Refund of claims cannot be barred by limitations: CESTAT

Refund of claims cannot be barred by limitations: CESTAT

The tribunal rules that customs authorities cannot apply a hyper-technical approach

The Customs, Excise and Service Tax Appellate Tribunal (CESTAT), Chennai, has observed that an application for refund of claims for service tax cannot be considered barred by limitation if it was moved within a year from the date of export, as mandated by the statutory notification.

Judicial member Sulekha Beevi directed that the amendment to the Finance Act, 2016 clearly provided for refund of service tax for services used up to the place of removal. Therefore, the customs authorities cannot apply a hyper-technical approach to it.

Allowing the appeal of VV Mineral versus Commissioner of Central Excise, she stated, "When the amendment has been given retrospective application, wherever the department has denied the refund claim, an assesse would be eligible for a refund. It is not necessary that there should be an order of rejection of refund. If litigation is at the stage of show cause notice and there is a proposal for rejection, the notice has to be adjudicated after considering the amendment brought forth vide the Finance Act, 2016."

"It cannot be said that the Adjudicating Authority has to first reject the claim and thereafter the assesse has to file a fresh claim under the amended notification of 2016. So, if an order of rejection is pending before the first appellate authority or the tribunal, it is not required to dismiss the appeal and direct the appellant to file a fresh refund claim," she added.

The judicial member made it clear that the intention of the government was very much clear from the notification to grant refund with effect from 2012. Clinging on to the technical formalities could not alter this.

The appellant was registered as an Export Oriented Unit (EOU), engaged in the business of garnet. It filed refund claims for the service tax paid by them on clearing and forwarding agency service, port service and customs agent service as per the 2012 notification, which mandated the claims to be filed within one year of the export of products.

Since an explanation was appended to it later, according to which the notification allowed rebate of service tax on taxable services, the appellant claimed refund of the service tax paid on the input services used by them till the port. But, show cause notices were issued to it in 2015 and 2016, rejecting the refund.

When a proposal was made in the Finance Bill, 2016 granting refund under the notification of 2012, the appellant re-filed its claims. After adjudication, the department allowed it to hold the rest of the claim time-barred.