By Puloma Dalal, Jayesh Gogri, Mandar Telang, Chartered Accountants
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For tax paid on services consumed outside SEZ, exemption is not available under Notification No. 4/2004-ST dated 31st March, 2004.
In case service tax is paid on such services, the refund application should be filed u/s. 11B of the Central Excise Act, 1944 read with section 83 of the Finance Act, 1994 within 1 year from the relevant date as no procedure was prescribed under the said notification 4/2004.
Service recipient can claim refund of service tax only when incidence of service tax is not passed on.
Refund under Notification no. 9/2009-ST dated 4th March, 2009 is available subject to fulfilment of prescribed conditions only.
Facts:
The appellant paid service tax due to ambiguity in Notification No. 4/2004-ST dated 31st March, 2004. Therefore, the appellant filed a refund claim in view of section 26(e) of the SEZ Act, 2005 read with Rule 31 of the SEZ Rules, 2006 which states that no service tax is leviable in relation to authorised operations in SEZ. The refund got rejected on the following grounds:
• Refund can be filed by the person who pays service tax and not by service recipient
• Unjust enrichment
• Part amount on the basis of time bar
• No provisions to refund service tax paid on services consumed outside SEZ.
Held:
The Tribunal observed that since service tax was not payable under Notification No. 4/2004-ST dated 31st March, 2004 but was paid by the appellant, they could claim the benefit of refund of service tax. However, there being no procedure to claim refund under the said Notification, the refund application ought to have been filed under section 11B of the Central Excise Act, 1944 read with section 83 of the Finance Act, 1994. The Tribunal held that refund claim was not filed within 1 year from the relevant date i.e., the date of payment of service tax and accordingly, part refund was held to be time barred. Since there were no provisions to refund service tax paid on services consumed outside SEZ, the Commissioner (Appeals) order upheld the rejection. Service recipient can claim refund of service tax only when incidence of service tax was not passed on. In the present case, there was no evidence to prove absence of unjust enrichment and thus refund was not available to the appellant. Though part period was covered by Notification No. 9/2009-ST dated 4th March, 2009, since the appellant had not filed refund claim under the said Notification No. 9/2009-ST and in absence of evidence on records of fulfilment of conditions prescribed under the notification, refund was not allowed.
