By TIOL News Service

MUMBAI, APR 03, 2015: THE officers of DGCEI, Regional Unit, Pune gathered an intelligence that the appellant's were providing services of erection of 'Modular Kitchen and Other Services', which was brought into the tax net from 16th of June 2005. After completion of investigation, the appellants were directed by the officers of DGCEI to pay the amount of service tax as determined by them under the category of ‘Construction of Complex Services'.

All the three appellants paid the amount to the Treasury and also filed an application under Section 73(3) of the Finance Act, 1994 for closure of their case(s).

Subsequently, they entertained a view that they were not required to pay the service tax as has been paid by them. They, therefore, filed refund claims for the amounts paid by them on direction of the DGCEI.

The adjudicating authority rejected the refund claims and the orders were upheld by the Commissioner(A).

So, the appellants are before the CESTAT and submit that the tax collected by the government is incorrect and since the tax liability on the services came into effect subsequently the refund claims filed by them have to be allowed. Moreover, it is also submitted that the provisions of Section 73(3) would not be applicable to their case since they were required to follow the proper provisions as to file the declaration and the same has to be accepted by the adjudicating authority.

The Bench after extracting the provisions of section 73(3) of the FA, 1994 noted that the submissions made by the appellant seemed to be not in consonance with the law. It was further observed -

"…the said section (73(3) of FA, 1994) is not ambiguous and very clearly lays down that the Central Excise officer shall not serve any notice on the appellant if the payment which has not been paid or has been short-paid is ascertained by the Central Excise officer and paid before the service of notice, no notice requires to be issued to the assessee. The provisions of sub-section are very clear and if no notice is issued to the appellants under Section 73(1) of the Finance Act, 1994, it would mean that the tax liability discharged by the appellants would be the tax as accepted and paid by him. In our considered opinion, when the appellants themselves had discharged the tax liability, there cannot be any refund of the amount as the issue is considered as ‘closed' by the revenue authorities."

Holding that the orders of the lower authority are correct and legal and do not suffer from any infirmity, the same were upheld and the appeals were rejected.

In passing: More in the days to come…

(See 2015-TIOL-607-CESTAT-MUM)