2020 (4) TMI 308 - HC - Service Tax

Refund claim - Period of limitation - SEZ unit - Distribution of input services / credit - Period to be computed from the date of original Invoice or from the date of ISD invoice - refund claims covered by Table-II of Form A-4 of Notification No. 12/2013-ST dated 01.07.2013 - applicability of mandatory time limit for filing refund as prescribed in clause (e) of the Para 3(III) of the Notification No.12/2013-ST dated 01.07.2013 issued by the Government of India Ministry of Finance Department of Revenue. Whether the Tribunal was right in holding that mandatory time limit to file refund claims prescribed in clause (e) of paragraph 30(III) of Notification No. 12/2013-ST dated 01.07.2013 issued by the Government of India Ministry of Finance Department of Revenue is not applicable to the refund claims covered by Table-ll of Form A-4 of the said notification? - HELD THAT - This question does not arise out of the impugned order inasmuch as the Tribunal while finding the submission of the learned counsel for the respondent that clause (e) does not apply to refund claims covered by Table-ll of Form A-4 of the said notification to be convincing; has not dealt with this aspect in these proceedings as it did not find any infirmity in the adjudicating authority having granted refund by following the practice and precedence set by his predecessors. Whether the Tribunal was right in holding that the adjudicating authority has exercised discretion to allow filing of refund claim beyond one year by the respondent when the adjudicating authority had not recorded any reasons to condone such delay? - HELD THAT - In the absence of any facts coming on record it is not clear as to whether or not any previous order contains reasons for extending the period for filing refund claims - Be that as it may considering the fact that the adjudicating authority was conscious about the fact that in case of refund claims falling under Table-II some claims were filed beyond a period of one year from the date when the ISD made actual payment to the registered service provider it cannot be said that the view adopted by the Tribunal is not a plausible view so as to give rise to a question of law much less a substantial question of law. Whether the Tribunal has the power or jurisdiction to condone the delay in filing the refund claim as per clause (e) of Para 3(lll) of Notification No. 12/2013-ST dated 01.07.2013 which is vested with the Assistant/Deputy Commissioner of Central Excise? - HELD THAT - There is a provision for allowing further time on sufficient cause which is found in the proviso to section 8(4) of the said Act. It was the case of the revenue that with the completion of the assessment the time limit for filing C forms expires. The appellate authority comes on the scene only after the assessment is over. Under the relevant statutory provisions an assessing authority alone can allow further time. The appellate authority is different from an assessing authority. Therefore the appellate authority cannot allow further time and receive C forms at the appellate stage subsequent to the assessment - the court has held that whatever discretion is conferred on the assessing authority for purposes of assessment must so be regarded as a matter of statutory construction to have been conferred on the appellate authority even without the concerned statutory provision expressly naming the appellate authority in that behalf. An appellate authority engaged as it is in precisely the same task under the fiscal statute as that of the assessing authority must also be possessed of like powers as those of the assessing authority. Whether the Customs Excise and Service Tax Tribunal was justified in holding that in case of ISD invoices for all purposes be it cenvat or refund the ISD invoice is deemed to be taxpaying document and hence the date of that invoice has to be taken even for computing the one year stipulated in clause (e) of paragraph 3(III) of Notification No.12/2103-ST dated 1st July 2013? - Whether the Customs Excise and Service Tax Tribunal was justified in holding that no reasons are required to be assigned for extending the period for filing refund claims? - HELD THAT - On a conjoint reading of rules 7 and 9 of the CC Rules it emerges that the input service distributor has to distribute the CENVAT credit in respect of service tax paid on input service to its manufacturing units whether in the DTA or the SEZ; and in terms of rule 9 of the said rules the concerned unit which in the present case is an SEZ unit is entitled to take CENVAT credit on the basis of an invoice issued by the input service distributor under rule 4A of the Service Tax Rules. Therefore an invoice issued by the input service distributor is proof of payment having been made to the service provider and can be said to be a taxpaying document. However while such document is proof of payment of tax the date which such document bears is not the date of actual payment of service tax as contemplated in clause (e) of paragraph 3(III) of Notification No.12/2013-ST dated 01.07.2013 - Clause (e) of paragraph 3(III) of Notification No. 12/2013-ST dated 01.07.2013 postulates that the claim for refund shall be filed within one year from the end of the month in which actual payment of service tax was made by such Developer or SEZ Unit to the registered service provider or such extended period as the Assistant Commissioner of Central Excise or the Deputy Commissioner of Central Excise as the case may shall permit. Customs Excise and Service Tax Tribunal was not justified in holding that in case of ISD invoices for all purposes be it cenvat or refund the ISD invoice is deemed to be taxpaying document and hence the date of that invoice has to be taken even for computing the one year stipulated in clause (e) of paragraph 3(III) of Notification No.12/2103-ST dated 1st July 2013. It is further held that the Customs Excise and Service Tax Tribunal was not justified in holding that no reasons are required to be assigned for extending the period for filing refund claims - Both the above substantial questions of law stand answered accordingly in favour of the appellant and against the respondent. Appeal disposed off.

Summary

Issues Involved:
1. Interpretation of the mandatory time limit for filing refund claims under Notification No. 12/2013-ST.
2. Correctness of the adjudicating authority's sanctioning of refund claims based on ISD invoices.
3. Discretionary power of the adjudicating authority to allow filing of refund claims beyond the stipulated time.
4. Jurisdiction of the Tribunal to condone the delay in filing refund claims.

Detailed Analysis:

1. Interpretation of the Mandatory Time Limit for Filing Refund Claims:
The primary issue examined was whether the Tribunal was right in holding that the mandatory time limit to file refund claims prescribed in clause (e) of paragraph 3(III) of Notification No. 12/2013-ST dated 01.07.2013 is not applicable to refund claims covered by Table-II of Form A-4. The Tribunal found the argument convincing but did not delve into it, as it upheld the adjudicating authority's decision based on past practices and precedents. The court noted that this question does not arise from the impugned order since the Tribunal did not explicitly address it.

2. Correctness of the Adjudicating Authority’s Sanctioning of Refund Claims:
The adjudicating authority sanctioned the refund claims filed by the respondent within one year from the date of ISD invoices issued to the SEZ unit. The Tribunal upheld this decision, noting that the adjudicating authority followed established practices and precedents. The Tribunal found that the refund claims were filed within one year from the earliest point the SEZ unit became aware of the tax liability. The Tribunal also noted that the adjudicating authority has the discretion to permit filing of refund claims beyond the one-year period.

3. Discretionary Power of the Adjudicating Authority:
The Tribunal held that the adjudicating authority exercised its discretion to permit the filing of refund claims beyond the one-year period, as evidenced by the adjudicating authority's cognizance of the covering letter filed with the refund claim. The court found that while the adjudicating authority did not explicitly record reasons for condoning the delay, it was conscious of the factual differences between claims under Table-I and Table-II of Form A-4. The court concluded that the Tribunal’s view was plausible and did not give rise to a substantial question of law.

4. Jurisdiction of the Tribunal to Condon the Delay:
The Tribunal's jurisdiction to condone the delay in filing refund claims was upheld, referencing the Full Bench of the Madras High Court's decision in State of Tamil Nadu v. Arulmurugan and Company, which held that appellate authorities possess the same powers as the assessing authorities. The Supreme Court’s decision in Commissioner of Income Tax v. McMillan & Co. supported this view, indicating that appellate authorities can exercise the same powers as the initial assessing authorities. Thus, the Tribunal was justified in exercising discretion to condone the delay.

Substantial Questions of Law:
1. Whether the ISD invoice is deemed to be a taxpaying document for computing the one-year period stipulated in clause (e) of paragraph 3(III) of Notification No. 12/2013-ST dated 01.07.2013.
2. Whether reasons are required to be assigned for extending the period for filing refund claims.

The court held that the ISD invoice cannot be used to compute the one-year period for filing refund claims. It emphasized that the adjudicating authority must assign reasons for extending the period for filing refund claims. The Tribunal’s decision to treat the ISD invoice date as the starting point for the one-year period was incorrect. However, the court did not interfere with the Tribunal's decision to uphold the refund order due to the lack of evidence pointing out any incorrectness in the refund claim.

Conclusion:
The appeals were disposed of with the clarification that the issue of the applicability of clause (e) to refund claims under Table-II of Form A-4 remains open for future determination. The court emphasized that the adjudicating authority must provide reasons when extending the period for filing refund claims.