2019 (9) TMI 1417 - AT - Service Tax

Refund of service tax - time limitation - deposits made through challans not utilized towards payment of duty - relevant date of reckoning the time limit - section 11B of CEA - HELD THAT - It is not in dispute that the application of refund was rejected to the extent of Rs. 7, 07, 894/- on the ground of time bar. It is also not in dispute that this pertains to an amount deposited vide challan dated 17-5-2016 and the application for refund was filed beyond one year from the date of this challan. It is also evident that the appellant had raised some other grounds before the first appellate authority which are not part of the decision in the order-in-original rejecting their appeal. As can be seen from clause (b) to proviso to sub-section (2) of Section 11B unspent advance deposits lying in balance in applicant s current account are covered by Section 11B. Once they are covered by Section 11B it is not open for anyone to pick and choose which portion of Section 11B applies to them and which does not. The entire provisions of Section 11B apply in the absence of any specific clause indicating otherwise. The next question is the relevant date for reckoning the time limit in such cases which has been defined in the explanation to Section 11B. Clause (f) of this explanation covers the present case i.e. in any other case the date of payment of duty . Since the date of payment of duty has yet to begun in case where an amount has been deposited only in the account current but has not been utilized towards payment of Service Tax the relevant date has not yet begun in this case - application for refund is within the time limit and hence needs to be sanctioned - Appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Refund claim rejection on the ground of time bar.
2. Interpretation of Section 11B for refund claims.
3. Relevant date for reckoning the time limit for refund claims.

Analysis:
The appeal was filed against the rejection of a refund claim partly by the Dy. Commissioner of Customs, citing time bar as the reason for rejecting a portion of the claim. The appellant had paid an amount towards Service Tax liability, later realizing an unutilized balance for which they sought a refund. The first appellate authority upheld the rejection, stating the new grounds raised were not part of the original decision. The appellant argued that the limitation under Section 11B should not apply as they had only deposited the amount and not utilized it for payment. They contended that the relevant date for the time limit had not begun as the deposit remained unutilized. The Departmental Representative argued that the new grounds raised before the first appellate authority warranted rejection of the appeal.

The key issues to be addressed were whether deposits made but not utilized could be claimed as a refund under Section 11B, the applicability of Section 11B in such cases, and determining the relevant date for the time limit. The Tribunal highlighted that unspent advance deposits in the applicant's account are covered by Section 11B in its entirety, and individuals cannot selectively apply provisions of the section. The explanation to Section 11B clarified that in cases where deposits were made but not utilized for duty payment, the relevant date for the time limit calculation had not commenced. Therefore, the Tribunal allowed the appeal, directing the refund to be granted.

In conclusion, the Tribunal allowed the appeal, emphasizing that the application for refund was within the time limit as the relevant date for reckoning had not started due to the unutilized deposit. The decision highlighted the comprehensive application of Section 11B to refund claims involving deposits not utilized for duty payments, ensuring a fair interpretation of the law in such cases.