By TIOL News Service

MUMBAI, DECEMBER 11, 2018. THE appellant executed certain maintenance, repairing and construction work for Mazagon Dock Ltd. (MDL) and Tata Power through work contract agreement and after completion of the work, rate was reduced on renegotiation by both firms against which appellant raised credit notes to their customers for differential rate in the value of services provided and service tax component.

Accordingly, refund claim for excess service tax paid between the period April 2013 to March 2014 amounting to Rs.28,18,361/- was filed on 30.07.2015.

The claim was rejected by invoking Section 11B of the CEA, 1944 as applicable to service tax and on the ground that the same was not filed within the stipulated time.

The Appellant did not challenge the rejection order but put forth a claim that it was eligible to avail CENVAT credit as per Rule 6(3) of the STR, 1994 in respect of the amount claimed as refund and which was refused.

In appeal before the CESTAT, the appellant has placed reliance on the decisions in Tata Consultancy Services Ltd. 2012-TIOL-1034-CESTAT-MUM, Bajaj Allianz General Insurance Co. Ltd. 2014-TIOL-1540-CESTAT-MUM, Indorama Synthetics India Ltd. 2018-TIOL-1988-CESTAT-MUM to drive home the point that they are eligible for CENVAT credit in respect of inadmissible refund and Notification 9/2009-ST has not put any embargo for such availment of CENVAT credit.

The AR suggested that the matter could be remanded for examination of eligibility of appellant to avail CENVAT credit under Rule 6(3) of the STR.

Rule 6(3) of the STR, 1994 reads-

(3) Where an assessee has issued an invoice, or received any payment, against a service to be provided which is not so provided by him either wholly or partially for any reasonor where the amount of invoice is renegotiated due to deficient provision of service, or any terms contained in a contract, the assessee may take the credit of such excess service tax paid by him, if the assessee.-

(a) has refunded the payment or part thereof, so received for the service provided to the person from whom it was received; or

(b) has issued a credit note for the value of the service not so provided to the person to whom such an invoice had been issued.

The Bench noted that the refund claim filed on 30.07.2015 pertained to the period ending March 2014 and clause (f) of Explanation (B) to section 11B of CEA, 1944 mandated that date of payment is to be taken into consideration for computation of one year period to file the refund application; that the adjudicating authority had given a clear finding that provision of Rule 6(3) of the STR, 1994 is fully applicable to the present refund claim and that the claimant did not receive the value of the services provided under the STR for which refund is claimed.

The CESTAT also mentioned about the order-in-appeal wherein it is observed that the applicant had not been prudent to follow the procedure provided (u/r 6(3) of STR, 1994) in the case of excess payment and since they had applied for refund u/s 11B after the limitation period, the order-in-original was sustainable.

It was also observed that although the appellant had made a request before the Commissioner(A) for adjustment of excess payment, such relief was refused on the ground that it was not the subject matter of appeal.

The Bench, therefore, opined that in view of the apex Court decision in MIL India Ltd. - 2007-TIOL-30-SC-CXthe Commissioner (Appeals) could have also acted as an adjudicating authority and he ought not to have confined his findings to the order appealed.

It is further observed-

"7. There is no denying of the fact that adjudication of tax dispute being made by quasi judicial authorities, all provisions of the Code of Civil Procedure is not directly applicable to it. But when there is no express provision made to meet such a contingency which is not contemplated in the procedure prescribed for such adjudication of tax disputes, spirit of provision of civil procedure may be brought into service for effective adjudication. This fact is further fortified by the decision of the Hon'ble Supreme Court reported in M.P. Steel Corporation vs. CCE 2015 - 2015-TIOL-89-SC-CUS wherein spirit of Indian Limitation Act was pressed into service for condoning delay in filing appeals. Therefore, it would not be irrational to invoke order 7 rule 7 of the Civil Procedure Code, which empowers a court to grant such other relief which may always be given, as a court may think just, to the same extent as if it has been asked for…"

The Single Member Bench concluded thus-

"8. The appeal is allowed in part entitling the appellant to avail cenvat credit for the refused refund claim of Rs.28,18,361/- and the period of availment of such credit shall commence after the statutory appeal period of appeal is over. Order of the Commissioner (Appeals) is accordingly modified."

(See 2018-TIOL-3722-CESTAT-MUM)