal and observed that it was fact on record that initially the refund claim was filed on 29-6-2012, the same was allowed by the Commissioner (Appeals) on 21-3-2016, instead of sanctioning the refund claim, the revenue preferred to file appeal before this Tribunal and this Tribunal had dismissed the appeal of the Revenue. The Tribunal held that it was the duty of the Revenue that after the order of this Tribunal, they were required to refund sou moto within 3 months from 1-3-2017 but instead of doing so, the appellant was forced to file refund claim again which was filed on 13-2-2018. The departmental officer did not stop there; they reviewed the order of the adjudicating authority sanctioning the refund and held that the refund claim was barred by limitation without any basis to drag the appellant in unnecessary litigation. The said act of the department cannot be appreciated.[AMP Capital Advisors (India) (P) Ltd. v. Commr. Of CGST, Appeal No.ST/60296 of 2019-ST, decided on 13-01-2021]


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Case BriefsTribunals/Commissions/Regulatory Bodies

Customs, Excise and Services Tax Appellate Tribunal (CESTAT): Ashok Jindal (Judicial Member) allowed an appeal which was filed against the rejection of a refund claim.

Initially, the proceedings were initiated against the appellant for non-payment of service tax under reverse charge mechanism for a commission paid to the foreign-based commission agent and during the course of audit, the objection was raised, the appellant paid the entire amount of service tax along with interest and prayed that the proceedings against the appellant was to be closed but the department issued a show-cause notice by invoking the extended period of limitation. The demands of service tax along with interest paid by the appellant were appropriated and the penalties were also imposed.

The appellant filed an appeal against the said order and prayed that in this case, the extended period of limitation was not invokable as whatever service tax was to be paid by them; they were entitled to take credit of the same. Therefore, it was a case of revenue neutrality. The Tribunal had concluded with the same and that appeal was allowed. In consequence, to the order the appellant had filed a refund claim of service tax paid for the extended period of limitation and interest. The adjudicating authority had rejected the same and on appeal before the Commissioner (Appeals), it was concluded that the appellant had already paid service tax along with interest in terms of Section 73 (3) of the Finance Act, 1994, the proceedings stood concluded, therefore, the refund of the amount claimed by the appellant was not admissible. Thus, the instant appeal was filed.

The Tribunal observed that both the parties had admitted the fact that in the earlier round of litigation, this Tribunal had passed the order and dropping the demand of service tax for an extended period of limitation along with interest and in that circumstance the refund claim filed consequent that order was admissible in the eyes of law. The Tribunal allowed the appeal while setting aside the impugned order.[Spray Engineering Devices Ltd. v. CCE & ST, 2021 SCC OnLine CESTAT 10, decided on 11-01-2021]


Suchita Shukla, Editorial Assistant has put this story together

Case BriefsTribunals/Commissions/Regulatory Bodies

Customs, Excise and Services Tax Appellate Tribunal (CESTAT): Ashok Jindal (Judicial Member) allowed an appeal filed against the impugned order wherein the refund claim had been rejected in terms of the provisions effective from 01-03-2015 in case of deemed export.

The counsel for the appellant, Mr Naveen Bindal submitted that he was not contesting the matter and was taking the alternative plea that while filing the refund claim, they had reversed certain cenvat credit and as their claim of refund was pending before the adjudicating authority, an amendment took place and Central Goods and Service Tax Act (CGST Act) 2017 was introduced in place of Central Excise Act, 1944. The adjudication order was passed after the introduction of CGST Act 2017 therefore, the appellant was having no occasion to raise the issue of re-credit of cenvat credit which have reserved before the adjudicating authority; therefore, in terms of Section 142(3) of the CGST Act 2017, they were entitled to cash refund or re-credit to their cenvat credit account.

The Tribunal observed that It is a fact on record that when the appellant filed the refund claim of cenvat credit reversed by them, it was not the issue but with the introduction of CGST Act 2017, the issue of re-credit arose in terms of Section 142 (3) of the CGST Act 2017 and the appellant had no occasion to raise the issue of the re-credit before the adjudicating authority as the adjudicating authority itself had passed the impugned order after introduction of CGST Act 2017. The Tribunal relied on the judgment of Rawalwasia Ispat Udyog (P) Ltd. v. CCE, 2019 (26) GSTL 196 where it was observed that,

            “4. Considering the fact that as per Section 142 (3) of CGST Act, 2017, which was enforced with effect from 1.7.2017 if any refund arises on account of Cenvat credit, duty, tax, interest or any amount, the same shall be paid in cash to the assessee. Despite, clear-cut provisions of law in GST regime, the Commissioner (Appeals) has allowed the refund to be credited in their Cenvat Credit account which is against the spirit of law. In fact, the Commissioner (Appeals) by doing this act has dragged the appellant in unnecessary litigation before this Tribunal, the act of the Commissioner (Appeals) cannot be appreciated. Therefore, I do not find any merit in the impugned order, the same is set aside and the order of the adjudicating authority is restored.”

The Tribunal allowing the appeal held that the appellant was entitled to re-credit of the amount already reversed before the introduction of CGST Act 2017.[Great India Steel Fabricators v. CCE & ST, Excise Appeal Nos. 60833 & 60836 of 2018, decided on 10-12-2020]


Suchita Shukla, Editorial Assistant has put this story together

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Customs, Excise and Services Tax Appellate Tribunal (CESTAT): Ashok Jindal (Judicial Member) allowed an appeal against the order of dismissal by the Commissioner (Appeals).

The appellant was engaged in providing works contract service to Garrison Engineers (MES) a unit of Department in the Ministry of Defense who was not engaged in any commercial activity. The said service was exempted from service tax before 01-04-2015 vide entry No. 12(a) of Mega Exemption Notification No. 25/2012-ST which was withdrawn and the above mentioning construction services became taxable with effect from 01-04-2015 subsequently by another notification the said entry was again inserted thereby exempting the service tax providing in relation to construction of noncommercial Govt. building from whole of service tax retrospectively. In view of which the appellant had filed a refund claim for the service tax paid.

Initially an amount of Rs 3,50,746/- for the period March, 2015 was rejected as time-barred and the refund claim of Rs 32,70,626/- was sanctioned but was credited to Consumer Welfare Fund being hit by unjust and enrichment. The said order was challenged before the Commissioner (Appeal) by the appellant who had allowed the refund claim of Rs 32,70,626/- to the appellant holding that the said amount be given back to the appellant who would in turn refund the same to the military, amount of Rs 3,50,746/-was rejected as time-barred. The revenue had filed an appeal before the Tribunal against the order of sanctioning refund claim which was dismissed and against the order of holding the refund of Rs 3,50,746/- as time barred an appeal had been filed by the appellant which was allowed holding that refund claim cannot be held time-barred and the appellant was entitled to claim of the amount paid for the period March, 2015.

Thereafter, the appellant made a request to the Assistant Commissioner to refund the amount, the adjudicating authority instead of complying the direction of Commissioner (Appeals) as well as the Tribunal transferred the whole of the amount of Rs. 36,21,376/- to the Consumer Welfare Fund holding that the same was hit by the principle of unjust enrichment. An appeal against the said order was filed before the Commissioner (Appeals) was also dismissed. Hence, the instant appeal.

The Tribunal explained that the said issue had been dealt in the judgment of A.P. Enterprises v. C.C.E & S.T. Panchkula, and it was to be decided whether the refund claim was hit by barred of unjust enrichment or not,

            “On going through the said letter, I find that in terms of Section 11B (2) (e), the person who has borne the tax, can file the refund claim. Therefore, the service tax in the impugned matter paid by the appellant is required to be refunded to the service recipient directly. In these circumstances, I hold that the refund of service tax paid by the appellant cannot be rejected. Therefore, I sanctioned the refund claim, but the same is payable in the account of service recipient directly. Therefore, the appellant is directed to provide all the details of the service recipient required for sanctioning the refund claim. If already provided by the appellant, the adjudicating authority shall sanction the refund claim to the service recipient directly within 30 days from the receipt of this order.”

The Tribunal while allowing the appeal relied on the case of the Supreme Court in Ranbaxy Laboratories Ltd. v. Union of India, (2011) 10 SCC 292 and held that the refund claim was to be given directly to the service recipient i.e Garrison Engineers (MES), therefore, the refund claim was allowed along with interest.[Verma Brothers v. C.C.E. & ST, Service Tax Appeal No. 60358 of 2020, decided on 01-12-2020]


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Custom, Excise and Service Tax Appellant Tribunal (CESTAT): S.S. Garg (Judicial Member) remanded the matter to its original authority where the appellants had appealed against an order where the Commissioner of Central Excise and Central Tax had partially allowed and rejected their refund claim on various grounds.

The appellants were registered with the service tax department under the category of Consulting Engineering, Business Auxiliary Services, Maintenance and Repair Services, Erection, Commissioning and Installation Service and Management Consultant Services. They filed for refund claims of unutilized CENVAT credit paid on input services used for providing the Consulting Engineering Services. A show-cause notice was issued to the appellants seeking rejection of the claims on various discrepancies/shortcomings. Their claims were partially rejected and partially allowed by the concerned authority.

Disha Gursahaney, Counsel for the appellants, submitted that the order rejecting the refund was not sustainable in law as the same had been passed without appreciating the definition of ‘Input Service’, through which the refund claim could have been rejected had there been no nexus with the output service. The refunds were also rejected on certain services on the ground that there was no direct nexus between the input services which were used for providing taxable output service which was exported, but the said services were held to be input services by various decisions of the Tribunal. Further, the refund cannot be denied on the ground that there was no address of the assessee on certain invoices. Finally, the test of whether an input service adversely affects the quality and efficiency of the provisions of output service was not prescribed anywhere in the Rules. The language employed in Rules was a determinative factor of legislative intent and it was improper to add any words thereto and evolve some legislative intent, not found in the statute itself.

The Tribunal accepted the contentions raised by the appellants and held that order of the Commissioner rejecting the refund claims on the ground that there was no direct nexus between the input service and the output services was not legally sustainable. Denial of refund on lack of nexus was not sustainable in law and therefore, the appellants were entitled to the refund on the input services. The appellants were also entitled to refund of CENVAT credit in respect of Commercial and Industrial Construction Service, Company Secretary and Public Relation Management Service being essential for rendering output service.

The Tribunal remanded the matter back to the original authority and ordered them to examine the documents which may be produced by the appellants in support of their refund claims. As far as denial of refund on the basis of debit notes in which the amount paid and services received was concerned, the Tribunal held that debit note was a valid document for claiming CENVAT credit under Rule 9 of the CENVAT Credit Rules, 2004.

Finally, denial of refund on other procedural irregularities was also not sustainable in law because the appellant was engaged in the export of service, where rendering output service was essential. [Ingersoll Rand Technologies and Services (P) Ltd. v.  Commr. of Central Excise and Central Tax, 2019 SCC OnLine CESTAT 2167, decided on 22-11-2019]