When no service tax is payable, then the amount paid is to be treated as deposit.

PJ/CASE LAW/2014-15/2430

Case:- ROSHAN R JAISWAL Vs COMMISSIONER OF CENTRAL EXCISE, NAGPUR

Citation: - 2014-TIOL-2308-CESTAT-MUM

Brief Facts:-The brief facts of the case are that the appellant is a distributor for BSNL Pre-paid Cellular services etc. and was registered with Service Tax department under the category of ‘franchise service'. As per para 9 of the Order-in-Original, the appellant had deposited an amount of Rs.24,73,590/- during the period 13.1.2009 to 9.11.2009 which included interest. These taxes were paid pursuant to issue of show-cause notice dated 16.10.2008, which was adjudicated vide Order-in-Original dated 17.8.2009. Although the tax and interest has been deposited, the appellant had preferred appeal before the Commissioner (Appeals), who vide Order-in-Appeal No. SR/52/NGP/2010 dated 15.2.2010 allowed the appeal in favour of the appellant holding that the appellant is a trader in SIM cards and have paid the Sales Tax on such transaction and accordingly, no Service Tax is payable. Consequent to allowing of the appeal, the appellant applied for refund for the total amount of Rs.24,76,590/-. The Assistant Commissioner while adjudicating the claim of refund, allowed refund of Rs.23,76,070/- (Rs.18,98,953/- being Service Tax and Rs.4,77,117/- towards interest) observing that as per the order of the Commissioner (Appeals), the amount of Service Tax on the alleged value of Service Tax comes to Rs.18,98,953/- and the interest on such tax comes to Rs. 5,74,637/- whereas on scrutiny of the challans it is observed that the appellant has paid Rs.19,96,473/- as tax and Rs.4,77,117/ towards interest and the amount of Rs.97,520/- was rejected. It was observed that the interest paid by the appellant does not tally with the calculation as per the appellate order and thus, the amount was rejected on the ground of mismatch.Being aggrieved, the appellant carried the matter in appeal before the Commissioner (Appeals), who was pleased to dismiss the appeal on the ground of time bar.

Appellant’s Contention:-Being aggrieved, the appellant is in appeal before this Tribunal and states that as it has been held that no Service Tax is eligible on the appellant, whatever amount was deposited by it is acquired the character of deposit. Accordingly, the whole amount of Rs.24,76,590/- become refundable and there is miscarriage of justice in rejecting the refund of an amount of Rs.97,520/- out of the total claim on the account of mismatch. Accordingly, the appellant prays for allowing the appeal with a direction to the concerned authority to refund the rejected amount of Rs.97,520/-.

Respondent’s Contention:-The learned AR appearing for the Revenue relies on the impugned order.

Reasoning of judgment:-Having considered the rival contentions, it has been held that the amounts deposited by the appellant whether by way of tax or interest, it assumed the character of deposit when it was held in its favour that no Service Tax is payable. Thus, it has been held that the adjudicating authority has erred in rejecting the refund claim of Rs.97,520/- on the ground of mismatch. Thus, the appeal is allowed, the impugned order is set aside and the adjudicating authority is directed to issue the refund of Rs.97,520/- within a period of four weeks from production of a copy of this order.

Decision: - Appeal allowed.

Comment:-The gist of the case is when it has been held that no service tax is payable then the amount paid by the appellant by way of tax or interest then it is to be treated as deposit and the amount should be refunded.

Prepared By: - Lovina Surana

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PJ/CASE LAW/2014-15/2430

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