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January 2014

2012 (32) STR 392 (Guj) C C Patel & Associates Pvt Ltd vs. UOI

By Puloma Dalal, Jayesh Gogri, Mandar Telang Chartered Accountants
Reading Time 2 mins
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Whether refund claim for services tax paid twice can be rejected on the ground of limitation?

Facts:
Appellant preferred refund claim for service tax paid twice (second time at the instance of department) against the Order of CESTAT rejecting the appeal filed by Appellate.

Appellant deposited service tax on billing basis instead of receipt basis that too before the due date. Respondent passed the orders raising the demand of service tax on the receipts realised in subsequent period, without adjusting the service tax paid at the time of billing. Appellant deposited the service tax demanded with interest and preferred a refund claim. Respondent rejected the refund claim on the ground of limitation and also due to possibility of unjust enrichment.

Held:
High Court after referring to provisions of section 68(2) & 68(3) of the Finance Act as existed at the relevant time, held that, Appellant had already deposited the entire tax on billing basis thus had complied the requirement of section 68. The logic advanced in the Order of Respondent while demanding the tax was fundamentally incorrect. Question of limitation in case of retention of service tax which was paid twice would not arise and such retention was without authority of law. Appellant has deposited the tax separately and second time under insistence of Revenue which was the subject matter of refund, hence principal of unjust enrichment was not applicable. Appeal was allowed with direction to refund the tax paid.

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