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2022 (6) TMI 138 - AT - Service TaxRelevant Date - Rejection of Refund claim - the tax paid was exempted in the hands of the appellant - rejection on the ground of time limitation - locus standi of appellant to claim refund - HELD THAT:- This is not a tax paid by mistake on the part of the appellant or a tax that was to be discharged by the appellant within the deadline obligated in rule 6 of Service Tax Rules, 1994. It is, in a manner of speaking, tax exacted at ‘gunpoint’ by an assessee who did not bother to ascertain taxability and bundled the presumed obligation in the liability of the appellant who had engaged them for an activity. It is a tax that was exempted in the hands of the appellant though without provision in law for repelling such collection and the sole restitution available after contracting out such activity exempted from tax in such circumstances is section 11B of Central Excise Act, 1944 by application of section 83 of Finance Act, 1994. The claim was, accordingly, preferred but was rejected leading to appeal against that denial before Commissioner of CGST & Central Excise (Audit-II), Mumbai. Tax is levied on the ‘taxable event’ or, as in the case of ‘service tax’, on activity and not on persons; unlike the erroneous enunciation by the first appellate authority, the exemption, likewise, is on the ‘service’ and not the ‘provider of service’, who is, effectively, an agent of the tax administration for collection of tax from the ‘recipient of service’ along with the contracted payment. The tax paid by the appellant to the ’provider of service’ should not, owing to the exemption, have been charged in the invoice. In such circumstances, retention thereof in the face of claim for it is, unless in accordance with procedure laid down in law, repugnant to constitutional authority for levy and collection of tax. Indeed, the refund mechanism of section 11B of Central Excise Act, 1944, as made applicable to Finance Act, 1994, is not restricted to assessee, or ‘person liable to pay tax’, but also is within the right of any person. The impugned order has erred in concluding otherwise on right to claim refund and in attributing the intent of the exemption to deployment of service of the ‘provider of service’ for itself. The essence of ‘service’, at least as far as tax is concerned, is the transaction between provider and recipient for consideration, certainly excluding activities undertaken for oneself that, doubtlessly, is devoid of ‘consideration’ from the scheme of tax – which appears not to have weighed with the first appellate authority. The locus standi of the appellant to claim refund of tax borne by him has, therefore, been wrongly assailed in the impugned order. Considering the contrived disposal of the grievance by the first appellate authority and the plausible cause of that, the facts and submissions, suffices for disposal of this appeal without much further ado. More so, as the rejection by the original authority was not preceded by a show cause notice, which is the foundation of any proceedings, as well as the limiting framework of a tax dispute. The absence of show cause notices forecloses the scope for remand. The ‘relevant date’ which determines operation of bar of limitation of time, for the person who has borne the burden of tax, is not so easily placed. The default, among the several circumstances envisaged in section 11B of Central Excise Act, 1944, is date of payment of tax. The original authority has not ascertained the ‘relevant date’ for this purpose. Even with that default benchmark, four of the five invoices pass muster. For that sole invoice of 20th February 2014, the lower authorities have not determined the appropriate ‘relevant date’ by applying the ‘starting points’ in section 11B of Central Excise Act, 1944 adapted for ‘service’ rendering any finding on bar of limitation of time to be faulty. Moreover, that the tax was charged without authority of law is not in doubt. Appeal allowed - decided in favor of appellant.
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