ST - Since litigation was going on, therefore, amount deposited by appellant will be deemed to be Under Protest and no limitation as prescribed u/s 11B will be applicable: CESTAT
By TIOL News Service
BANGALORE, SEPT 19, 2017: THE appellants are functioning as Chartered Accountant and they have entered into a contract with the Mangalore Electricity Supply Company (MESCOM) for rendering the services of opening ledger accounts, preparation of monthly bills, preparation of skeleton bills, accounting of demands and recoveries, maintenance of daily abstracts and tallying, preparation and issue of disconnection lists to field staff and preparation of union MIS and consolidated DCB statements as per the agreement entered into with MESCOM. Appellants have been filing returns regularly under Chartered Accountant services.
The work undertaken by the appellant in respect of MESCOM allegedly falls outside the purview of Chartered Accountant Service.
However,upon demand by the Department, they paid service tax amounting to Rs. 1,47,431/- along with interest of Rs. 12,526/- for the services rendered during the period July 2003 to September 2004 under Business Auxiliary Service.
Thereafter a show-cause notice dated 10.08.2005 requiring the appellant to pay Rs. 1,99,373/- for the said period in relation to the service rendered to MESCOM under contract under the category of "Practicing Chartered Accountant" was demanded.
The adjudicating authority held that the services rendered to MESCOM is taxable under the category of “Practicing Chartered Accountant" and confirmed the service tax demand of Rs. 1,99,373/- and appropriated an amount of Service Tax of Rs. 1,47,431/- and interest of Rs. 12,526/- already paid by the appellants and confirmed the demand of balance amount of Rs. 51,942/- and also imposed penalty.
The Commissioner (Appeals) vide order dated 02.08.2006 allowed the appeal of the assessee.
The Revenue appeal was dismissed by the CESTAT by order dated 23.01.2008.
Aggrieved, Revenue challenged the said order before the Karnataka High Court but this appeal was dismissed on 18.04.2011.
Thereafter, the appellant filed application for refund of Rs. 6,04,779/- [ST Rs. 1,47,431/- and interest of Rs. 12,526/-] for the period July 2003 to September 2004& tax paid of Rs. 4,08,749/- with interest of Rs. 27,895/- for the period October 2004 to March 2006.
The claim was denied by the lower authority, but in appeal, the Commissioner(A) partly allowed the same.
The appellant is before the CESTAT against this order.
It is submitted that the total amount of service tax of Rs. 6,04,779/- paid by the appellant has to be considered as paid Under Protest; that it is a settled law that when an assessee goes in appeal against an order of assessment and against the demand, that itself is a protest and no formal letter as required under Rule 233B of Central Excise Rules is necessary as held in the cases of CCE Vs. BCL Forgings Ltd. - 2005-TIOL-831-CESTAT-MUM and CCE Vs. ITC - 2004-TIOL-112-SC-CX-LB.
It is further submitted that the Commissioner (Appeals) has wrongly held that the appellant when challenging the demand for a particular period gets the consequential benefit if the final appellate order is in his favour and for the subsequent period the appellant should have paid the contested tax under protest and therefore consequential refund cannot be for period not covered by the appellate proceedings.
These findings of the Commissioner(A), the appellant says, is beyond the allegation made in the show-cause notice dated 20.06.2012 as the show-cause notice had proposed to reject the refund only on the ground that the entire refund claim filed by the appellant was barred by time as the appellant should have filed the refund claim within one year from the date of Order-in-Appeal dated 02.08.2006 and not from the date of the order dated 18.04.2011 passed by the High Court of Karnataka.
That the impugned order partly dismissed the appeal by disallowing the refund of Rs. 4,08,749/- and interest of Rs. 27,985/- [total Rs. 4,44,820/-]and which is unsustainable in law being beyond the show-cause notice.
Reliance is placed on –
CCE Vs. Sun Pharmaceuticals Inds. Ltd. - 2016-TIOL-10-SC-CX
Caprihans India Ltd. Vs. CCE - 2015-TIOL-244-SC-CX
SACI Allied Products Ltd. Vs. CCE - 2005-TIOL-73-SC-CX-LB
Reckitt & Coleman of India Ltd. Vs. CCE - 2002-TIOL-813-SC-CX
Bharat Auto Cars Pvt. Ltd. Vs. CCE - 2015-TIOL-2832-CESTAT-BANG
KVR Constructions Vs. CCE - 2010-TIOL-68-HC-KAR-ST
Further submissions are –
+ That the appellants are entitled for interest on delayed payment as the refund was not sanctioned within three months from the date of filing the refund application which was filed on 16.05.2012 and as per Section 11BB of the CEA r/w Section 83 of the FA, 1994 - Ranbaxy Laboratories Vs. UOI - 2011-TIOL-105-SC-CX relied upon.
+ That by O-in-O, the Deputy Commissioner for earlier period July 2003 to September 2004 sanctioned interest of Rs. 12,747/- on refund amount of Rs. 1,47,431/-.
The AR justified the impugned order by reiterating the findings therein.
After considering the submissions, the Bench observed –
+ In the show-cause notice there was a proposal to reject the refund only on the ground that the entire refund claim filed by the appellant was barred by time whereas in the impugned order, the learned Commissioner (Appeals) has partially allowed the refund claim and partially disallowed the same.
+ The various decisions cited by the appellant clearly held that a new case cannot be made out at the appellate level and the Department cannot travel beyond the show-cause notice.
+ The entire duty was deposited during the pendency of the ongoing litigation between the assessee and the Department and in that case the entire deposit will be deemed to be Under Protest and the appellant has filed the refund claim after the decision of the Karnataka High Court wherein the Department's appeal was dismissed and thereafter the Department did not file the appeal before the Apex Court.
+ From the decision of the Karnataka High Court dated 18.04.2011, the refund was filed on 16.05.2012. Since the litigation was going on, therefore, the amount deposited by the appellant will be deemed to be under protest and no limitation as prescribed under Section 11B will be applicable.
+ In view of the decision of the Karnataka High Court in the case of KVR Constructions cited supra, the amount deposited by the assessee to the Revenue has to be treated as deposit at the hands of the Government and hence the limitation to claim refund under provisions of Section 11B is not applicable.
Conclusion:
++ I allow the appeal of the appellant and hold that the appellant is entitled to refund of Rs. 4,44,820/-.
++ The appellant is also entitled to interest after the expiry of three months from the date of filing the refund application which was filed on 16.05.2012 as per the judgment of the Hon'ble Supreme Court in the case of Ranbaxy Laboratories cited supra.
The appeal was allowed with consequential relief.
(See 2017-TIOL-3395-CESTAT-BANG)
