Issuance of second SCN for rejection of refund despite there being an order of Tribunal in favour of assessee

PJ/Case Laws/2011-12/1266

Case: General Commodities Pvt. Ltd. v/s Commissioner of Service Tax, Bangalore

Citation: 2011 (23) STR 14 (Kar)

Issue:- Whether department was right in issuing second SCN for rejection of refund despite there being an order of Tribunal in favour of assessee?

Brief Facts:- Petitioner-assessee had paid excess service tax on the gross freight charges without claiming any abatement of 75% from the gross amount as per Notification No. 1/2006-ST dated 1-3-2006 for the period from April 2006 to September 2006. Therefore, they filed application for refund of excessive service tax paid. The refund application was rejected by the 2nd Respondent-authority. Being aggrieved, the petitioner preferred an appeal before the CESTAT and the same was allowed.

However, Department issued one more show cause notice proposing to reject part of the refund claim to the petitioner on the ground that the Final order of the Tribunal covere only the point of ‘unjust enrichment’ and does not cover the point of rejection of refund amount. Hence, petitioner has filed writ petition seeking to quash the second show cause notice and direct the Service Tax Department to refund the excess amount paid with interest as per the Final order of the Tribunal.

Reasoning of Judgement:- The High Court noted that it appeared that the Assistant Commissioner of Service Tax has issued second show cause notice dated 9-3-2010, proposing to reject the part of the claim for refund of excess tax on the ground that the Tribunal's order covers only the point of 'unjust enrichment' and does not cover the point of rejection of Rs. 4,00,754/- though the Tribunal has allowed the appeal of the petitioner. The Assistant Commissioner of Service Tax, without looking into the very order of the Tribunal has issued second notice despite a clear order being passed by the Tribunal.

It was held that the observations made in the second show cause notice that the Tribunal has considered only on the point of 'unjust enrichment' and does not cover the point of rejection, does not hold any water in view of the fact that the entire matter has been discussed and final order has been rendered. There-fore, the impugned SCN is quashed with a direction to the Assistant Commissioner to refund the excess service tax with interest as claimed by the petitioner.

Decision:- Writ petition allowed.

Comments:- The above case shows the unnecessary reasons are being given by the department to reject the refund of the assessee. It always seems that department is not willing to empty their pockets and poor assessee has no option but to take long route of litigation. In the given case, the High Court has rightly directed grant refund to assessee. We have also come across the situations when the department issues show cause notices on well settled issues and we have to again start with A and to end at Z. This is good decision by High Court and we can approach Court in such cases.

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PJ/Case Laws/2011-12/1266

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