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2017 (3) TMI 1219 - AT - Service TaxRejection of refund claim - refund claim has been rejected on the ground that tax is indeed leviable - the case of appellant is that the dispute pertains to the rejection of refund claim and not to a decision on taxability. The latter would flow from a demand u/s 73 of FA, 1994 and no such challenge appears on record. Nor is there any material on record to suggest that notice for such demand was issued - Held that: - 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 - If the tax or interest was due, tax thereon should have been recovered, in the absence of applicability of section 73(3), by issue of notice u/s 73(1). An order of rejection of refund claim u/s 11B is not the proceedings to determine taxability - appellant is justified in claiming that the demand under section 73(1) is mandated to complete the proceedings and would necessarily have to be followed by an adjudication order that is legally challengeable. 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 - matter on remand.
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