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Rejection of refund claim of appellant held justifed by HC.
Rejection of refund claim of appellant held justifed by HC.
"Assistant Commissioner of CE, rejected refund claim of present appellant. On appeal Commissioner (A) confirmed it. On appeal HC held, When service tax was admittedly due & payable by provider of service & was validly paid pursuant to mutual payment arrangement between parties, no such irrelevant aspect can make amt. which was validly paid as service tax to be refundable. Thus, reasoning of both authorities below held sound & acceptable. "-900134
Facts in Brief:
1. The appellant challenges the order of the Commissioner (A), Raipur, made on 1.3.2005 upholding the order of the Assistant Commissioner of Central Excise, Division Bilaspur, passed on 29.11.2004 by which he had rejected the refund claim of the present appellant to the tune of Rs. 10,56,648/-.
HC held as under,
2. In case NKK is required to pay any tax, fine, penalty and/or interest arising due to JSPL not fulfilling its obligations under ARTICLES 5-1. 5-2 and 5-3, JSPL shall be required to compensate such tax, fine, penalty and/or interest paid, payable, incurred and or/suffered on or in relation to such legal/administrative charges, b y NKK in any jurisdiction".[All emphasis is added] 11.1 The service tax was chargeable on the service provider even as stipulated in the agreement, but the appellant instead of remitting it to the foreign party-service provider NKK Corporation, Japan, as required by Article 5.3, credited it to the Central Government by filing the return to discharge the statutory liability of the service provider in respect of the value of the taxable service.
3. The service provider instead of collecting service tax from the appellant as per the invoice dated 2.10.2002 had imposed an obligation on the appellant to pay that amount in the treasury, as contemplated in Article 5.1 which provided that in the case of taxes payable by NKK Corporation, i.e., the foreign service provider, they would be borne by JCPL, i.e., the appellant and that the JCPL agreed to bear such amount of service tax specified in para 5.3.
4. The appellant by paying the amount of service tax as per the invoice had in fact discharged the liability of the service provider pursuant to the obligation to do so, which was undertaken by the appellant under Clauses 5.1 read with Clause 5.3 of the agreement. If the appellant had not done so, it would have become liable to the service provider under Article 5.4 of the agreement.
5. It cannot, therefore, be said that the service tax was erroneously paid or that it was not payable in respect of the services provided to the appellant, though it was earmarked for deposit, as stated in the said invoice dated 2.10.2002 which was issued by the foreign service provider on the appellant. The attempt to shift the focus of the case from Section 68(1) to Section 68(2) is, therefore, wholly misconceived.
6. The service tax payable in respect of taxable service cannot become refundable merely because instead of the service provider collecting and crediting it to the Central Government, it was so credited by the recipient of service under their mutual arrangement. Any other view will amount to putting a premium on dishonest claim of refund of service tax due and paid in respect of the taxable service in question at the instance of the service provider by the recipient under their contractual arrangement.
7. We are not concerned with any hypothetical question, which was sought to be raised during the arguments as to what would have happened had the tax not been paid despite the contractual obligation undertaken by the appellant to pay it directly instead of sending it to the provider. When the service tax was admittedly due and payable by the provider of service and was validly paid pursuant to the mutual payment arrangement between the parties, no such irrelevant aspect can make the amount which was validly paid as service tax to be refundable.
8. It has not been disputed before us during the arguments that the benefit of the notification dated 16.12.2002 was not admissible to the appellant, since the service tax had become payable on 2.10.2002. The reasoning of both the authorities below is sound and acceptable on the question of the non-applicability of the exemption notification to the petitioner's case. We find ourselves in complete agreement with the reasoning adopted and findings reached by both the authorities below and find no warrant for interference with the impugned order on any of the contentions raised on behalf of the appellant.
Case Reference - Jindal Steel And Power Ltd. vs Commissioner Of Central Excise.
