By Puloma Dalal, Jayesh Gogri, Mandar Telang Chartered Accountants
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Once it is proved that service tax is not passed on to the customer, refund shall be granted. Departmental Officials shall provide appropriate advice to Government Organisations.
Facts:
The petitioner, a Government of India undertaking made payment of service tax on a non-taxable service inadvertently. Refund claim filed was partly disallowed as it was time barred and partly allowed on the condition of submission of proof to the effect that the liability was not passed on to the consumer.
It was contended that since it is a Government undertaking, the provisions of time limit u/s. 11B of the Central Excise Act, 1944 need not be applied.
The respondents contended that though the activity was not covered under service tax net, vide Circular dated 18- 12-2002, the activity was leviable to service tax. Further, since requisite documentary proof was not submitted and the claim was barred by limitation, the petitioner was not entitled to refund.
Held:
The departmental officials shall differentiate between the ordinary assessee and Government of India undertaking and not pass orders mechanically. When it was asserted that the liability was not passed on to the customer, department could have verified the said fact.
The Circular relied upon by the respondents was already withdrawn by CBEC vide Circular dated 13-05-2004 and they did not act bonafide to the extent that no reference of such withdrawal was made.
Accordingly, the writ petition was allowed and the respondents were directed to refund the amount with interest within four weeks from the date of this decision failing which, the official shall be personally held responsible for contempt of Court.
