By TIOL News Service

MUMBAI, DEC 20, 2018: THE assessee had filed a claim on 27.09.2006 seeking refund of excess service tax paid by them during the period October 2005 to December 2005 amounting to Rs.92,88,777/-.

The claim was rejected by an order dated 19.10.2007 as being unsubstantiated since documents including the invoices were not filed.

Commissioner(A) heard the appellant on 15.02.2011 and set aside this order on 29.04.2011.

Consequently, the Assistant Commissioner sanctioned the refund vide order dated 19.08.2011 but did not allow any interest.

Again, the assessee went in appeal.

The Commissioner(A) by order dated 12.08.2015 held that the assessee was entitled for interest but for the period after 15.05.2011, i.e. three months after he had last heard the appellant since the documents were submitted before him only on 15.02.2011.

However, the Appellant contended that they were eligible for interest for the period beyond three months of filing the initial claim i.e. from 27.12.2006 as the claim for refund was filed on 27.09.2006. They are, therefore, before the CESTAT and seek to place reliance on the decision in Shelf Drilling International Inc. - 2016-TIOL- 2187-HC-MUM-Cus.

Revenue is also aggrieved by the order of Commissioner(A) and submits that they had allowed the refund within three months of the receipt of the order in appeal dated 29.04.2011 and hence there is no interest payable as per section 11BB of the CEA, 1944.

Both the appeals were heard together by the Bench.

After extracting the provisions of section 11B of the CEA, 1944 and paragraph 2.4 of Chapter 9 (Refunds) of the CBEC Manual of Supplementary Instructions, the CESTAT inter alia observed -

++ In case where the refund claim has been filed without the supporting documents then in that case, the refund claim cannot be deemed to be filed on the date when it is physically filed with the jurisdictional officer but can be the date when all the supporting documents in support of the claim has been filed.

++ In view of above the refund claim cannot be treated as filed till it is filed along with all the supporting documents. Tribunal has in case of Reliance Industries - 2014-TIOL-2454-CESTAT-AHM held that if the prescribed documents were not submitted with the refund application, the same cannot be treated as complete application.

++ In the present case though the refund application was filed 27.09.2006, but the same was not substantiated by the proper documents. Accordingly the same was rejected by the jurisdictional Assistant Commissioner on this ground vide his order dated 19.10.2007. Commissioner (Appeal) has in his order dated 12.08.2015 observed in para 6 that "…On going through the O-I-A dated 29.04.2011, I find that the Commissioner (Appeal) in his order allowed the appeal only after going through the relevant invoices and documents submitted on 15.02.2011 by the Appellant in the office of Commissioner (Appeal) evidencing the payment of excess amount of service tax. The fact that the documents were submitted by the appellant on 15.02.2011 for the first time was admitted during the hearing on 24.03.2015. The said invoices & other documents were crucial for verifying the claim of the appellant. In absence of the said documents, the refund claim cannot be considered as complete refund application." These observations of the Commissioner (Appeal) have not been assailed by the Appellant in his appeal or by the counsel during the course of argument…

++ After receipt of the complete documents on 15.02.2011 and their verification Commissioner (Appeal) has vide order dated 29.04.2011 sanctioned the refund claim and set aside the order of the adjudicating authority dated 19.10.2007. Thus interest in terms of Section 11BB becomes payable to the appellant only after expiry of three months from the date of submission of supporting documents i.e. 15.02.2011.

Concluding that the order of Commissioner (Appeal) cannot be faulted, the appeal filed by the assessee was rejected.

As for the Revenue appeal, the Bench observed -

"… We are clearly of the opinion that the second order sanctioning the refund claim by the Adjudicating Authority was not required as Commissioner (Appeal) has vide order dated 29.04.2011 allowed and sanctioned the refund claim in favour of the party. In terms of explanation to section 11BB, the said order of Commissioner (Appeal) was deemed to be an order under sub-section (2) to Section 11B. If that be so the reasons for again undertaking the adjudication proceedings to sanction the refund claim was totally uncalled for. Since in terms of the said explanation the order of Commissioner (Appeal) is deemed to be order under section 11B(2), he could not have but adjudicated upon a refund application filed before him on the date when the party has submitted all the documents in its support. Section 11BB do not provide to count three months from the date of order of Commissioner (Appeal) or the date of receipt of order of the Appellate Authority by the jurisdictional Assistant Commissioner. On the contrary section is very clear in stating that interest is to be paid after expiry of three months from the date of filing of the refund claim."

Revenue has also taken another ground in appeal and that is that if the refund was deemed to have been filed on 15.02.2011, then it should have been held as barred by limitation.

To this contention, the CESTAT observed that since the Revenue had not challenged the order dated 29.04.2011 of the Commissioner(A) and had in fact sanctioned the refund, such a ground could not now be taken.

The Revenue appeal was also held as being devoid of merits.

In fine, both the appeals were rejected.

(See 2018-TIOL-3814-CESTAT-MUM)