2017 (7) TMI 635 - AT - Central Excise

Refund claim - time limitation - duty paid under protest - reverse charge - whether time limitation of 1 year is applicable to duty paid under protest? - Held that - the first appellate authority was correct in coming to the conclusion that service tax liability arises on the respondents herein only, if the said amounts were paid post 18/04/2006 - reliance place on the judgment of the Hon ble Bombay High Court in the case of Indian National Shipowners Assocaition 2009 (3) TMI 29 - BOMBAY HIGH COURT is correct as this judgment of the Hon ble High Court of Bombay has been upheld by the apex court and based upon such decision, Board has also issued circular No.276/8/2009-CX.8A dt. 26/09/2011 stating that service tax liability for the payments made to an overseas service provider will arise from 18/04/2006 only - refund allowed - appeal dismissed - decided against Revenue.

Summary

Issues:
1. Interpretation of service tax liability on commission paid to overseas agents.
2. Validity of refund claim for service tax paid under protest.
3. Applicability of notification No.36/2004 and Section 66A of the Finance Act, 1994.
4. Decision based on the judgment of the Hon'ble Bombay High Court in the case of Indian National Shipowners Association.

Analysis:
1. The case involved a dispute regarding the service tax liability on commission paid to overseas agents by the manufacturers and exporters of cotton yarn. The respondents contended that no service tax was payable on services rendered outside India. However, they started discharging service tax under protest and filed a refund claim for the duty paid, arguing that the time limit of one year for the refund claim did not apply to duty paid under protest.

2. The original authority rejected the refund claims, leading the respondents to file appeals before the Commissioner (A). The first appellate authority allowed the appeals, relying on the decision of the Hon'ble High Court of Bombay in a similar case. The department, aggrieved by this decision, filed appeals before the Tribunal.

3. The Tribunal considered the arguments presented by both parties. It was noted that the service tax liability as a service recipient from a service provider situated abroad would arise only from 18/04/2006. The Tribunal agreed with the first appellate authority's conclusion that service tax liability on the respondents would arise only if the amounts were paid post that date. The Tribunal also referenced the judgment of the Hon'ble Bombay High Court, upheld by the apex court, and a circular issued by the Board, supporting the decision.

4. The Tribunal addressed the arguments raised by the learned AR regarding the applicability of notification No.36/2004 and Section 66A of the Finance Act, 1994. It concluded that the impugned orders were legal and correct, as the notification was issued without corresponding provisions in the Finance Act, 1994, until 18/04/2006. Therefore, the Tribunal upheld the impugned orders, rejected the appeals, and disposed of the cross-objections, based on the legal interpretation and precedents established by the Hon'ble Bombay High Court.