By TIOL News Service

MUMBAI, AUG 09, 2018: THIS is a Revenue appeal.

The respondent is engaged in manufacturing of fruit pulp, juices and vegetable products [Ch.8] and is also registered with the Service Tax department in respect of the taxable services viz. GTA, Manpower Recruitment or Supply Agency Service and Security Service.

Being a recipient of taxable service, the respondent discharges the service tax liability under reverse charge mechanism in terms of s.68(2) of FA, 1994.

The respondent had filed a claim u/r 5B of the CCR, 2004 seeking refund of service tax paid on the taxable services received by it.

This claim was rejected as non-maintainable on the ground that the respondent being a recipient of taxable service is not a service provider and the provisions of Rule 5B r/w Notification No. 12/2014-CE(N.T.) are not applicable.

The Commissioner (Appeals) set aside the impugned order and, therefore, Revenue is in appeal.

The AR relied upon the Tribunal [SMB] decision dated 29.11.2017 - 2018-TIOL-492-CESTAT-MUM passed in the respondent's own case and where it is held that rule 5B does not have any application in the assessees case.

The respondent relied upon the decision in United News of India - 2017-TIOL-311-CESTAT-DEL in support of the impugned order.

The Bench considered the submissions and observed –

+ It is an admitted fact on record that the respondent does not provide any taxable service and is also not registered with the Service Tax department for providing any taxable service.

+ However, the respondent is registered with the department for payment of service tax on the taxable services received by it and discharged the service tax liability on reverse charge mechanism, as provided under sub-section (2) of Section 68 of the Finance Act, 1994.

+ Since the respondent discharged the service tax liability in the capacity of recipient of service, Rule 5B should be equated with Rule 5 of the rules, for grant of refund of service tax paid on the taxable services.

Noting that the Tribunal in the case of United News of India - 2017-TIOL-311-CESTAT-DEL and Cummins Technologies India Ltd. – 2017-TIOL-3470-CESTAT-DEL have held that when the recipient pays service tax on receiving the taxable service, the provisions of section 66 of the Act [pari-materia with Section 68(2)] should be available for claim of the benefit contained in the Notification 17/2004-ST dated 10.09.2004, the Single Member Bench constituted by the Member (Judicial) concluded that there is no infirmity in the order passed by the Commissioner (A).

As for the case of the respondent viz. - 2018-TIOL-492-CESTAT-MUM cited by the AR in support of the appeal filed, the Member(J) viewed that the Tribunal in that case had not specifically discussed the issue of liability to pay service tax by the recipient of service and its implication for claiming the benefit through refund claim; that such aspect had not been discussed by the Tribunal, owing to the reason that the same was not pleaded by the parties to such appeal. Inasmuch as the said decision will not have any binding precedent for deciding the case in hand, held the Member(J).

In fine, the Revenue appeal was dismissed.

(See 2018-TIOL-2457-CESTAT-MUM)