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2017 (3) TMI 1026 - AT - Service TaxRefund claim - payment of tax under protest - rejection of refund on the ground of taxability of activity - Held that: - A refund claim may be rejected only for a limited number of reasons: at the threshold for being beyond the jurisdiction or on account of bar of limitation and at the sanction stage for being deficient in material relevant to sanction. It is rarely that a refund is claimed on grounds of non-taxability and, when it is, the competent authority is required to adduce reasons for rejection if that be the intent. All of these must, necessarily, be preceded by issue of notice specifying the ground for rejection - the notice relies upon the taxability of the activity as the ground for rejection. No other independent ground has been invoked. Just as a claim for refund on ground of non-taxability should be accompanied by a decision in appeal upholding that contention, a rejection of claim that tax not due was paid incorrectly would have to be backed by an order of assessment. The appellant is justified in claiming that the demand u/s 73(1) is mandated to complete the proceedings and would necessarily have to be followed by an adjudication order that can be legally challenged. By not issuing a notice and a consequential order, the assessee was also denied the opportunity to challenge the contention of Revenue on taxability. The impugned order rejecting the refund claim on ground of taxability is not sustainable as taxability has not been asserted by appropriate process and is set aside - matter is restored to the original authority to reconsider the refund claim - appeal allowed by way of remand.
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