Refund of Service tax paid from cenvat credit but later paid in cash

PJ/Case Laws/2011-12/1522

Refund of Service tax paid from cenvat credit but later paid in cash - date of filing of refund claim

Case: COMMISSIONER OF CENTRAL EXCISE, MEERUT-I Versus UNITECH MACHINES LTD

Citation: 2011 (24) S.T.R. 452 (Tri. - Del.)

Issue:- Refund claim of Service Tax – Service tax paid from Cenvat Credit Account initially but later on paid in case of insistence of Department - Date for computing period limitation of one year to be date on which Service Tax paid through TR-6 Challan.

Brief Facts:- Appellants have been paying service tax on freight under GTA under Rule 2(d) of Service Tax Rules, 1994. During the period January'05 to November'05, they paid service tax of Rs. 5,28,995/- & Education Cess of Rs. 10,597/- through Cenvat Credit Account. Later on, in the course of the departmental audit, the audit team objected the said payment of tax made through Cenvat Credit Account and asked the appellants to make the payment through PLA. The appellants made payment of service tax of Rs. 5,28,000/- & Education Cess of Rs. 10,577/- vide T.R.6 Challan No. 2 dated 5-12-2005. The amount of service tax being paid twice, the appellants on 1-8-2006 filed refund claim of Rs. 5,39,592/- which was paid initially by them through their Cenvat Credit Account.

The original adjudicating authority held that the appellant was required to file refund claim within a period of one year. As such, he observed that refund of credit amount so utilized by the appellant for payment of service tax for the period prior to 2-8-2005 was not admissible inasmuch as refund claim was field on 1-8-2006. Accordingly, he sanctioned part amount of refund claim and rejected the balance amount of Rs. 3,33,564/- as time-barred.

Being aggrieved by the said order, the respondents filed appeal before the Commissioner (Appeals) by relying upon the various decisions, he held in favour of the assessee by observing that admittedly the amount of service tax was paid by the assessee twice i.e. once through debit in cenvat credit account and later on vide T.R.6 challan. As such, he held that it is basically restoration of credit/accounting adjustment of credit of duty and is to be allowed to them and limitation of time under Section 11B of Central Excise Act, 1944 is not applicable in their case.

Thus, the present appeal is filed.

Reasoning of Judgment:- Tribunal found that there is no dispute about factual position that the service tax was originally paid by the assessee through cenvat credit account. It is only at the instance of the Revenue, based upon the audit objection that they subsequently paid service tax by T.R.6 challan. The said directions of the Revenue were followed by the appellant, who deposited the service tax by cash vide T.R.6 challan dated 5-12-2005. With the deposit of service tax in cash the respondent immediately became entitled to reversal of debit entry in their cenvat credit account. They have filed refund claim on 1-8-2006 i.e. within period of one year from the deposit of the service tax in cash. As such, it is seen that the cause of action arose on 5-12-2005. Apart from observing that such adjustment, arising as a consequent by paying service tax in cash ought to be done as consequent to such payment, it was noted that the cause of action having been arisen on 5-12-2005 the said date should be taken as the relevant date for the purpose of limitation. As such, in any case, the refund claim filed on 1-8-2006 is within a period of one year, no infirmity found in the impugned order of the Commissioner (Appeals).

Decision:- Appeal rejected.

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