TMI Blog2017 (5) TMI 1200X X X X Extracts X X X X X X X X Extracts X X X X ..... s 87 of FA, 1994. The Department cannot proceed to recover the interest u/s 87 without issuing a SCN and determination of the amount due and payable by the appellant as provided under sub-Section (1) of Section 73 of the FA, 1994 - appeal allowed - decided in favor of appellant. - Appeal No. ST/2/2012 and Application No. ST/MISC/30231/2017 - Final Order No. A/30546/2017 - Dated:- 13-4-2017 - Ms. Sulekha Beevi, C.S., Member (Judicial) Ms. Rukmani Menon, Advocate for the Appellant. Sh. M. Chandra Bose, Additional Joint Commissioner (AR) for the Respondent. ORDER The appellant is an SEZ Unit and they are availing various services namely General Insurance Business, Banking and Financial Services, Chartered Accountant Services, etc. As per Notification No. 9/2009 as amended by Notification No. 15/2009 the appellants can claim exemption from payment of service tax by way of refund as they are SEZ Units. Both the notifications 09/2009 and 15/2009 stipulates that exemption shall be granted by way of refund to all services used in relation to the authorized operations in the SEZ except for services consumed wholly within the SEZ unit. 2. The appellant thus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... peal. The additional ground put forward is that the authorities below have erred in proceeding to recover the amount of interest under the provision of Section 87 without initiating any proceeding under Section 73 to determine the amount due and payable by the appellant. 5. She adverted to Section 73 and Section 87 of the Finance Act and explained that Section 73 deals with the determination of the amount due and payable by the appellant. Though, there was delay in paying the service tax under the reverse charge mechanism on the part of the appellant, vide letter dated 28.01.2011 the appellant had raised a dispute with regard to the demand of interest for delay in deposit of service tax. In the said letter, the appellant put forward the contention that the refund of service tax is governed by Section 11B of Central Excise Act, 1944 read with Section 83 of the Finance Act, 1994. The same Sections deal with the refund of interest also. As the service tax deposited is liable to be refunded to the appellant, the interest paid along with the tax is also liable to be refunded. That therefore no interest is payable by appellant. To this, the Department has issued letter dated ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ard the submissions made before me. 8. (a) The moot question that arises for consideration is whether the Department can recover the interest amount of ₹ 30,05,219/- under Section 87 of the Finance Act, 1994 without issuance of a Show Cause Notice and without adjudication proceedings to determine the amount due and payable by the appellant. (b) The appellant has filed Miscellaneous application to receive additional grounds. The addition ground put forward is that the recovery under Section 87 is against law for the reason that there has been no adjudication order passed under Section 73 of the Act. This new ground is only a legal issue. The appellant does not seek to adduce fresh facts or evidence. Therefore, the application is allowed. 9. Admitted facts of the case are that in respect of invoice No. 10028762A dated 11.02.2010 there was a delay on the part of the appellant in making payment of service tax. The said matter was intimated to the appellant by the Department and the appellant vide letter dated 28.01.2011 had raised dispute regarding their liability to pay the interest. Another fact which remains undisputed is that the service tax paid vide ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (2) The Central Excise Officer shall, after considering the representation, if any, made by the person on whom notice is served under sub-section (1), determine the amount of service tax due from, or erroneously refunded to, such person (not being in excess of the amount specified in the notice) and thereupon such person shall pay the amount so determined : Provided that where such person has paid the service tax in full together with interest and penalty under sub-section (1A), the proceedings in respect of such person and other persons to whom notices are served under sub-section (1) shall be deemed to be concluded : Provided further that where such person has paid service tax in part along with interest and penalty under sub-section (1A), the Central Excise Officer shall determine the amount of service tax or interest not being in excess of the amount partly due from such person. (3) Where any service tax has not been levied or paid or has been short-levied or short-paid or erroneously refunded, the person chargeable with the service tax, or the person to whom such tax refund has erroneously been made, may pay the amount of such service tax, chargeable or errone ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aid rules; (c) in any other case, the date on which the service tax is to be paid under this Chapter or the rules made thereunder; (ii) in a case where the service tax is provisionally assessed under this Chapter or the rules made thereunder, the date of adjustment of the service tax after the final assessment thereof; (iii) in a case where any sum, relating to service tax, has erroneously been refunded, the date of such refund. 87. Recovery of any amount due to Central Government. - Where any amount payable by person to the credit of the Central Government under any of the provisions of this Chapter or of the rules made thereunder is not paid, the Central Excise Officer shall proceed to recover the amount by one or more of the modes mentioned below :- (a) the Central Excise Officer may deduct or may require any other Central Excise Officer or any officer of customs to deduct the amount so payable from any money owing to such person which may be under the control of the said Central Excise officer or any officer of customs; (b) (i) the Central Excise Officer may, by notice in writing, require any other person from whom money is due or may become ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sub-Section (1B) has been added to Section 73 w.e.f. 14.05.2015. The said sub-Section reads as under: Sub-section (1B) : Notwithstanding anything contained in sub-section (1), in a case where the amount of service tax payable has been self-assessed in the return furnished under sub-section (1) of Section 70, but not paid either in full or in part, the same shall be recovered along with interest thereon in any of the modes specified in Section 87, without service of notice under sub-Section (1). 11. The contention of the department is that when the service tax is paid under self assessment, there is no need to issue show cause notice for any short payment of tax or interest. Section 70 of the Finance Act deals with payment of service tax under the self assessment method. Section 73 of the Finance Act provides for the determination of service tax which is not levied or not paid or short levied or short paid or erroneously refunded. In the present case, the appellants do not dispute their liability to pay the service tax. The same has been paid under the self assessment method by filing returns under Section 70 of the Act. Though the tax was paid with delay they hav ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Central Excise Officer would be entitled to recover the amount from the person payable and payable would by such person after adjudication has been done as otherwise, it would amount of putting the cart before horse. Rule 6A of the Service Tax Rules, 1994 would also indicate that where any amount of service tax payable has been self assessed under Section 117 of the Act but not paid, either in full or in part, the same shall be recovered along with interest in the manner prescribed under Section 87 of the Act. 19 . The garnishee notices issued by respondents-2 to 4 on respondents-5 to 8 calling upon them to divert the funds which are held by them on behalf of M/s. RMS is not a provisional attachment as provided under Section 73C of the Act. In other words, it is not the case of respondents-2 to 4 that in exercise of the power vested under Section 73C of the Finance Act and to protect the interest of the Revenue and with the previous approval of the Commissioner of Central Excise (Commissioner of Service Tax) such attachment had been made. The perusal of the said garnishee notices would clearly indicates that respondents-5 to 8 have been called upon to divert the funds held ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... her evidence, as may be deemed necessary. It further enables the said officer to pass an order after taking into account all the relevant material which is available or which he has gathered and after giving an opportunity to the person concerned of being heard, to make the assessment of the value of taxable service to the best of his judgment and determine the sum payable by the assessee or refundable to the assessee on the basis of such assessment. It can thus be seen that the scheme provides that a person who is liable to pay the Service Tax is required to pay Service Tax himself on the basis of assessment made by him and furnish a return to the Superintendent of Central Excise. The Central Excise Officer in case such a return is filed or even if when no such return is filed, is empowered to assess the value of taxable services rendered by such person, to the best of his judgment and determine the sum payable by the assessee or refundable to the assessee on the basis of such assessment. It can thus be clearly seen that when an assessee is liable to pay tax in either of the situations, i.e., filing a return or not filing a return, the Central Excise Officer is empowered to assess ..... X X X X Extracts X X X X X X X X Extracts X X X X
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