Allahabad High Court
M/S Premier Car Sales Ltd.Shahnazaf ... vs Commissioner Of Cental Excise & Service ... on 21 August, 2019
Equivalent citations: AIRONLINE 2019 ALL 1351, (2019) 9 ADJ 547 (ALL)
Bench: Devendra Kumar Upadhyaya, Alok Mathur
HIGH COURT OF JUDICATURE AT ALLAHABAD, LUCKNOW BENCH Reserved on 08.07.2019 Delivered on 21.08.2019 Court No. - 5 AFR (1) Case :- CENTRAL EXCISE APPEAL No. - 21 of 2019 Appellant :- M/S Premier Car Sales Ltd.Shahnazaf Road Lko.Throu.Director Respondent :- Commissioner Of Central Excise & Service Tax Ashok Marg Lko. Counsel for Appellant :- Pradeep Agrawal Counsel for Respondent :- Dipak Seth (2) Case :- CENTRAL EXCISE APPEAL No. - 22 of 2019 Appellant :- M/S Premier Car Sales Ltd.Shahnazaf Road Lko.Throu.Director Respondent :- Commissioner Of Central Excise & Service Tax Ashok Marg Lko. Counsel for Appellant :- Pradeep Agrawal Counsel for Respondent :- Dipak Seth Hon'ble Devendra Kumar Upadhyaya,J.
Hon'ble Alok Mathur,J.
(Delivered by Hon'ble Alok Mathur, J.)
1. Heard Sri Pradeep Agrawal, learned counsel for the appellant, and Sri Dipak Seth, learned Counsel appearing for the Revenue-respondent.
2. Since both the appeals have been preferred by the same appellant against common impugned judgment and order and involve similar question of law, with the consent of learned counsel for the parties they are being decided by this common judgment.
3. The aforesaid appeals, under section 35G of the Central Excise Act, 1944 (hereinafter referred to as "the Act, 1944") have been preferred against the order dated 10/09/2018 passed by the Customs, Excise and Service Tax Appellate Tribunal, Allahabad (hereinafter referred to as "the CESTAT").
4. The appellant in the aforesaid appeals is the authorised dealer of Hyundai brand of motor vehicles and has been providing taxable services of "business auxiliary services", "service of motor vehicle" and "transport of goods" by road.
5. The controversy involved in the present appeals has arisen due to the rejection of the application preferred by the appellant for refund of the Service Tax deposited by it on account of "logistic charges" during the period 2009-10 to 2010-11.
6. Before the Assistant Commissioner (Service Tax), Central Excise Division-I Lucknow the appellant moved an application for refund in respect of its registered premises at Mahanagar and Head Quarters, claiming refund of Rs.9,39,413/- and Rs.10,81,034/-respectively, stating that the appellant was already paying Value Added Tax (hereinafter referred to as "VAT") as assessed by the Commercial Tax Department on the logistic charges, and therefore both VAT and Service Tax could not be levied simultaneously. Both the refund claims were rejected by the Assistant Commissioner by passing the order dated 30/11/2012, on the ground that the application was filed "beyond limitation" and also on the ground of "unjust enrichment" as the appellant did not submit any proof that the incidence of Service Tax paid had not been passed on to any other person.
7. The appellant preferred an appeal before the Commissioner of Central Excise (Appeals) under Section 85 of the Finance Act, 1994 stating that the refund pertains to the period commencing from 06/01/2010 and the refund claim is not barred by time in as much as the limitation of one year is applicable only for the cases where excess payment of tax or the credit has not been utilised, and in the present case the amount of Service Tax was deposited under the instructions of the Department, under protest.
8. It was further submitted that the tax has been deposited by the appellant from its own pocket and therefore there was no question of passing the burden of Service Tax on anyone else, and hence the refund could not have been refused on the ground of unjust enrichment.
9. The Commissioner (Appeals) by means of his order dated 20/08/2014 rejected the appeal of the appellant by holding that Service Tax can validly be imposed upon the logistic charges collected by the appellant , and consequently, the question of refund did not arise in light of the fact that the Service Tax was levied correctly.
10. The appellant had claimed the refund of Service Tax on account of the fact that the Department of Commercial Tax had imposed VAT on the logistic charges considering it as part of sale price, and in case Service tax is also levied then it will amount to Double Taxation, which is impermissible in law.
11. The Joint Commissioner (Corp. Circle), Commercial Tax Department-I, Lucknow confirmed the VAT liability amounting to Rs.5,58,985/- (14.5% on the logistic charges of Rs. 38,53,095), by means of order passed under section 25 (1) of the U.P VAT Act on 24/01/2012.
12. With respect to imposition of VAT the appellant filed an appeal before the Additional Commissioner (Appeal-I), Commercial Tax Department, Lucknow on the ground that the Service Tax has been paid on the logistic charges and therefore requested for refund of the said amount. The imposition of VAT was confirmed on 30/07/2013 and 14/10/2013 respectively, and subsequently the appellant challenged the said orders before the Commercial Tax Tribunal Lucknow, and the same was dismissed by means of orders dated 25/01/2014 and 26/03/2014 and subsequently, it has been submitted that, Trade Tax Revisions have been preferred before the High Court being Trade Tax Revision No.43 of 2014 and Trade Tax Revision No. 70 of 2014. which are pending consideration.
13. With regard to the imposition of Service Tax the appellant, on rejection of the appeal by the Commissioner (Appeals) by means of order dated 20/08/2014, preferred a second appeal before the CESTAT which was rejected on 10/08/2018. The said order dated 10/08/2018 has been impugned before us in the present appeals.
14. A perusal of the impugned order would indicate that the CESTAT after considering the submissions of the appellant and the Revenue came to conclusion that the refund claimed by the appellant under section 11 B of the Act, 1944 was to be claimed within one year, and as the application for refund was filed beyond the period of limitation it was time-barred and on this ground alone the appeal of the appellant has been rejected.
15. The learned counsel for the appellant with regard to imposition of Service Tax has vehemently urged that in light of the fact that the charges within the expression "logistic charges" have already been determined to be "a Sale" within the meaning of the U.P VAT Act, therefore "Service Tax" cannot be levied on the same as it would amount to double taxation.
16. It is relevant to refer to the order of the Commissioner (Appeals) Customs, Central Excise and Service Tax, Lucknow dated 20/08/2014 wherein he has considered the question as to whether "logistic charges" are amenable to Service Tax, and has observed that the appellant started payment of Service Tax on "logistic charges" under the category of "business auxiliary service" in the financial year 2009-10 and has accepted the tax liability on the said charges. In the meanwhile the VAT authorities have decided the issue by holding that actual nature of "logistic charges" should be classified as "goods" on which tax leviable as "logistic charges" are incurred before sale of goods and are therefore considered as part of sale price. It was further considered that the applicant himself has not accepted the order of the VAT authorities and has challenged the order before the High Court. The appellant is in the business of selling cars, and in addition to the amounts shown in the sale invoice, was also charging an amount Rs. 5000/- as "logistic charges" in lieu of transportation/delivery of car at the doorstep of the buyer. It was in light of the above fact that the Department took the stand that as it was the service of transportation/delivery of goods by the appellant, Service Tax was leviable and therefore concluded that the department has rightly levied service tax on the logistic charges, and the applicant himself has also not accepted the decision of the VAT authorities and therefore there was no question of refund of Service Tax on such amount during the period in question.
17. Before the CESTAT it was contended by the appellant that he was already discharging Service Tax on the same transaction value, and subsequently the same transaction was subjected to VAT which, according to him, was the correct classification, and therefore he had filed an application for refund of the Service Tax. It was fairly conceded by him that the Service Tax was neither deposited under protest nor was there any provisional assessment, but vehemently urged that only one taxe is payable by the appellant, and therefore applied for the refund of Service Tax under the provision of Section 11 B of the Act, 1944.
18. The CESTAT held that an application for refund is governed by provisions section 11 B of the Act, 1944, wherein the limitation of one year has been prescribed and there being no provision for extension of the said period, it further held that the refund was filed beyond the period of limitation, and on this ground alone, rejected the appeal.
19. The following substantial questions of law arise in these cases for our consideration are as follows:-
1. Whether the CESTAT was Justified in holding that Section 11-B of the Act, 1944 was attracted in the present case where there is a limitation of one year for claiming refund ?
2. Whether the appellant was entitled for refund of the amount deposited as Service Tax?
20. The controversy with regard to the issue as to whether a transaction would be amenable to "Service Tax" or "VAT" has drawn the attention of the Hon'ble Supreme Court in a number of cases. In the case of Bharat Sanchar Nigam Ltd vs Union of India (supra), where the issue was as to whether on the sale of SIM card, Sales Tax could be leviable or the same was a service subjected to Service Tax , the Hon'ble Supreme Court after extensively dealing with all the constitutional provisions, in paragraph 87 of the judgment concluded that the same would depend upon the intention of the parties. But we are not called upon to adjudicate this issue in the present case in as much as only the question of refund of Service Tax has been raised by the appellant on the ground that VAT has already been levied by the Commercial Tax Authorities.
21. Section 11B of the Act, 1944 provides for refund of Service Tax, which is quoted herein below :
"SECTION 11B. Claim for refund of [duty and interest, if any, paid on such duty. -- (1) Any person claiming refund of any [duty of excise and interest, if any, paid on such duty] may make an application for refund of such [duty and interest, if any, paid on such duty] to the [Assistant Commissioner of Central Excise or Deputy Commissioner of Central Excise] before the expiry of [one year] [from the relevant date] [[in such form and manner] as may be prescribed and the application shall be accompanied by such documentary or other evidence (including the documents referred to in section 12A) as the applicant may furnish to establish that the amount of [duty of excise and interest, if any, paid on such duty] in relation to which such refund is claimed was collected from, or paid by, him and the incidence of such [duty and interest, if any, paid on such duty] had not been passed on by him to any other person :
Provided that where an application for refund has been made before the commencement of the Central Excises and Customs Laws (Amendment) Act, 1991, such application shall be deemed to have been made under this sub-section as amended by the said Act and the same shall be dealt with in accordance with the provisions of sub-section (2) substituted by that Act :] [Provided further that] the limitation of [one year] shall not apply where any [duty and interest, if any, paid on such duty] has been paid under protest.
[ * * * * ] [(2) If, on receipt of any such application, the [Assistant Commissioner of Central Excise or Deputy Commissioner of Central Excise] is satisfied that the whole or any part of the [duty of excise and interest, if any, paid on such duty] paid by the applicant is refundable, he may make an order accordingly and the amount so determined shall be credited to the Fund :
22. From a bare perusal of Section 11B of the Act, 1944 it is clear that an application for refund has to be made within a period of one year from the relevant date. The appellant made an application for refund on 21/04/2012 for the refund of Service Tax deposited for the financial year 2009-10 and 2011-12 (April - June).
23. In the reply submitted by the appellant to the show cause notice, the fact that the application for refund was moved beyond the period of limitation has not been disputed by him, but he had raised the plea that the Service Tax was deposited under protest, and therefore, according to the second proviso of Section 11 B of the Act of 1944, the time period would not hinder the refund in favour of the appellant. While arguing before CESTAT he had himself conceded that the "Service Tax" was not deposited under protest, thereby disentitling him from the benefit of the second proviso of Section 11 B of the Act. .
24. The Hon'ble Apex Court, recently, while considering the period of limitation as prescribed under Section 11B of the Act, 1944 in the case of Western Coalfields Ltd v. Commissioner of Central Excise Trichy/Madurai, AIR 2019 SC 1069 has observed as under :-
"11. It is not disputed that the excise duty was paid by the manufacturer (M/s. Fenner (India) Ltd.) under protest to the department and the dispute with regard to the classification of the product finally came to be decided by this Court in Fenner India's case (supra) and the manufacturer M/s. Fenner (India) Ltd. never moved any application for refund of the excise duty at any given point of time. The appellant herein is the buyer and purchased conveyor beltings from the manufacturer M/s. Fenner (India) Ltd. during the period 20th July, 1988 to 15th January, 1994 indicated in Civil Appeal No. 7625 of 2005. The period for which the refund of excise duty has been claimed differs but in all the cases, applications have been filed by the appellant(buyer) much after the period of limitation which was six months from the date of purchase of goods at the time of filing of the application to claim refund under Section 11B of the Act.
12. Section 11B deals with the claim of refund of duty as paid on his own accord by any person for refund of such duty to the competent authority before the expiry of six months from the relevant date as prescribed but where the duty was paid under protest in terms of the 2nd proviso to Section 11B(1), the period of limitation may not apply. Although the buyer can also apply for refund provided the duty of excise is borne by the buyer and he had not passed on the incidence of such duty to any other person as referred to under Section 11B(2)(e) and the application has been moved within the period of six months from the relevant date of purchase of the goods by such person in terms of Section 11B(5)(B)(e) of the Act. The scheme of Section 11B makes a distinction between right of the manufacturer to claim refund from right of the buyer to claim refund treating them separate and distinct for making an application for refund exercising their right under Section 11B of the Act and it has been examined by the three-Judge Bench of this Court in Commissioner of Central Excise, Mumbai-II v. Allied Photographics India Ltd. case (supra) as under:--
"Therefore, Section 11-B(3) stated that no refund shall be made except in terms of Section 11-B(2). Section 11-B(2)(e) conferred a right on the buyer to claim refund in cases where he proved that he had not passed on the duty to any other person. The entire scheme of Section 11-B showed the difference between the rights of a manufacturer to claim refund and the right of the buyer to claim refund as separate and distinct. Moreover, under Section 4 of the said Act, every payment by the manufacturer whether under protest or under provisional assessment was on his own account. The accounts of the manufacturer are different from the accounts of a buyer(distributor). Consequently, there is no merit in the argument advanced on behalf of the respondent that the distributor was entitled to claim refund of "on-account" payment made under protest by the manufacturer without complying with Section 11-B of the Act."
13. It was further held as under:--
"Having come to the conclusion that the respondent was bound to comply with Section 11B of the Act and having come to the conclusion that the refund application dated 11-2-1997 was time-barred in terms of Section 11B of the Act, we are not required to go into the merits of the claim for refund by the respondent who has alleged that it has not passed on the burden of duty to its dealers."
14. It may be appropriate to notice that the view earlier expressed by the two-Judge Bench of this Court in National Winderv. Commissioner of Central Excise, Allahabad, (2003) 11 SCC 361 was held to be per incuriam in Commissioner of Central Excise, Mumbai-II v. Allied Photographics India Ltd. case (supra).
15. In the instant case, indisputedly the application was filed by the appellant as a buyer of the goods(conveyor belts) from M/s. Fenner (India) Ltd. who paid the duty under protest much after a period of limitation(six months) as prescribed under the mandate of law disentitles the claim of refund to the appellant as prayed for in view of the judgment of this Court in Commissioner of Central Excise, Mumbai-II v. Allied Photographics India Ltd. case (supra) holding that the purchaser of the goods was not entitled to claim refund of duty made under protest by the manufacturer without complying the mandate of Section 11B of the Act, 1944.
16. In our considered view, the appeals are without substance and deserve to be rejected. Consequently, the appeals fail and are accordingly dismissed."
25. In light of the above we are of the opinion that the application for refund of Service Tax having been moved beyond the period of limitation prescribed, was rightly rejected and further the appellant had himself conceded before the CESTAT that Service Tax was not deposited under protest nor was there any provisional assessment. We therefore do not find any infirmity in the order of CESTAT.
26. What we find is that it is not disputed that Service Tax has been levied on the "logistic charges" charged by the appellant in view of transportation/delivery of car at the doorstep of the buyer and the same amounts to service of transportation/delivery of goods on which the appellant has paid Service Tax. He had moved the application for refund of Service Tax only subsequent to the order passed by VAT authorities simultaneously levying VAT on the "logistic charges", which has not been accepted by the appellant. The law in this regard is also settled in the case of Imagic Creative (Supra) where the Hon'ble Supreme Court has held that payment of Service Tax and also VAT are mutually exclusive. Therefore, they should be held to be applicable having regard to the respective parameters of Service Tax and Sales Tax as envisaged in a composite contract as contra-distinguished from an indivisible contract. It may consist of different elements providing for attracting different nature of levy. It is, therefore, difficult to hold that in the case of this nature, VAT would be payable on the value of the entire contract, irrespective of the element of service provided. The order of the assessing authority, thus appears to be correct.
27. The appellant appears to be challenging the levy of VAT on one hand, and on the other also trying to establish that the service tax is not applicable on "logistic charges". With regard to the levy of Service Tax the Commissioner (Appeals), Custom Central Excise and Service Tax, Lucknow, after examining the set of facts arising in the present case, have held that the amount charged towards provision of service of transportation/delivery of goods is leviable to Service Tax, and this finding of fact has also been accepted by the CESTAT. No other argument has been brought to our notice nor any reasoning has been placed before us for unsettling this position, and therefore Service Tax was rightly levied on the appellant. Once it is established that Service Tax has rightly been levied then there would be no occasion to refund the same.
28. Even otherwise, as discussed above the application for refund should have been moved within a period of one year, which was admittedly moved beyond the stipulated period. As already held by the Apex Court the application moved beyond the statutory period prescribed in Section 11-B of the Act, 1944, would be time barred and the claim of the appellant could not have been admissible on this score also.
29. In light of the above the questions raised in the present appeal are answered accordingly.
30. The appeals being devoid of merits are dismissed.
Order Date :- 21.08.2019 A. Verma