Relevant date of filing Refund claim

PJ/Case Laws/2010-11/1034

Case: Commissioner of Service Tax, New Delhi v/s M/s HMA Udyog Pvt Ltd

Citation: 2010 (20) STR 827 (Tri–Del)

Issue:- What will be the date of filing of the refund claim if first it is submitted incomplete and subsequently the completed documents are submitted?

Brief Facts:- During the period from 16 August 2002 to March'03 respondent-assessee paid service tax by treating their activity as Advertising Agency Service. Subsequently, on realizing that their activity was not covered by the definition of advertising agency service, they filed a refund claim on 29.8.03 alongwith certain documents. Since all the relevant documents were not submitted and certain information had not been given, respondents were asked to furnish the required documents and information. Accordingly, revised refund claim was filed on 17.03.04.

The Adjudicating Authority rejected the entire refund claim as being time barred under Section 11B of Central Excise Act, 1944 as applicable to service tax by virtue of Section 83 of the Finance Act, 1994. The assessee filed an appeal to the Commissioner (A). The Commissioner (Appeals) set aside the impugned order on the ground that since the tax had been collected without authority of law, the limitation period under Section 11B would not apply as the refund claim would not be governed by the Section 11B.

Against this order, appeal has been filed by Revenue before the Tribunal. Their appeal specifically mentioned that the refund claim of service tax of Rs.82, 544/- deposited by TR.6 challan dt.16.8.02 is time barred.

Appellant’s Contention:- Revenue pleaded that since the claim had been filed under provisions of Section 11B read with Section 83 of the Finance Act, 1994, it would be governed by the limitation period prescribed under this Section. The Commissioner (Appeals) has wrongly held that this is a case when the tax was paid without authority of law and limitation period would not apply. Reliance was placed on judgment in the case of Mafatlal Industries Ltd. vs Union of India [1997 (89) ELT 247 (SC)] wherein it was held that once a refund claim is filed under Section 11B of the Central Excise Act, it would be governed by the provisions of that section.

Respondent’s Contention:- Respondent concedes that the limitation period prescribed under Section 11B would be applicable to this refund claim but he emphasized that since the refund claim had been filed on 29.8.03, only a part of the claim, in particular an amount of Rs.82,544/- paid on 16.8.02, would be hit by limitation and the rest of the claim would be within time. It was submitted that even the Revenue's appeal is against the Commissioner(Appeals)'s order allowing refund of service tax of Rs.82,544/- paid on 16.8.02, as it is mentioned that it only the refund claim of the amount of Rs.82,544/- paid on 16.8.02 which is time barred and as such Revenue's appeal does not challenge the entire refund claim and that in view of this, the Commissioner(Appeals)'s order is incorrect only to the extent of allowing the refund claim of Rs.82,544/-.

Reasoning of the Judgment:- The Tribunal found that respondent had paid the service tax amounting to Rs.82,544/- for the month of July'02 on 16.8.02 and the service tax for the months from Aug'02 to June'03 had been paid during the period from 13.9.02 to 24.7.03. The total tax paid for period from July'02 to June'03 was Rs.12, 19, 287/- out of which an amount of Rs.82, 544/- as service tax for July'02 had been paid on 16.8.02. The respondent had paid the service tax under the impression that their activity is covered by the definition of "Advertising Agency Service". However, subsequently on realizing that their activity is not covered by the definition of Advertising Agency Service, they filed the refund claim on 29.8.03.

The Tribunal found that though on defects and deficiencies being pointed out by the Department, the respondent had submitted the revised refund claim on 17.03.04, it is 29.8.03 which has to be treated as the date for filing the claim. Since both sides agreed that the refund would be governed by the limitation period prescribed under Section 11B, it is only the refund claim of Rs.82,544/- of the service tax for the month of July'02 paid on 16.8.02, which would be hit by time bar and the remaining claim would be within time.

In view of the above, it was held that the Commissioner (Appeals)'s order is incorrect only to the extent it has allowed the refund claim of Rs.82, 544/- of service tax paid on 16.8.02. The Commissioner (Appeals)'s order stands modified.

Decision:- Revenue's appeal partly allowed.

Comments:- This is very good decision. Department normally says that the refund is to be reckoned from the date when all the documents are filed. They return the refund rather than issuing show cause notice. Even if the show cause notice is issued and the incomplete documents are filed then they say that the refund is to be reckoned from the date of filing of documents. Hence these are time barred. But this decision has clearly laid down that the it is to be reckoned from the date when refund is originally filed and not from the date when insufficient document/information is filed subsequently.

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PJ/Case Laws/2010-11/1034

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