ST - Amount paid in excess during investigation - Merely because adjudicating authority had appropriated amount paid towards tax demand, refund cannot be denied when Commr(A) reduced tax liability by holding that excess amount is not deposit & claim is hit by bar of limitation: CESTAT
By TIOL News Service
AHMEDABAD, MAR 31, 2015: THE appellant is an authorized dealer of M/s Hero Honda Motors Ltd. and registered with the Service Tax authorities. It was found that the appellants were engaged in providing services as Direct Selling Agents (DSA) of various banks including ICICI Bank in their premises. According to the Revenue, the appellant was liable to pay Service Tax under the category of Business Auxiliary Service.
The appellant, at the instance of the CE officers, deposited an amount of Rs.6.85 lakhs on 19.09.2005. A SCN came to be issued on 25.09.2008 demanding ST of Rs.6.07 lakhs under BAS for the period 01.07.2003 to 27.08.2005 and proposing appropriation of the amount deposited during the investigation. The original authority confirmed the demand of ST with interest and penalties and also appropriated the amount already paid.
However, the Commr(A) reduced the demand to Rs.4.43 lakhs and appropriated the same plus interest & penalty against the deposit made.
Revenue challenged this order. The Tribunal vide its final order dt. 28.07.2011 rejected the appeal and the cross objection filed by appellant was allowed by setting aside the penalty imposed u/s 77 & 78 of FA, 1994.
Thereafter, the appellant filed a refund claim for the excess amount deposited by them during the investigation.
This was paid by the original authority but denied by the lower appellate authority in Revenue appeal. The Commissioner (Appeals) allowed the appeal of the Revenue on the ground that the appellant has not filed their claim within one year from the date of order of the Commissioner (Appeals) and it is hit by limitation under Section 11B of the Central Excise Act 1944.
So, the appellant is before the CESTAT and submits that they deposited this amount during investigation and since they had not paid any Service Tax the provisions of Section 11B of CEA, 1944 would not be applicable. [ M/s Foods, Fats & Fertilizers Ltd Vs CCE Guntur - 2010-TIOL-1138-CESTAT-BANG relied upon]
The AR countered this submission by stating that the amount paid is not a deposit as the adjudicating authority had already appropriated the amount against the demand of Service Tax. [United Spirit Ltd Vs CC (Import) NhavaSheva - 2008-TIOL-1839-CESTAT-MUM , Mafatlal Industries Ltd - 2002-TIOL-54-SC-CX-CB relied upon]
The Bench observed that the fact that appellant had deposited an amount of Rs.6,85,200/- on 19.09.2005 during investigation and the SCN was issued in September, 2008 and which amount was appropriated by the adjudicating authority against the demand of duty and which order was modified by reducing the demand by Commr(A) and accordingly proportionate deposit was appropriated, is not disputed by the department.
The Bench further noted that the Tribunal in the case of Bajaj Auto Ltd, M/s Foods, Fats & Fertilizers Ltd held - that the amount in question deposited by the appellant during the course of investigation have to be considered as deposits;that in respect of the part of the amount so deposited which has not been found by the Commissioner to be payable, the appellants are entitled for refund of the excess amount of deposits made by them; such deposits are not hit by the bar of limitation.
The case laws cited by the AR were distinguished and after holding that the order of Commissioner(A) is not sustainable in law the appeal was allowed with consequential relief.
(See 2015-TIOL-581-CESTAT-AHM)
