Custom, Excise & Service Tax Tribunal
Ms Lalitpur Power Generation Companay ... vs Ce & Cgst Allahabad on 10 July, 2025
Service Tax Appeal No.70656 of 2018
CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL
ALLAHABAD
REGIONAL BENCH - COURT NO.I
Service Tax Appeal No.70656 of 2018
(Arising out of Order-in-Appeal No.187/ST/Alld/2018 dated 23.03.2018 of the
Commissioner (Appeals) CGST & Central Excise, Allahabad)
M/s Lalitpur Power Generation Company Ltd.,..Appellant
(Mirchwara, Lalitpur)
VERSUS
Commissioner of Central Excise &
Service Tax, Allahabad ....Respondent
(Central Excise Diviion, Jhansi) APPEARANCE:
Shri Piyush Kumar, Advocate for the Appellant Shri A.K. Choudhary, Authorised Representative for the Respondent CORAM: HON'BLE MR. P.K. CHOUDHARY, MEMBER (JUDICIAL) HON'BLE MR. SANJIV SRIVASTAVA, MEMBER (TECHNICAL) INTERIM ORDER NO.15/2024 DATED 27.09.2024 INTERIM ORDER NO.13/2025 DATED 02.06.2025 FINAL ORDER No.70479/2025 DATE OF HEARING : 16.04.2024 DATE OF DECISIONS : 10.07.2025 SANJIV SRIVASTAVA:
This appeal is directed against Order-in-Appeal No.187/ST/Alld/2018 dated 23.03.2018 of the Commissioner (Appeals) CGST & Central Excise Allahabad. By the impugned order has upheld the Order-in-Original No.29- ST/REFUND/DC/2017 dated 07.06.2017 of the Deputy Commissioner, Central Excise Division, Jhansi rejecting the refund claim filed by the appellant for an amount of Rs. 61,15,061/-.
2.1 The appellant had filed refund claims for the refund of Swachh Bharat Cess and Krishi Kalyan Cess, for an amount of Rs.61,15,061/-, on 04.01.2017, before the jurisdictional Service Tax Appeal No.70656 of 2018 2 authorities claiming that the same has been wrongly charged by their service provider, namely, M/s Bajaj Infrastructure Development Company Ltd., Lalitpur (BIDCO), in the invoices raised on them (appellant).
2.2 In their refund claim, appellant submitted that M/s BIDCO had raised invoices for the advances towards the taxable services, prior to the levy of Swachh Bharat Cess and Krishi Kalyan Cess, and had charged Services Tax, Education Cess and Secondary & Higher Education Cess in these invoices. Subsequently, M/s BIDCO raised invoices for the progressive works carried out by them (M/s BIDCO) and the payments against these invoices, were adjusted from the advances. Further, in such invoices issued after the levy of the Swachh Bharat Cess and Krishi Kalyan Cess, Swach Bharat Cess and Krishi Kalyan Cess were wrongly charged and paid in the Government account.
2.3 During examination of the refund claim, it was noticed that the appellant had awarded contract to M/s BIDCO for carrying out the works of civil construction and erection, commissioning & installation. Since, the appellant failed to (i) provide the details of payment made in full to the service provider before the completion of the services or the progressive payments made from time to time which were adjusted by subsequent invoicing by M/s BIDCO, (i) submit the evidences that payment so made are inclusive of Service Tax or exclusive of Service Tax and the said payments were full & final to the contracted value and (ii) justify thạt Swachh Bharat Cess and Krishi Kalyan Cess were not liable to be paid, as the services provided by M/s BIDCO were already taxed. and they (appellant) were receiving services continuously, Show Cause Notice dated 07.03.2017 was, therefore, issued to them, for rejecting the refund claim.
2.4 The jurisdictional authority has vide his order in original referred in para 1 above, rejected the refund claim of the appellant, on the grounds raised in the Show Cause Notice and Service Tax Appeal No.70656 of 2018 3 also the appellant failed to provide the documents, such as, ST- 3 Returns, challans etc. 2.5 Aggrieved appellant filed appeal before the Commissioner (Appeal) which has been rejected as per the impugned order.
2.6 Aggrieved appellant has filed this appeal.
3.1 We have heard Shri Piyush Kumar, Advocate for the Appellant and Shri A K Choudhary, Authorized Representative for the revenue.
3.2 Arguing for the appellant learned counsel submits that-
Learned Commissioner in para 4.4.3 & 4.4.4 of the impugned Order has observed that contextual Running Invoices issued for performance of progressive work as part of continuous service in terms of 3rd proviso of Rule 4A(1) of Service Tax Rules, 1994 read with Rule 2(d) of POTR, 2011 attract the provisions of Rule 5 of POTR, 2011 and therefore, the Invoices issued beyond 14 days on new levy would attract SBC and KKC, which is ex-facie erroneous, as in terms of provisions of Section 66 of the Finance Act, 1994 till 01.06.2012 and Section 66B as introduced by the Finance Act, 2012 stipulated a charge of Service Tax on the value of all services (other than specified in negative list) provided or agreed to be provided; and in terms of 3rd proviso of Rule 4A(1) of the Service Tax Rules, 1994 and Rule 3 of POTR, 2011, liability to pay Service Tax was fastened on the date of issuance of Invoices for advance payment by BIDCO and receipt of such advance payment 6.2 In terms of Rule 2(e) of POTR, 2011, point of taxation means 'the point in time when a service shall be deemed to have been provided' and as per Rule 3 of Rules ibid wherein modalities for determination of point of taxation are defined,. envisage point of taxation to be (a) the time when the invoice for service provided or agreed to be provided is issued; or (b) when any advance amount is received by service provider; and as per proviso (i) to Rule Service Tax Appeal No.70656 of 2018 4 3, in case of continuous supply of service where the provision of the whole or part of the service is determined periodically on the completion of an event in terms of a contract, which requires the receiver of service to make any payment to service provider, the date of completion of each such event as specified in the contract shall be deemed to be the date of completion of provision of service; moreover as per explanation appended to Rule 3, wherever any advance is received by the service provider towards the provision of taxable service, the point of taxation shall be the date of receipt of each such advance The deeming provisions enshrined in Rule 2(e) and explanation to Rule 3 envisage a legal fiction that the service would deem to have been provided to the extent of advance payment on the date of receiving advance. In Appellant's respectful submission, in terms of Rule 3(b), proviso () thereof and explanation thereto, clearly imply that when service provider receives any advance for services to be provided on a future date, the date of issue of such Invoice for advance or receipt of such advance, would constitute the point of taxation for the purpose of determination of applicable rate of Service Tax to the extent of the value of advance payment and the rate applicable on such date, would be the effective rate of Service Tax for the purpose of determination of Service Tax in respect of services of value equal to such advance payment. The date of issuance of Running Invoice after part performance, wherein value of service has been adjusted against advance payment, would not constitute point of taxation for determination of rate and quantum of Service Tax to the extent of value of advance payment adjusted in the said Running Invoice Therefore, SBC and KKC charged in the contextual 75 Invoices issued by BIDCO against EPC Contract and 61 Invoices issued against WCT Contract wherein BIDCO has erroneously charged SBC and KKC, despite the entire amount having Service Tax Appeal No.70656 of 2018 5 been adjusted against advance received earlier, whereupon Service Tax liability as applicable on the date of receipt of advance was duly discharged, is ex-facie wrong Appellant reiterates that in terms of Rule 2(e), Rule 3 read with proviso (i) thereof and explanation appended thereto of POTR, date of issuance of Invoices for advance payment in terms of contextual Contracts and date of receipt of such advances would constitute the point of taxation and not the date of issuance of Running Invoices with 'Zero' Invoice Value arising out of adjustment of advance received, whereupon Tax was already charged Interpretation of Rule 5 adopted by learned Commissioner in his finding returned in para 4.4 is ex-facie misconceived and erroneous. Referring to Rule 5(b) of the POTR, 2011 and Explanations 1 & 2, learned Commissioner has held that SBC and KCC being new levy, the same would be applicable to all Invoices issued beyond 14 days from the date of introduction of new levy without taking into account provisions of Rule 5(a) of POTR, 2011, which mandates that no tax shall be payable to the extent the Invoice has been issued and the payment received against such Invoice before such service became taxable'. Learned Commissioner's aforesaid interpretation is also contrary to the provisions of Rule 4 of POTR, 2011, wherein legal framework for determination of point of taxation in case of change in effective rate of tax are enshrined Appellant submits that Clause (i) of Rule 4(b) prescribes that where Invoice has been issued and payment has been received prior to change of Tax rate point of taxation shall be the date of receipt of payment or date of Invoice whichever is earlier.
Appellant submits that harmonious construction of Rule 2(e), Rule 3(b), Proviso (i) to Rule 3, Explanation to Rule 3, Rule 4(b)() and Rule 5(a) of POTR, 2011 clearly manifest that the point of taxation wherever service Service Tax Appeal No.70656 of 2018 6 provider receives advance payment for providing service on a later date, the date of receipt of such advance payment or date of issuance of Invoice in respect of such advance payment, whichever is earlier, is the point of taxation i.e.deemed date of providing service to the extent of the advance payment. The interpretation adopted by learned Commissioner has rendered the aforesaid provisions otiose and hence, cannot be countenanced.
As regards learned Commissioner's reliance on Circular No. 144/13/2011-ST dated 18.07.2011 in para 4.4.2 to hold that subject 75 + 61 Invoices in respect whereof Appellant had filed subject refund claim would be subject to SBC and KKC, Appellant submits that interpretation of the Circular adopted by learned Commissioner is ex-facie misconceived. The Circular does not anywhere stipulate that value of services, in respect whereof payment have already been received by service provider in advance and whereupon Tax as leviable on the day of receipt of advance has already been discharged, would again become leviable to Tax at enhanced rate on the date of issuance of zero value Running Invoice issued after part performance of continuous supply of service In the present case, Invoices for advance payments were issued much before the advent of SBC and KKC and payments in lieu of those Invoices was also duly made by Appellant and received by BIDCO, the service provider prior to introduction of SBC and KKC. Thus, there being specific bar that no tax shall be levied to the extent the Invoice has been issued and payment has been received against such Invoice before introduction of new levy, learned Commissioner's finding that the Invoice issued beyond 14 days of the introduction of new levy shall be subject to payment of SBC and KKC, despite the Invoice value being zero and payment in lieu of those services referred and quantified in the invoices having been Service Tax Appeal No.70656 of 2018 7 received in advance much before the date of introduction of SBC and KKC holding that the Invoices issued 14 days after introduction of SBC and KKC is ex-facie wrong. SBC was introduced vide Section 119 of Chapter IV of Finance Act, 2015 and KKC was introduced vide Section 161 of Chapter VI of Finance Act, 2016 as Service Tax. Sub-section (2) of Section 1 19 prescribed that there shall be levied and collected a Cess called SBC as Service Tax and sub-section (5) of Section 119 provided that all provisions of Chapter V of Finance Act, 1994 shall be applicable to these levies. Similarly, sub-section (2) of Section 161 prescribed that there shall be levied and collected a Cess called KKC as Service Tax and sub- section (5) of Section 161 provided that all provisions of Chapter V of Finance Act, 1994 shall be applicable to these levies.
Therefore, SBC and KKC at the most can be construed as enhancement of rate of Service Tax which cannot be applied to the amounts received as advance earlier, whereupon Service Tax and applicable Cesses were discharged at the time of issuance of Invoices/receipt of advance payment, though services in lieu of those advances were rendered on a date subsequent to enhancement of Tax rates as in terms of Rule 4(2)(i1) of POTR, 2011, where Invoice has been issued and payment for Invoice has been received before the change in Tax rate, the point of taxation shall be the date of payment or date of Invoice whichever is earlier.
Appellant most respectfully relies on the following decisions:
o Vigyan Gurukul [2012 (25) STR 459 (Tri. - Del.)]; o Bajaj Allianz Insurance Co Ltd. [2009 (13) STR 259 (Tri. - Mum)] o Carrier Point [2018 (10) GSTL 213 (Raj.)] As SBC and KKC under the impugned 75 +61 Invoices were paid and collected by the Department was without Service Tax Appeal No.70656 of 2018 8 sanction of law, the same cannot be retained by the Department as have been held in the following cases:
o India lspat Works Pvt. Ltd. reported in 2006 (3) STR 161 (Tri. - Del.)] o KVC Construction [2012 (26) STR 195 (Kar.)] upheld by Supreme Court 2018 (14) GSTL J70 (SC).
Qua denial of refund on ground of unjust enrichment, the finding of learned Commissioner is ex-facie wrong, for the reason that o this issue was neither raised in the Show Cause Notice nor in the Order-in-Original, therefore, being beyond the scope of Show Cause Notice/Order-in- Original, cannot be countenanced;
o along with claim, Appellant had filed certificate issued by its Statutory Auditor that the amount claimed was not booked in the Profit & Loss Account and therefore, cannot be construed as passed on to any other person;
o as the refund amount is reflected in Appellant's Balance Sheet as receivables from Government even today, bar of unjust enrichment is not applicable.
3.3 Learned authorized representative reiterates the findings recorded in the impugned order.
4.1 We have considered the impugned order along with the submissions made in appeal and during the course of arguments.
4.2 For rejecting upholding the order of original authority rejecting the refund claim filed by the appellant, impugned order records following findings:
"The appellant had awarded the contracts of (a) civil construction and structural orks and (i) erection, installation and commissioning, relating to 3X660 MW (1980) MW Power Project of the 'appellant at Lalitpur district of Uttar Pradesh, to M/s Carbery Infrastructure Pte.
Ltd., Singapore, (a subsidiary company of M/s BIDCO).
Service Tax Appeal No.70656 of 2018 9 Subsequently these contracts were assigned to M/s BIDCO;
ii) M/s BIDCO had issued invoices for the advances, in which the Service Tax, Dducation Cess and Secondary & Higher Education Cess had been charged and paid in the Government account. Subsequently, they raised invoices for the progressive works and the aforesaid advances were adjusted from such invoices. However, in respect of such invoices issued on or after the levy of Swachh Bharat Cess and Krishi Kalyan Cess, M/s BIDCO charged Swachh Bharat Cess @0.5% and Krishi Kalyan Cess @0.5%, from the appellant and deposited the same in the Government account; and
ii) Since the appellant were of the view that they had wrongly paid Swachh Bharat Cess and Krishi Kalyan Cess on such invoices of M/s BIDCO, they after obtaining a disclaimer certificate from M/s BIDCO, applied for the impugned refund, on 04.01.2017 4.2 On going through the documents submitted by the appellant, I find that they have provided contract-wise charts, in respect of the aforesaid two contracts, showing the details of advances including Service Tax & Education Cesses, invoices issued by M/s BIDCO against advances, subsequent invoices issued for the progressive works, adjustment of advances and details of Swachh Bharat Cess & Krishi Kalyan Cess charged and paid. Further, they have also provided chart showing details of challans and certificate from the Chartered Accountant, namely, M/s R.S. Dani & Co. certifying the details of advances paid by the appellant to M/s BIDCO, Thus, I find that rejection of the refund claim on the technical grounds of non adjustment of the amount of Rs.2,29,86,43,853/- entirely prior to the payment of the additional amount of Service Tax of Rs.21,68,11,410/- and non submission of all the relevant ST-3 returns and the challans, was unjustified Service Tax Appeal No.70656 of 2018 10 4.3 I also find that Swachh Bharat Cess was introduced, w.e.f. 15.11.2015, vide Section 119 (Chapter VI) of the Finance Act, 2015 read with Notification No. 21/2015-ST dated 06.11,2015 and 'the effective rate of this levy was specified @0.5% of the value of taxable service, vide Notification No. 22/2015-ST dated 06.11.2015. The relevant extracts of Sectior 119 of the Finance Act, 2015 are, as under:
Section_ 119: (2) There shall be levied and collected in accordance with the provisions of this Chapter, a cess to be called the Swachh Bharat Cess, as service tax on all or any of the taxable services at the rate of two per cent. on the value of such services for the purposeș of financing and promoting Swachh Bharat initiatives or for any other purpose relating thereto.
(5) The provisions of Chapter V of the Finance Act, 1994 and the rules made thereunder, including those relating to refunds and exemptions from tax, interest and imposition of penalty shall, as far as may be, apply in relation to the levy and collection of the Swachh Bharat Cess on taxable services, as they apply in relation to the levy and collection of tax on such taxable services under Chapter V of the Finance Act, 1994 or the rules made thereunder, as the case may be.
4.3.1 Further, Krishi Kalyan Cess was introduced, w.e.f. 01.06.2016, vide Section 161 of the Finance Act, 2016. The relevant extracts of this Section are, as under:
Section_161: (2) There shall be levied and collected in accordance with the provisions of this Chapter, a cess to be called the Krishi Kalyan Cess, as service tax on all or any of the taxable services at the rate of 0.5 per cent. On the value of such services for the purposes of financing and promoting initiatives to improve agriculture or for any other purpose relating thereto.
Service Tax Appeal No.70656 of 2018 11 (5) The provisions of Chapter V of the Finance Act, 1994 (32 of 1944) and the rules made thereunder, including those relating to refunds and exemptions from tax, interest and imposition of penalty shall, as far as may be, apply in relation to the levy and collection of the Krishi Kalyan Cess on taxable services, as they apply in relation to the levy and collection of tax on such taxable services under the said Chapter or the rules made thereunder, as the case may be.
4.4 Thus, I find that the provisions of the Act and the rules made thereunder are applicable to Swachh Bharat Cess and Krishi Kalyan Cess levied & collected at the rate of 0.,5% on the value of taxable services. In order to ascertain the point of taxation in respect of Swachh Bharat Cess and Krishi Kalyan Cess, it is required to apply Rule 5 of the Point of Taxation Rules, 201 1 in this case, which provide, as under:
Rule_5: Where a service is taxed for the first time, then,
(a) no tax shall be payable to the extent the invoice has been issued and the payment received against such invoice before such service became taxable; (b) no tax_ shall be pauable if the paument has been received before _the service becomes taxable and invoice has been issued within fourteen daus of the date when the service is taxed for the first time, Explanation 1. - This rule shall apply mutatis mutandis in case of new levy on services Explanation 2. -
New levy or tax shall be payable on all the cases other than specified above.
4.4.1 Further, the scope of the Explanation 1 & Explanation 2 in Rule 5 of the Point of Taxation Rules, inserted vide Notification No. 10/2016-ST dated 01.03.2016, was clarified by the Central Board of Excise 8 Customs, vide letter D.O. F.No. 334/8/2016-TRU dated 29.02.2016 of the Joint Secretary (TRU), as under;
Service Tax Appeal No.70656 of 2018 12 The Point of Taxation Rules, 2011 have been framed under provisions of clause (a) and (hhh) of sub-section (1) of section 94, now specific powers is also being obtained under section 67A to make rules regarding point in time of rate of service tax. Thus, any doubt about the applicability of service tax rate or apparent contradiction between section .67A and POTR would be taken care of Therefore, consequent modifications have been done in POTR. Rule 5 of POTR applies when a new service comes into the service tax net. (a) Although in the case of new levy, provisions of Chapter V of the Finance Act, 1994, and rules made thereunder, are invariably made applicable in relation to the levy and collection of the new levy. However, doubts have been raised regarding its applicability in case of new levy. Therefore, an Explanation is being inserted in Rule 5 stating that the same is applicable in case of new levy on services. Further, in rule 5 of POTR, it is provided that in two specified situations the new (b) levy would not apply. Another Explanation is being inserted therein stating that in situations other than those specified where new levy or tax is not payable, the new levy or tax shall be payable.
4.4.2 I also find "invoice" has been defined under Rule 2(d) of the Point of Taxation Rules, as the invoice referred to in Rule 4A of the Service Tax Rules, 1994 and shall include any document referred to in the said rule. Further, in terms of the third proviso to the Rule 4A(1) of the Service Tax Rules, 1994, every person providing continuously supply of service, shall issue an invoice, bill or challan, as the case may be, within thirty days of the date when each event specified in the contract, which requires the service receiver to make any payment to the service provider. I also find that the Central Board of Excise & Customs, vide Circular No. 144/13/2011-ST dated 18.07.2011, clarified, as under:
Service Tax Appeal No.70656 of 2018 13 Subiect: - Clarification on "Completion of service". regarding Representations requesting clarification on "completion of service" as provided under the Point of Taxation Rules, 2011 and Service Tax Rules, 1994 have been received from certain sections of service providers that in many situations it is not possible to issue invoices within 14 days of the completion, of the service since the exact date of completion of service is difficult to identify. Instances have been given where after the task of providing the service may be physically accomplished, but certain other formalities are required to be completed from the client's end before an invoice can be issued.
2. These representations have been examined. The Service Tax Rules,_1994 require that invoice should be issued within a period of 14 days from the completion of the taxable service. The invoice needs to indicate, inter alia, the value of service so completed., Thus it is important to identify the service so completed, This would include not only the physical part of providing the service but also the completion of all other auxiliary activities that enable the service provider to be in a position to issue the invoice.
Such auxiliary activities could include activities like measurement, quality testing etc which may be essential pre-requisites for identification of completion of service. The test for the determination whether a service has been completed would be the completion of all the related activities that place the service provider in a situation to be able to issue an invoice. However such activities do not include flimsy or irrelevant grounds for delay in issuance of invoice.
The above interpretation also applies to determination of the date of completion of provision of service in case of "continuous supply of service"
Service Tax Appeal No.70656 of 2018 14 4.4.3 Since, in this case, there is no dispute that M/s BIDCO had provided continuous supply of services, the invoices issued for the progressive works, which required the appellant to make payments to M/s BIDCO, by way of adjustment from the advances, are, thus, required to be considered for the purpose of Rule 5 of the Point of Taxation Rules, 2011, in terms of Rule 4A of the Service Tax Rules, 1994 read with Rule 2(d) of the Point of Taxation Rules, 201 1 and the aforesaid clarification dated 18.07.2011 issued by the Central Board of Excise & Customs and not the invoices issued for the advances.
4.4.4 Thus, on applying the aforesaid statutory provisions & clarifications to the facts of the case, I find that in this case, though the payments had been received before the levy of Swachh Bharat Cess and Krishi Kalyan Cess the invoices for the progressive works (i.e., the invoices issued under Rule 4A of the Service Tax Rules, 1994 showing the value of taxable services), were issued after the introduction of these new levies. Thus, where such invoices had been issued within fourteen days of these levies, find there was no requirement to pay Swachh Bharat Cess and Krishi Kalyan Cess. Further, where the invoices had been issued on or after fourteen days of these levies, Swachh Bharat Cess and Krishi Kalyan Cess were required to be paid.
4.4.5 Further, on going through the charts for the two contracts submitted by the appellant, it is observed that there are only two invoices in the contract for erection, installation & commissioning and four invoices in the contract for civil construction and structural works which were issued within fourteen days of the levy of Swachh Bharat Cess and the remaining invoices had been issued on or after 01.12.2015. Thus, in respect of such invoices Service Tax Appeal No.70656 of 2018 15 involving Swachh Bharat Cess of Rs.2,48,418/-, there was no requirement for paying Swachh Bharat Cess 4.4.6 Similarly, it is observed that there are only eleven invoices in the contract for erection, installation & commissioning and three invoices in the contract for civil construction and structural works which were issued within fourteen days of the levy of Krishi Kalyan Cess and the remaining invoices had been issued on or after 15.06.2016. Thus, only in respect of such invoices involving Krishi Kalyan Cess of Rs.6,32,596/-, there was no requirement for paying Krishi Kalyan Cess.
4.5 . I also find that in terms of Section 11B of the Central Excise Act, 1944 as made applicable to the Service Tax matters, the relevant date for filing the refund in this case was one year from the date of payment of Service Tax, as the refund was filed by the appellant .e., the service receiver). Further, on going through the documents submitted by the appellant, it is observed that Swachh Bharat Cess of Rs.2,48,418/- was paid vide challan dated 04.12.2015. Since in this case, refund was filed on 04.01.2017, I find that refund of Swachh Bharat Cess of Rs.2,48,418/- was barred by time limitation.
4.6 I further find that Section 11B(2) of the Central Excise Act, 1944 provides, as under:
Section 11B(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:
Provided that the amount of duty of excise and interest, if any, paid on such duty as determined by the Assistant Commissioner of Central Excise or Deputy Commissioner of Service Tax Appeal No.70656 of 2018 16 Central Excise under the foregoing provisions of this sub- section shall, instead of being credited to the Fund, be paid to the applicant, if such amount is relatable to -
d) the duty of excise and interest, if any, paid on such duty paid by the manufacturer, if he had not passed on the incidence of such duty and interest, if any, paid on such duty to any other person;
e) the duty of excise and interest, if any, paid on such duty borne by the buyer, if he had not passed on the incidence of such duty and interest, if any, paid on such duty to any other person;
4.6.1 Further, the Hon'ble Supreme Court in the following case laws, has held that principle of unjust applies to cases of captive consumption:
(i) Union of India vs. Solar pesticides Pvt. Ltd. 2000 (1
16) E.L.T. 401 (S.C.);
(ii) CCE, Chennai-II vs. Grasim Industries 2015 (318) E.L.T. 594 (S.C.) 4.6.2 Since in this case, the taxable services provided by M/s BIDCO were used captively by the appellant in their commercial & business activities and also no evidence has been submitted by the appellant to show that they had borne the incidence of Krishi Kalyan cess of Rs.6,32,596/-
and had not passed on the same to any other person, I, thus, find, in the light of Section 12B of the Central Excise Act, 1944 as made applicable to the Service Tax matters, that the appellant had passed the incidence of Krishi Kalyan Cess of Rs.6,32,596/ & Swachh Bharat Cess of Rs.2,48,418/- and as such, the refund thereof is hit by the unjust enrichment clause"
4.3 Original authority has recorded findings as follows for rejecting the refund claim filed by the appellant.
"I observe that, claimant has submitted that at the time of advances paid to service provider and tax paid on them Service Tax Appeal No.70656 of 2018 17 time to time, no Swachh Bharat Cess and Krishi Kalyan Cess were applicable on the service provider, yet the service provider during issuing the invoices for adjustment of such amount which was given as an advance before 15.11.2015 by the claimant, claimed the SBC & KKC and was paid to them later on, as such, the service provider has wrongly charged the said cess from the claimant and deposited the same and accordingly, the claimant has filed refund claim for the said amount which has been paid to the service provider i.e. M/s. Bajaj Infrastructure Development Company Limited. The service provider has claimed the entire contract value and applicable service tax thereon towards the services from the claimant before levying SBC and KKC and after 15,11.2015. M/s. BIDCO (Service Provider) has raised invoices only to adjust the amount, which was claimed as an advance before 15.11.2015, and no-amount was payable-by them against the invoices issued prior to 15.11.2015, M/s. BIDCO has informed them (Claimant) that SBC and KKC should not have been levied as they have already received the entire payment towards such services before 15.11.2015 and 01.06.2016 as the case may be, as an advance payment and progressive payments as well. The claimant has also submitted that Rule 5 of the point of Taxation Rules would be applicable in their case.
I also observe that the claimant is a service recipient and M/s. BIDCO is a service provider. The service provider appears to have provided their services to the service recipient and appears to have received the amount alongwith service tax and Cess. It has beer stated that the service tax alongwith Cess have been deposited by the service provider correctly. Since the Cess was wrongly charged from the recipient by the service provider as the same was deposited in Government exchequer by the service provider as such the service provider was required to claim such undue deposits if any, however, the claimant Service Tax Appeal No.70656 of 2018 18 has filed the claim with a disclaimer letter received from service provider that they will not claim any refund of SBC / KKC, wrongly charged and paid to the Government. I also observed that the claimant on other side has failed to provide the proper details of payment made in full, time to time to the 'service provider before the completion of services or the progressive payments made time to time viz. Mobilization advances / other advances etc. which have been adjusted by subsequent invoicing, by the service provider. They have also failed to submit the evidences that the payment so made were inclusive of Service tax or exclusive of service tax and that the said payments were full and final to the contracted value.
In the matter, the claimant has also submitted documents in support of their contention that the service provider have paid SBC/KKC on the invoices though they were not required to pay the said Cess, as they have made adjustment of advances received during Nov.'15 to 18/08/2016. I find that they have received total 136 invoices in which the SBC/KKC have been paid by the service provider after making adjustment of advances received. In support of their contention that service tax has been paid on advances received by service provider, the claimant has produced details of only 74 invoices of service provider, which show the service tax payment made on the advances received by them. Perusal of records also shows that service provider has issued total 660 invoices during 04.10.2012 to 18.08.2016, for the works related to Erection, Commissioning & Installation or of Civil construction. The sample copies of invoices submitted in. their support shows that the service tax has been charged after adjusting the advance taken against finalization of specification and advance taken against mobilization by the service provider. No invoice in their support showing assessable yalue Nil has been submitted, owever, the charts annexed with their submission show that for the Service Tax Appeal No.70656 of 2018 19 invoices on which SBC/KKC has been paid, net taxable value is Nil i.e. to say value of work done has been adjusted with advances received. The charts submitted in support, doubtless, show that w.e.f. 01.10.2015, service provider has issued invoices of NIL' net taxable value after adjustment f advances received, but contrary to it claimant has failed to submit the proper and time to time, 'details of total advances of Rs.554,50,47,376/- said to have been ◦ received by the service provider during the period 04.10.2012 to 30.09.2015 and which has been adjusted in total value for payment of service tax; subsequently. In absence of concrete evidence, which can be only support of intention of claimant that they have already paid the entire amount towards such services as an advance payments, it is anbiguous to make conclusions. The records submitted also show .that he claimant has paid total Rs.784,36,91,229/- as an advance (mobilization adyance) to service provider for Erection services and work contract services time to time on which due service tax have been paid by them. However, it is also resembling that an amount of Rs.5,54,50,47,376/- has been adjusted on the invoices issued during 04.10.2012 to 18.08,2016, both the above figures are not matching and fate of differential amount of advances'so given is not recorded. The claimant has neither submitted records regarding such anomady nor given any proof of service tax payment made for the advances amounting to Rs.5,54,50,47,376/- nor submitted any records showing that such. utilized advances are amongst the advances paid earlier. In' absence of concrete documents, it is hard to find out whether. advance amount adjusted of Rs. 554,50,47,376/-, was the amount involved in the advance given i.e. Rs.784,36,91,229/- or otherwise.
Also in view of natural justice, if it is taken that advance of Rs. 7,84,36,91,229/- is the correct amount on which due service tax has been paid and amount of Rs.
Service Tax Appeal No.70656 of 2018 20 5,54,50,47,376/-, has been adjusted subsequently, then a question suo motto arises, as to why the differential amount of Rs2,29,86,43,853/- has not been adjusted from the value of Rs. 1,74,75,09,720/- (net taxable value) on which due service tax has been paid time to time, by the service provider.
I also observe that claimant has submitted that service provider has claimed the entire contract value and applicable service tax from them before levying of SBC and KKC and the amount on which Cesses have been paid, were already the adjusted amounts on which due taxes were paid earlier, as such no Cess was required to. be paid, but the said Cesses were paid to Govt. Exchequer due to mistaken notion of law, hence refund of such amount is warranted, From. the available documents it is lear that service provider has been given Rs.7,84,36,91,229/- as advances on which due service tax was said to be paid, time to time and against which he service provider as also issued invoices of gross amount Rs.7,29,25,57,096/- and amongst them only amount of Rs.5,54,50,47,376/- have been adjusted through the said invoices, issued time to time, after completion of work and an amount of Rs.2,29,86,43,853/- was not adjusted but contrary to. this, service provider has also paid an additional amount of Service Tax of Rs.21,68,11,410/- on the value of Rs.1,74,75,09,720/- time to time on the above said invoices also. This gives conclusion that if service provider was having the tax paid value with them, why the said value has not been utilized fully, for adjustment during issuance of invoices and service tax has been paid on the said part of invoice value: As per chart submitted, the service provider has issued invoices after full adjustments of value on such invoices since 01.10.2015; but claimant has failed to produce documents in support of their contention i.e. the details of advances given time to time and utilization thereof, and remaining balance at the Service Tax Appeal No.70656 of 2018 21 relevant time also they failed to prove why the advance amount on which service tax was paid by the service provider, has not been utilized during issuance of invoices and the service tax charged on net taxable value by service provider has been paid by them. The claimant has also failed to submit the evidences of payment of SBC/KKC, as charged by the service provider to them. This itself clarify that the claimant has failed to prove with documentary evidences that tax paid in advance value, of services, by the service provider has been properly utilized and SBC/KKC paid on nil net value, was not payable, accordingly, they were right, to claim for refund of such service tax amount paid advertently and unknowingly to the Govt. Exchequer.
I also observe that the claimant has also failed to produce substantial documents in their support viz, ST-3 Returns, Challans for Service Tax deposits for the interim period which may give a correct and evidential picture in their support The claimants contentions that legally they are entitled for the refund of such undue service tax deposit in view of service tax provisions read with disclaimer letter from the service provider is not supported with proper and correct evidences in their support, as discussed supra, Therefore, it appears that the claimant is not entitled for refund of the amount so claimed and such claim is liable to be rejected on the grounds discussed herein above."
4.4 From the orders of the lower authorities it is evident that in the present case application claiming the refund has been filed by the service recipient and not the service provider. Service provider i.e. M/s BIDCO has filed self assessed ST-3 returns as required showing the payment of the Swachh Bharat and Krishi Kalyan Cess. Nothing has been brought on record to show that the returns were subsequently revised showing the position as claimed by the appellant in respect of levy and collection of Swachh Bharat Cess and Krishi Kalyan Cess. Original Authority Service Tax Appeal No.70656 of 2018 22 has in absence of production of the ST-3 returns held that the refund claims are unsubstantiated. Appellate authority has examined the issue in detail and has concluded after examination of issue on merits as per the findings recorded in para 4.4.4, 4.4.5 and 4.4.6 of impugned order. As per the Appellate Authority refund though admissible to the appellant in respect of the invoices that were issued within 14 days of the levy of Swachh Bharat Cess and Krishi Kalyan Cess will have to be rejected on the ground of limitation and Unjust enrichment.
4.5 We find that Hon'ble Supreme Court has in case of Mafatlal Industries [1997 (89) ELT 247 (SC)] has held as follows:
"70. Re : (II) :We may now consider a situation where a manufacturer pays a duty unquestioningly - or he questions the levy but fails before the original authority and keeps quiet. It may also be a case where he files an appeal, the appeal goes against him and he keeps quiet. It may also be a case where he files a second appeal/revision, fails and then keeps quiet. The orders in any of the situations have become final against him. Then what happens is that after an year, five years, ten years, twenty years or even much later, a decision is rendered by a High Court or the Supreme Court in the case of another person holding that duty was not payable or was payable at a lesser rate in such a case. (We must reiterate and emphasise that while dealing with this situation we are keeping out the situation where the provision under which the duty is levied is declared unconstitutional by a court; that is a separate category and the discussion in this paragraph does not include that situation. In other words, we are dealing with a case where the duty was paid on account of mis-construction, mis-application or wrong interpretation of a provision of law, rule, notification or regulation, as the case may be.) Is it open to the manufacturer to say that the decision of a High Court or the Supreme Court, as the ease may be, in the case of another person has made him aware of the mistake of law and, therefore, he is entitled to refund Service Tax Appeal No.70656 of 2018 23 of the duty paid by him? Can he invoke Section 72 of the Contract Act in such a case and claim refund and whether in such a case, it can be held that reading Section 72 of the Contract Act along with Section 17(1)(c) of the Limitation Act, 1963, the period of limitation for making such a claim for refund, whether by way of a suit or by way of a writ petition, is three years from the date of discovery of such mistake of law? Kanhaiyalal is understood as saying that such a course is permissible. Later decisions commencing from Bhailal Bhai have held that the period of limitation in such cases is three years from the date of discovery of the mistake of law. With the greatest respect to the learned Judges who said so, we find ourselves unable to agree with the said proposition. Acceptance of the said proposition would do violence to several well-accepted concepts of law. One of the important principles of law, based upon public policy, is the sanctity attaching to the finality of any proceeding, be it a suit or any other proceeding. Where a duty has been collected under a particular order which has become final, the refund of that duty cannot be claimed unless the order (whether it is an order of assessment, adjudication or any other order under which the duty is paid) is set aside according to law.
So long as that order stands, the duty cannot be recovered back nor can any claim for its refund be entertained. But what is happening now is that the duty which has been paid under a proceeding which has become final long ago - may be an year back, ten years back or even twenty or more years back - is sought to be recovered on the ground of alleged discovery of mistake of law on the basis of a decision of a High Court or the Supreme Court. It is necessary to point out in this behalf that for filing an appeal or for adopting a remedy provided by the Act, the limitation generally prescribed is about three months (little more or less does not matter). But according to the present practice, writs and suits are being filed after lapse of a long number of years and the rule of limitation applicable in that behalf is Service Tax Appeal No.70656 of 2018 24 said to be three years from the date of discovery of mistake of law : The incongruity of the situation needs no emphasis. And all this because another manufacturer or assessee has obtained a decision favourable to him. What has indeed been happening all these years is that just because one or a few of the assessees succeed in having their interpretation or contention accepted by a High Court or the Supreme Court, all the manufacturers/Assessees all over the country are filing refund claims within three years of such decision, irrespective of the fact that they may have paid the duty, say thirty years back, under similar provisions - and their claims are being allowed by courts. All this is said to be flowing from Article 265 which basis, as we have explained hereinbefore, is totally unsustainable for the reason that the Central Excise Act and the Rules made thereunder including Section 11B/Rule 11 too constitute "law" within the meaning of Article 265 and that in the face of the said provisions - which are exclusive in their nature - no claim for refund is maintainable except under and in accordance therewith. The second basic concept of law which is violated by permitting the above situation is the sanctity of the provisions of the Central Excises and Salt Act itself. The Act provides for levy, assessment, recovery, refund, appeals and all incidental/ancillary matters. Rule 11 and Section 11B, in particular, provide for refund of taxes which have been collected contrary to law, i.e., on account of a mis- interpretation or mis-construction of a provision of law, rule, notification or regulation. The Act provides for both the situations represented by Sections 11A and 11B. As held by a seven - Judge Bench in Kamala Mills, following the principles enunciated in Firm & Illuri Subbaiya Chetty, the words "any assessment made under this Act" are wide enough to cover all assessments made by the appropriate authorities under the Act whether the assessments are correct or not and that the words "an assessment made" cannot mean an assessment properly and correctly made. It was also pointed Service Tax Appeal No.70656 of 2018 25 out in the said decision that the provisions of the Bombay Sales Tax Act clearly indicate that all questions pertaining to the liability of the dealer to pay assessment in respect of their transactions are expressly left to be decided by the appropriate authorities under the Act as matters falling within their jurisdiction. Whether or not a return is correct and whether a transaction is exigible to tax or not are all matters to be determined by the authorities under the Act. The argument that the finding of the authority that a particular transaction is taxable under the Act is a finding on a collateral fact and, therefore, resort to civil court is open, was expressly rejected and it was affirmed that the whole activity of assessment beginning with the filing of the return and ending with the order of assessment falls within the jurisdiction of the authorities under the Act and no part of it can be said to constitute a collateral activity not specifically or expressly included in the jurisdiction of the authorities under the Act. It was clarified that even if the authority under the Act holds erroneously, while exercising its jurisdiction and powers under the Act that a transaction is taxable, it cannot be said that the decision of the authority is without jurisdiction. We respectfully agree with the above propositions and hold that the said principles apply with equal force in the case of both the Central Excises and Salt Act and the Customs Act. Once this is so, it is un- understandable how an assessment/adjudication made under the Act levying or affirming the duty can be ignored because some years later another view of law is taken by another court in another person's case. Nor is there any provision in the Act for re-opening the concluded proceedings on the aforesaid basis. We must reiterate that the provisions of the Central Excise Act also constitute "law" within the meaning of Article 265 and any collection or retention of tax in accordance or pursuant to the said provisions is collection or retention under "the authority of law" within the meaning of the said article.
Service Tax Appeal No.70656 of 2018 26 In short, no claim for refund is permissible except under and in accordance with Rule 11 and Section 11B. An order or decree of a court does not become ineffective or unenforceable simply because at a later point of time, a different view of law is taken. If this theory is applied universally, it will lead to unimaginable chaos. It is, however, suggested that this result follows only in tax matters because of Article 265. The explanation offered is untenable as demonstrated hereinbefore. As a matter of fact, the situation today is chaotic because of the principles supposedly emerging from Kanhaiyalal and other decisions following it. Every decision of this Court and of the High Courts on a question of law in favour of the assessee is giving rise to a wave of refund claims all over the country in respect of matters which have become final and are closed long number of years ago. We are not shown that such a thing is happening anywhere else in the world. Article 265 surely could not have been meant to provide for this. We are, therefore, of the clear and considered opinion that the theory of mistake of law and the consequent period of limitation of three years from the date of discovery of such mistake of law cannot be invoked by an assessee taking advantage of the decision in another assessee's case. All claims for refund ought to be, and ought to have been, filed only under and in accordance with Rule 11/Section 11B and under no other provision and in no other forum. An assessee must succeed or fail in his own proceedings and the finality of the proceedings in his own case cannot be ignored and refund ordered in his favour just because in another assessee's case, a similar point is decided in favour of the manufacturer/assessee. (See the pertinent observations of Hidayatullah, CJ. in Tilokchand Motichand extracted in Para
37). The decisions of this Court saying to the contrary must be held to have been decided wrongly and are accordingly overruled herewith."
Service Tax Appeal No.70656 of 2018 27 4.6 Reiterating the above principles enunciated by majority in the above referred case, and relying on the subsequent decisions, Hon'ble Supreme Court again in case of ITC Ltd. [2019 (368) E.L.T. 216 (S.C.)] observed that the self assessment made cannot be challenged by way of refund application and the proper course would be to challenge the same by way of an appeal.
"41. It is apparent from provisions of refund that it is more or less in the nature of execution proceedings. It is not open to the authority which processes the refund to make a fresh assessment on merits and to correct assessment on the basis of mistake or otherwise.
42. It was contended that no appeal lies against the order of self-assessment. The provisions of Section 128 deal with appeals to the Commissioner (Appeals). Any person aggrieved by any decision or order may appeal to the Commissioner (Appeals) within 60 days. There is a provision for condonation of delay for another 30 days. The provisions of Section 128 are extracted hereunder :
"128. Appeals to [Commissioner (Appeals)]. -- (1) Any person aggrieved by any decision or order passed under this Act by an officer of customs lower in rank than a [Principal Commissioner of Customs or Commissioner of Customs] may appeal to the [Commissioner (Appeals)] [within sixty days] from the date of the communication to him of such decision or order :
[Provided that the Commissioner (Appeals) may, if he is satisfied that the appellant was prevented by sufficient cause from presenting the appeal within the aforesaid period of sixty days, allow it to be presented within a further period of thirty days.] [(1A) The Commissioner (Appeals) may, if sufficient cause is shown, at any stage of hearing of an appeal, grant time, from time to time, to the parties or any of them and adjourn Service Tax Appeal No.70656 of 2018 28 the hearing of the appeal for reasons to be recorded in writing :
Provided that no such adjournment shall be granted more than three times to a party during hearing of the appeal.] (2) Every appeal under this section shall be in such form and shall be verified in such manner as may be specified by rules made in this behalf."
43. As the order of self-assessment is nonetheless an assessment order passed under the Act, obviously it would be appealable by any person aggrieved thereby. The expression 'Any person' is of wider amplitude. The revenue, as well as assessee, can also prefer an appeal aggrieved by an order of assessment. It is not only the order of re- assessment which is appealable but the provisions of Section 128 make appealable any decision or order under the Act including that of self-assessment. The order of self- assessment is an order of assessment as per Section 2(2), as such, it is appealable in case any person is aggrieved by it. There is a specific provision made in Section 17 to pass a reasoned/speaking order in the situation in case on verification, self-assessment is not found to be satisfactory, an order of re-assessment has to be passed under Section 17(4). Section 128 has not provided for an appeal against a speaking order but against "any order" which is of wide amplitude. The reasoning employed by the High Court is that since there is no lis, no speaking order is passed, as such an appeal would not lie, is not sustainable in law, is contrary to what has been held by this Court in Escorts (supra).
44. The provisions under Section 27 cannot be invoked in the absence of amendment or modification having been made in the bill of entry on the basis of which self- assessment has been made. In other words, the order of self-assessment is required to be followed unless modified before the claim for refund is entertained under Section 27. The refund proceedings are in the nature of execution for Service Tax Appeal No.70656 of 2018 29 refunding amount. It is not assessment or re-assessment proceedings at all. Apart from that, there are other conditions which are to be satisfied for claiming exemption, as provided in the exemption notification. Existence of those exigencies is also to be proved which cannot be adjudicated within the scope of provisions as to refund. While processing a refund application, re-assessment is not permitted nor conditions of exemption can be adjudicated. Re-assessment is permitted only under Section 17(3)(4) and (5) of the amended provisions. Similar was the position prior to the amendment. It will virtually amount to an order of assessment or re- assessment in case the Assistant Commissioner or Deputy Commissioner of Customs while dealing with refund application is permitted to adjudicate upon the entire issue which cannot be done in the ken of the refund provisions under Section 27. In Hero Cycles Ltd. v. Union of India - 2009 (240) E.L.T. 490 (Bom.) though the High Court interfered to direct the entertainment of refund application of the duty paid under the mistake of law. However, it was observed that amendment to the original order of assessment is necessary as the relief for a refund of claim is not available as held by this Court in Priya Blue Industries Ltd. (supra).
45. Reliance was also placed on a decision of Rajasthan High Court with respect to service tax in Central Office Mewar Palace Org. v. Union of India - 2008 (12) S.T.R. 545 (Raj.). In view of the aforesaid discussion, we are not inclined to accept the reasoning adopted by the High Court, that too is also not under the provisions of the Customs Act."
47. When we consider the overall effect of the provisions prior to amendment and post-amendment under Finance Act, 2011, we are of the opinion that the claim for refund cannot be entertained unless the order of assessment or self- assessment is modified in accordance with law by taking recourse to the appropriate proceedings and it would not be Service Tax Appeal No.70656 of 2018 30 within the ken of Section 27 to set aside the order of self- assessment and reassess the duty for making refund; and in case any person.
4.7 In case of BT (INDIA) PRIVATE LIMITED [Order dated 06.11.2023 in W.P.(C) 13968/2021] F. EXAMINATION OF A REFUND CLAIM
49. That takes us then to the principal question and which relates to the nature and extent of the power that may be available to be exercised by the Adjudicating Authority while considering a claim for refund.
50. In terms of the Act, every person liable to pay service tax is obliged to furnish a self-assessed return in terms of Section 70. The return so submitted can be questioned either in accordance with Section 72, if the competent authority is of the opinion that the assessee has failed to assess the tax in accordance with the provisions of the Act or Rules made thereunder or in circumstances which are enumerated in Section 73.
51. It becomes pertinent to note that the expression „assessment‟ has been duly defined under the 1994 Rules to include self assessment of service tax. Rule 2(b) of the said Rules is reproduced hereinbelow:-
"Rule 2 - Definitions (1) In these rules, unless the context otherwise requires,--
xxxx xxxx xxxx
(b) "assessment" includes self assessment of service tax by the assessee, reassessment, provisional assessment, best judgment assessment and any order of assessment in which the tax assessed is nil; determination of the interest on the tax assessed or reassessed;"
52. A comprehensive reading of the provisions of the Act would thus establish that a self-assessed return stands placed on a pedestal equivalent to that of an actual order of Service Tax Appeal No.70656 of 2018 31 assessment, provisional or best judgment assessment or a reassessment. This issue in any case is liable to be answered against the respondent in light of the decision in ITC Limited.
53. That takes us then to Rule 5 of the CCR Rules and which embodies the procedure liable to be followed by an assessee claiming refund of CENVAT credit. It becomes pertinent and at the outset to note that while Rule 5(1) does employ the expression "determined‟, the same is of little relevance insofar as the question which stands posited before us is concerned. This, we do hold, since we find that the determination which is spoken of in Rule 5(1) is confined to a quantification of the refund allowable in accordance with the formula prescribed therein. We thus find ourselves unable to sustain the submission of the respondent that the word „determined‟ must be read in aid of recognizing a power of assessment being available to be exercised while considering a claim for refund.
54. However, and undisputedly Rule 5(1) of the CCR Rules also enables the Board to specify the safeguards, conditions and limitations subject to which a refund of CENVAT credit may be allowed. Undisputedly, the notification dated 18 June 2012 owes its genesis to this power which stands placed in the hands of the Board. The said notification in Clause 3(g) obliges the Assistant of the Deputy Commissioner to examine and verify the correctness of the refund claim and to ensure that goods cleared for export or services provided have actually been exported. It is the aforesaid safeguard and condition as contained in that Notification which the respondents would urge us to recognise as conferring an adjudicatory power upon the competent authority while considering a claim for refund.
55. The petitioner on the other hand, contends that the extent of the power which is available to be exercised by an authority while considering a claim for refund is no longer res integra and stands concluded in light of the judgments Service Tax Appeal No.70656 of 2018 32 rendered by the Supreme Court in Flock(India), Priya Blue Industries and ITC limited. 56. In order to evaluate the rival submissions, we firstly note that the Act adopts Section 11B of the Excise Act. As is evident from a reading of the said provision and more particularly Section 11B (2), a refund is granted by the competent authority upon it being satisfied that the whole or any part of the duty paid is refundable. In order to discern and appreciate the ratio decidendi of ITC Limited, we also deem it apposite to notice Sections 17 and 27 of the Customs Act, 1962, which are reproduced hereinbelow:
"17. Assessment of duty.--
(1) An importer entering any imported goods under Section 46, or an exporter entering any export goods under Section 50, shall, save as otherwise provided in Section 85, self-assess the duty, if any, leviable on such goods.
(2) The proper officer may verify [the entries made under Section 46 or Section 50 and the self- assessment of goods referred to in subsection (1)] and for this purpose, examine or test any imported goods or export goods or such part thereof as may be necessary. Provided that the selection of cases for verification shall primarily be on the basis of risk evaluation through appropriate selection criteria.
(3) For the purposes of verification under sub-section (2), the proper officer may require the importer, exporter or any other person to produce any document or information, whereby the duty leviable on the imported goods or export goods, as the case may be, can be ascertained and thereupon, the importer, exporter or such other person shall produce such document or furnish such information Service Tax Appeal No.70656 of 2018 33 (4) Where it is found on verification, examination or testing of the goods or otherwise that the self-
assessment is not done correctly, the proper officer may, without prejudice to any other action which may be taken under this Act, re-assess the duty leviable on such goods.
(5) Where any re-assessment done under sub-section (4) is contrary to the self-assessment done by the importer or exporter [* * *] and in cases other than those where the importer or exporter, as the case may be, confirms his acceptance of the said re-assessment in writing, the proper officer shall pass a speaking order on the re-assessment, within fifteen days from the date of re-
assessment of the bill of entry or the shipping bill, as the case may be.
Explanation.--For the removal of doubts, it is hereby declared that in cases where an importer has entered any imported goods under Section46 or an exporter has entered any export goods under Section 50before the date on which the Finance Bill, 2011 receives the assent of the President, such imported goods or export goods shall continue to be governed by the provisions of Section 17 as it stood immediately before the date on which such assent is received." xxxx xxxx xxxx "27. Claim for refund of duty.-- (1) Any person claiming refund of any duty or interest,--
(a) paid by him; or (b) borne by him,
may make an application in such form and manner as may be prescribed for such refund to the Assistant Commissioner of Customs or Deputy Commissioner of Service Tax Appeal No.70656 of 2018 34 Customs, before the expiry of one year, from the date of payment of such duty or interest:
Provided that where an application for refund has been made before the date on which the Finance Bill, 2011 receives the assent of the President, such application shall be deemed to have been made under sub-section (1), as it stood before the date on which the Finance Bill,2011 receives the assent of the President and the same shall be dealt with in accordance with the provisions of sub-section (2):
Provided further that the limitation of one year shall not apply where any duty or interest has been paid under protest: Provided also that where the amount of refund claimed is less than Rupees One hundred, the same shall not be refunded.
Explanation.--For the purposes of this sub-section, "the date of payment of duty or interest" in relation to a person, other than the importer, shall be construed as "the date of purchase of goods" by such person.
(1-A) The application under sub-section (1) shall be accompanied by such documentary or other evidence (including the documents referred to in Section 28-C) as the applicant may furnish to establish that the amount of duty or interest in relation to which such refund is claimed was collected from, or paid by him and the incidence of such duty or interest, has not been passed on by him to any other person.
(1-B) Save as otherwise provided in this section, the period of limitation of one year shall be computed in the following manner, namely--
(a) in the case of goods which are exempt from payment of duty by a special order issued under sub-section (2) of Section 25, the limitation of one year shall be computed from the date of issue of such order;
Service Tax Appeal No.70656 of 2018 35
(b) where the duty becomes refundable as a consequence of any judgment, decree, order or direction of the appellate authority, Appellate Tribunal or any court, the limitation of one year shall be computed from the date of such judgment, decree, order or direction;
(c) where any duty is paid provisionally under Section 18, the limitation of one year shall be computed from the date of adjustment of duty after the final assessment thereof or in case of re-assessment, from the date of such re-assessment.
(2) If on receipt of any such application, the Assistant Commissioner of Customs is satisfied that the whole or any part of the duty 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:
Provided that the amount of duty and interest, if any, paid on such duty as determined by the Assistant Commissioner of Customs under the foregoing provisions of this sub- section shall, instead of being credited to the Fund, be paid to the applicant, if such amount is relatable to--
(i) the duty and interest, if any, paid on such duty paid by the importer or the exporter, as the case may be if he had not passed on the incidence of such duty and interest, if any, paid on such duty to any other person;
(ii) the duty and interest, if any, paid on such duty on imports made by an individual for his personal use;
(iii) the duty and interest, if any, paid on such duty borne by the buyer, if he had not passed on the incidence of such duty and interest, if any, paid on such duty to any other person;
(iv) the export duty as specified is Section 26;
(v) drawback of duty payable under Sections 74 and 75;
Service Tax Appeal No.70656 of 2018 36
(vi) the duty and interest, if any, paid on such duty borne by any other such class of applicants as the Central Government may, by notification in the Official Gazette, specify;
(vii) the duty paid in excess by the importer before an order permitting clearance of goods for home consumption is made where--
(i) such excess payment of duty is evident from the bill of entry in the case of self-assessed bill of entry; or
(ii) the duty actually payable is reflected in the reassessed bill of entry in the case of reassessment.
Provided further that no notification under clause (f) of the first proviso shall be issued unless in the opinion of the Central Government, the incidence of duty and interest, if any, paid on such duty has not been passed on by the persons concerned to any other person.
(3) Notwithstanding anything to the contrary contained in any judgment, decree, order or direction of the Appellate Tribunal, the National Tax Tribunal or any Court or in any other provision of this Actor the regulations made thereunder or any other law for the time being in force, no refund shall be made except as provided in sub-section (2).
(4) Every notification under clause (f) of the first proviso to subsection (2) shall be laid before each House of Parliament, if it is sitting, as soon as may be after the issue of the notification, and, if it is not sitting within seven days of its re-assembly, and the Central Government shall seek the approval of Parliament to the notification by a resolution within a period of fifteen days beginning with the day on which the notification is so laid before the House of the People and if Parliament makes any Service Tax Appeal No.70656 of 2018 37 modification in the notification or directs that the notification should cease to have effect, the notification shall thereafter have effect only in such modified form or be of no effect, as the case may be, but without prejudice to the validity of anything previously done thereunder.
(5) For the removal of doubts, it is hereby declared that any notification issued under clause (f) of the first proviso to subsection(2), including any such notification approved or modified under subsection (4), may be rescinded by the Central Government at any time by notification in the Official Gazette."
57. It becomes pertinent to note that both the Customs as well as the Excise Acts follow an identical procedure of self assessment. While Section 17 of the Customs Act enables an importer or an exporter, as the case may be, to self-assess and pay the duty leviable on goods, the said provision further empowers the proper officer to verify the selfassessed return that may be submitted. In terms of Section 17(4) of the said enactment, if the proper officer on verification, examination or testing of the goods comes to the conclusion that the self assessment is incorrect, it becomes entitled to reassess the duty leviable on goods. It is in extension of the aforesaid power that sub-section (5) of Section 17 speaks of reassessment and the obligation of the proper officer to pass a speaking order in support of the exercise of reassessment.
58. Section 27 enables a person to claim refund of duty or interest which may have been either paid or borne by it. Section 27(2) of the Customs Act, in terms identical to Section 11B (2) of the Excise Act, speaks of refunds being effected upon the proper officer being satisfied that the whole or any part of the duty paid is refundable. Section 27(2) is thus a provision which is pari materia with Section 11B (2) of the Excise Act.
59. The Supreme Court in ITC Limited, notwithstanding Section 27(2) employing the expression „satisfied‟ held that Service Tax Appeal No.70656 of 2018 38 unless a selfassessed return is revised or doubted in exercise of powers of reassessment, best judgment assessment or where it be alleged that duty had been short levied, short paid or erroneously refunded, those powers would not be available to be exercised at the stage of considering an application for refund. Having noticed the statutory position which prevails, we turn then to the decisions which would have a bearing on the question which stands posited.
60. Flock (India) was one of the earliest decisions which dealt with the aspect of a claim for refund emanating from a return which had been duly assessed. In Flock (India), the self- assessed returns had been duly assessed by the Assistant Collector and the issue of classification was answered against the assessee. The aforesaid order of the Assistant Collector came to be affirmed by the Collector (Appeals). It was thereafter and while seeking to prosecute a claim for refund that the assessee sought a review of the aforesaid decisions which had been rendered by the authorities. Negativing the said contention, the Supreme Court observed that once an assessment filed had been duly adjudicated in accordance with the procedure prescribed under the statute, it would be impermissible for the said decision being reviewed or revisited at the stage of consideration of a refund claim.
61. In Priya Blue Industries, the Supreme Court was faced with a situation where a Bill of Entry had been duly assessed and the duty payable in terms of that assessment deposited under protest. It was thereafter that an application for refund came to be preferred. As would be evident from the conclusions ultimately recorded in that decision, the Supreme Court categorically held that once an order of assessment came to be made, the duty was liable to be paid in accordance with that order alone. Their Lordships pertinently observed that unless such an order of assessment is reviewed or modified in appeal, the duty as determined to be payable would remain untouched and it would not be open Service Tax Appeal No.70656 of 2018 39 for an assessee to seek a review of the assessment order, bearing in mind the fact that the claim for refund is not akin to proceedings in appeal. It was further held that the authority which is enjoined to consider a refund claim can neither sit in an appeal over an assessment made nor can it review an order of assessment.
62. Both these decisions and the views expressed therein came to be specifically noticed and reaffirmed by three learned Judges of the Supreme Court in ITC Limited. The decision of the Supreme Court in ITC Limited assumes added significance, insofar as the present case is concerned, in light of it having found that a self-assessment return, even in the absence of a formal order dealing with the same, would nonetheless amount to an assessment. We had in this regard and in the preceding parts of this decision noticed the definition of the expression „assessment‟ as contained in Rule 2(b) of the 1994 Rules which includes a self- assessment of service tax and thus being evidence of a position similar and akin to that which obtains under the Customs and Excise Acts.
63. Their Lordships in ITC Limited categorically held that notwithstanding a self-assessed Bill of Entry having been merely endorsed by the competent authority, the same would nonetheless amount to an "assessment‟. It was in that backdrop that it was held that once a self-assessed return had been duly accepted, the same could not be modified or varied by an authority while considering an application for refund.
64. It becomes pertinent to note that the appellant before the Supreme Court in that case, had sought to press the claim for refund asserting that it had due to inadvertence failed to submit a self assessment return taking into consideration an exemption notification. It Service Tax Appeal No.70656 of 2018 40 was this claim which came to be ultimately negatived by the Supreme Court and which held that a claim for refund cannot be entertained unless the order of assessment, and which would include a self- assessment return, is modified in accordance with the procedure prescribed in the statute. In our considered opinion, it is these principles enunciated in Flock (India), Priya Blue Industries and ITC Limited, which compel and convince us to observe that the impugned order is clearly rendered unsustainable.
65. Undisputedly, the petitioner had submitted self- assessment returns proceeding on the basis that the output services rendered by it would qualify as an "export of service‟ and thus it being not exigible to service tax. The aforesaid self-assessment returns remained untouched and had not been questioned by the respondents either in terms of Sections 72 or 73 of the Act. The application for refund of CENVAT credit was founded on the petitioner assessing that it was not liable to pay service tax on services so exported. The accumulation of CENVAT credit came about in light of the various input services received by the petitioner and it having availed credit of service tax paid thereon in terms of Rule 3 of the CCR Rules. It was in respect of the accumulated CENVAT credit that the application for refund came to be made.
66. In our considered view, unless the self-assessed return, as submitted had been questioned, re-opened or re-assessed and the assertion of the petitioner of the services rendered by it qualifying as an "export of service‟ questioned or negatived in accordance with the procedure prescribed under the Act, its claim for refund could not have been negated. As was observed by the Supreme Court in ITC Limited, a self-assessed return also amounts to an "assessment‟ and unless it Service Tax Appeal No.70656 of 2018 41 is varied or modified in accordance with the procedure prescribed under the relevant statute, the same cannot possibly be questioned in refund proceedings. As the Supreme Court had held in the decisions aforenoted, the authority while considering an application for grant of refund neither sits in appeal nor is it entitled to review an assessment deemed to have been made. In fact, the Supreme Court in ITC Limited had described refund proceedings to be akin to execution proceedings.
67. We thus come to the firm conclusion that in the absence of the self-assessed return having been questioned, reviewed or re-assessed, the claim for refund of CENVAT credit could not have been denied by the respondents. When confronted with the application for refund, all that the respondents could have possibly examined or evaluated was whether the provisions of Rule 5 read along with the various prescriptions contained in the notification dated 18 June 2012 had been complied with. The respondents, at this stage of the proceedings, could not have doubted, questioned or undertaken a merit review of the self-assessed return which had been submitted.
68. The reliance which is placed on Clause 3(g) of the Notification dated 18 June 2012 also would not justify the denial of refund, since the expressions "determine' and "satisfy‟ as appearing in the parent Rule as also the Notification noted hereinabove would have to be construed bearing in mind the limited jurisdiction and authority which was available in the hands of the Adjudicating Authority and exercised by it while considering the application for refund. In any case, the mere usage of the expressions „determine‟ or „satisfy‟ would, in our considered opinion, not amount to expanding the nature of the authority which the second respondent could have exercised while evaluating an application for refund. Once the self-assessed return of the Service Tax Appeal No.70656 of 2018 42 petitioner and in terms of which its claim of refund and of being inexigible to service tax had attained finality and had not been reassessed or questioned, the refund was clearly liable to be granted automatically.
69. At the stage of consideration of the application for refund, it would be impermissible for the second respondent to question whether the services rendered by the petitioner amounted to an "export of service‟ or even dwell upon issues which related to its principal claim of not being liable to pay service tax. The recognition of such a power being available to be wielded while considering an application for refund would clearly be contrary to the principles propounded in ITC Limited. The acceptance of such a contention would amount to recognising the existence of an adjudicatory function inhering in the refund sanctioning authority and would clearly be abhorrent to the principles enunciated in the said decision of the Supreme Court.
70. Since the liability or otherwise of the petitioner to pay service tax would flow and rest only upon the assertions made in the self assessed return, the various issues which have been gone into by the second respondent while passing the impugned order would clearly be an exercise beyond the jurisdiction which could otherwise be recognised to exist at the stage of consideration of a refund claim. We thus find that the impugned order is clearly rendered unsustainable on this score and is liable to be set aside for the aforesaid reasons."
From the above decision of Hon'ble Delhi High Court it is evident that principles laid down by the Hon'ble Supreme Court in case of ITC Ltd, supra would apply to cases of refund under the Finance Act, 1994 i.e. Service Tax refunds.
4.8 In view of the above referred decisions of Hon'ble Supreme Court and Hon'ble Delhi High Court in our view till the time it is Service Tax Appeal No.70656 of 2018 43 established that the ST-3 return was revised or modified and to execute such revision/ modification the refund acclaim has been made the same could not have be entertained. Original authority was thus right in holding that the refund claim was unsubstantiated, and has rightly rejected the same.
4.9 It is also settled principle in law that all the refund claims filed should be in accordance with the provisions contained in Section 11B of the Central Excise Act, 1944. Hon'ble Supreme Court has in case of Mafatlal Industries specifically concluded observing as follows:
"99.The discussion in the judgment yields the following propositions. We may forewarn that these propositions are set out merely for the sake of convenient reference and are not supposed to be exhaustive. In case of any doubt or ambiguity in these propositions, reference must be had to the discussion and propositions in the body of the judgment.
(i) Where a refund of tax/duty is claimed on the ground that it has been collected from the petitioner/plaintiff - whether before the commencement of the Central Excises and Customs Laws (Amendment) Act, 1991 or thereafter - by mis-interpreting or mis-applying the provisions of the Central Excises and Salt Act, 1944 read with Central Excise Tariff Act, 1985 or Customs Act, 1962 read with Customs Tariff Act or by mis-interpreting or mis-applying any of the rules, regulations or notifications issued under the said enactments, such a claim has necessarily to be preferred under and in accordance with the provisions of the respective enactment before the authorities specified thereunder and within the period of limitation prescribed therein. No suit is maintainable in that Service Tax Appeal No.70656 of 2018 44 behalf. While the jurisdiction of the High Courts under Article 226 - and of this Court under Article 32 - cannot be circumscribed by the provisions of the said enactments, they will certainly have due regard to the legislative intent evidenced by the provisions of the said Acts and would exercise their jurisdiction consistent with the provisions of the Act.
The writ petition will be considered and disposed of in the light of and in accordance with the provisions of Section 11B. This is for the reason that the power under Article 226 has to be exercised to effectuate the rule of law and not for abrogating it.
The said enactments including Section 11B of Central Excises and Salt Act and Section 27 of the Customs Act do constitute "law" within the meaning of Article 265 of the Constitution of India and hence, any tax collected, retained or not refunded in accordance with the said provisions must be held to be collected, retained or not refunded, as the case may be, under the authority of law. Both the enactments are self-contained enactments providing for levy, assessment, recovery and refund of duties, imposed thereunder . Section 11B of the Central Excises and Salt Act and Section 27 of the Customs Act, both before and after the 1991 (Amendment) Act are constitutionally valid and have to be followed and given effect to. Section 72 of the Contract Act has no application to such a claim of refund and cannot form a basis for maintaining a suit or a writ petition. All refund claims except those mentioned under Proposition (ii) below have to be and must be filed and adjudicated under the provisions of the Central Excises and Salt Act or the Service Tax Appeal No.70656 of 2018 45 Customs Act, as the case may be. It is necessary to emphasise in this behalf that Act provides a complete mechanism for correcting any errors whether of fact or law and that not only an appeal is provided to a Tribunal - which is not a departmental organ - but to this Court, which is a civil court.
(iii) A claim for refund, whether made under the provisions of the Act as contemplated in Proposition
(i) above or in a suit or writ petition in the situations contemplated by Proposition (ii) above, can succeed only if the petitioner/plaintiff alleges and establishes that he has not passed on the burden of duty to another person/other persons. His refund claim shall be allowed/decreed only when he establishes that he has not passed on the burden of the duty or to the extent he has not so passed on, as the case may be. Whether the claim for restitution is treated as a constitutional imperative or as a statutory requirement, it is neither an absolute right nor an unconditional obligation but is subject to the above requirement, as explained in the body of the judgment. Where the burden of the duty has been passed on, the claimant cannot say that he has suffered any real loss or prejudice. The real loss or prejudice is suffered in such a case by the person who has ultimately borne the burden and it is only that person who can legitimately claim its refund. But where such person does not come forward or where it is not possible to refund the amount to him for one or the other reason, it is just and appropriate that that amount is retained by the State, i.e., by the people. There is no immorality or impropriety involved in such a proposition.
Service Tax Appeal No.70656 of 2018 46 The doctrine of unjust enrichment is a just and salutory doctrine. No person can seek to collect the duty from both ends. In other words, he cannot collect the duty from his purchaser at one end and also collect the same duty from the State on the ground that it has been collected from him contrary to law. The power of the Court is not meant to be exercised for unjustly enriching a person. The doctrine of unjust enrichment is, however, inapplicable to the State. State represents the people of the country. No one can speak of the people being unjustly enriched.
(iv) It is not open to any person to make a refund claim on the basis of a decision of a Court or Tribunal rendered in the case of another person. He cannot also claim that the decision of the Court/Tribunal in another person's case has led him to discover the mistake of law under which he has paid the tax nor can he claim that he is entitled to prefer a writ petition or to institute a suit within three years of such alleged discovery of mistake of law. A person, whether a manufacturer or importer, must fight his own battle and must succeed or fail in such proceedings. Once the assessment of levy has become final in his case, he cannot seek to reopen it nor can he claim refund without re-opening such assessment/order on the ground of a decision in another person's case. Any proposition to the contrary not only results in substantial prejudice to public interest but is offensive to several well established principles of law. It also leads to grave public mischief. Section 72 of the Contract Act, or for that matter Section 17(1)(c) of the Limitation Service Tax Appeal No.70656 of 2018 47 Act, 1963, has no application to such a claim for refund.
(v) Article 265 of the Constitution has to be construed in the light of the goal and the ideals set out in the Preamble to the Constitution and in Articles 38 and 39 thereof. The concept of economic justice demands that in the case of indirect taxes Central Excises duties and Customs duties, the tax collected without the authority of law shall not be refunded to the petitioner-plaintiff unless he alleges and establishes that he has not passed on the burden of duty to a third party and that he has himself borne the burden of the said duty.
(vi) Section 72 of the Contract Act is based upon and incorporates a rule of equity. In such a situation, equitable considerations cannot be ruled out while applying the said provision.
(vii) While examining the claims for refund, the financial chaos which would result in the administration of the State by allowing such claims is not an irrelevant consideration. Where the petitioner- plaintiff has suffered no real loss or prejudice, having passed on the burden of tax or duty to another person, it would be unjust to allow or decree his claim since it is bound to prejudicially affect the public exchequer. In case of large claims, it may well result in financial chaos in the administration of the affairs of the State."
4.10 In view of the above referred decisions of the Hon'ble Supreme Court and High Court we do not find any merits in this appeal. We also do not find that the decision relied upon by the appellant would support their case contrary to the above referred decision.
Service Tax Appeal No.70656 of 2018 48 5.1 Appeal is dismissed.
(Pronounced in open court on- )
(Separate Order)
(P.K. CHOUDHARY)
MEMBER (JUDICIAL)
Sd/-
(SANJIV SRIVASTAVA)
MEMBER (TECHNICAL)
akp
Service Tax Appeal No.70656 of 2018
49
P. K. CHOUDHARY:
I have carefully perused the findings of my learned brother Mr. Sanjeev Srivastava, Member (Technical), contained in para nos. 4.1 to 4.10 above; and considered the impugned Order-in- Appeal No.187/ST/Appl./Alld/2018 dated 23.02.2018 and Order- in-Original No.29-ST/Refund/DC/2017 dated 07.06.2017. I have also perused the ST-3 Returns pertaining to relevant period and Invoices issued by BIDCO for advances and running Invoices issued after part performance of services under the contextual Contracts which are available in file having been adduced by both sides.
2. The issue involved in the present Appeal is whether Appellant is entitled to claim for refund of Swachh Bharat Cess (SBC in short) and Krishi Kalyan Cess (KKC in short) erroneously charged by Service Provider BIDCO and erroneously paid by Appellant under Running Invoices issued periodically after part performance of continuous supply of service, despite the fact that the Invoice value in those Invoices was zero as payments in lieu of services invoiced and quantified in those Invoices were paid by Appellant and received by Service Provider in advance (before the date of introduction of SBC and KKC), whereupon Service Tax and Education Cess (EC) /Secondary & Higher Education Cess (SHEC) as applicable on the dates of payment/ receipt of advance payment was duly discharged.
3. In this case, Refund has been filed by service recipient in terms of provisions of Section 11B of the Central Excise Act, 1944 read with Section 83 of the Finance Act, 1994 and the dispute pertains to the period from 2011-12 to 2016-17.
4. The facts of the case as emanating from the records of present Appeal are that Appellant had awarded two EPC Contracts to M/s Bajaj Infrastructure Development Company Limited (BIDCO in short) on 19.05.2011, one for Erection, Commissioning and Installation Services and the other for providing Civil Constructions and Erection (Works Contract) Services. In terms of aforesaid Contracts, BIDCO issued 12 Service Tax Appeal No.70656 of 2018 50 Invoices for advance payment against EPI Contract and 62 Invoices for advance payment against WCT Contract. The aforesaid Invoices included advance amounts and applicable taxes viz. Service Tax @ 12% + Education Cess @ 2% + Secondary and Higher Education Cess @ 1% till 31.05.2015 and Service Tax @ 14% with effect from 01.06.2015 (as EC and SHEC were withdrawn with effect from 31.05.2015). Appellant accordingly paid the aforesaid Invoices and BIDCO in turn deposited the tax collected from Appellant to the exchequer.
5. BIDCO, thereafter, commenced rendering of services under both the Contracts and after rendering the services (part performance), BIDCO issued Running Invoices for the services rendered against subject Contracts for Invoice Value arrived by deducting advance from the value of services rendered. In the aforesaid Invoices BIDCO charged Service Tax + Cesses as applicable on the Invoice Value arrived by deducting advances from the value of service rendered. Appellant paid the Invoice Value and Taxes as indicated in the Invoices and BIDCO in turn deposited the Service Tax so collected on due dates. Wherever the Invoice value was zero as entire value of services were adjusted against advances, BIDCO did not charge any Tax. All these Invoices for advance payments and Running Invoices issued after part performance including those with zero Invoice value are available on record and there is no dispute qua the authenticity of the same.
6. Vide Section 119 of the Finance Act, 2015 read with Notification No.22/2015-ST dated 06.11.2015, Central Government introduced Swachh Bharat Cess with effect from 15.11.2015 @ 0.5% of the value of Taxable Services. Similarly, vide Section 161 of Finance Act, 2016, Central Government introduced Krishi Kalyan Cess with effect from 01.06.2016 @ 0.5% on the value of Taxable Services. As per appeal papers, after introduction of SBC with effect from 15.11.2015, BIDCO issued 52 Running Invoices with zero invoice value in respect of EPI Contract adjusting the entire value of services from advances received earlier. Similarly, BIDCO also issued 48 Service Tax Appeal No.70656 of 2018 51 Running Invoices with zero invoice value in respect of WCT Contract adjusting the entire value of services from advances received earlier. Likewise, after introduction of KKC, BIDCO issued 23 Running Invoices with zero invoice value in respect of EPI Contract adjusting the entire value of services from advances received earlier and also issued 13 Running Invoices with zero invoice value in respect of WCT Contract adjusting the entire value of services from advances received earlier. In all these Invoices, BIDCO charged SBC and KKC and Appellant paid the same to BIDCO, who in turn deposited the same with exchequer.
7. Later, on 04.01.2017, Appellant preferred subject Refund Claim on the ground that BIDCO had wrongly charged and collected SBC and KKC and Appellant had erroneously paid the same in respect of 75 Invoices against EPI Contract and 61 Invoices against WCT Contract amounting to Rs. 61,15,061/- being total amount of SBC and KKC so paid on zero value Invoices.
8. The original authority, Assistant Commissioner (Refund), thereafter issued a Show Cause Notice F. No. V(18)131- Refund/ST/JHS/2016/342 dated 07.03.2017 proposing rejection of the claim on the following grounds-
"In view of above, it is evident that the claimant is a service recipient and M/s. BIDCO is a service provider. The service provider appears to have provided their services to the service recipient and appears to have received the amount alongwith service tax and Cess. The service tax alongwith Cess have been deposited by the service provider. Since the Cess was wrongly charged from the recipient by the service provider and was deposited in Government exchequer by the service provider as such the service provider was required to. claim such undue deposits if any, however, the claimant has filed the claim with a disclaimer letter received from service provider that they will not claim any refund of SBC / ККС, wrongly charged and paid. But the claimant Service Tax Appeal No.70656 of 2018 52 on other side has failed to provide the details of payment made in full to the service provider before the completion of services or the progressive payments made time to time viz. Mobilization advances / other advances etc. which have been adjusted by subsequent invoicing, by the service provider. They have also failed to submit the evidences that the payment so made were inclusive of Service tax or exclusive of service tax and the that the said payments were full and final to the contracted value. They have also failed to clarify that the SBC/KKC were not liable to paid according to the provisions of Service Tax / Rules. The claimant's contention that Rule 5 of the point of Taxation Rules would be applicable in their case, appears not proper as the services which have been provided by the BIDCO were already taxed and the claimant was receiving services in a continuous process. Therefore, it appears that the claimant is not entitled for refund of the amount so claimed and such claim is liable to be rejected on the grounds discussed herein above."
9. Eventually, vide Order-in-Original dated 07.06.2017, Adjudicating Authority rejected Appellant's claim primarily on the following grounds-
"I also observe that claimant has submitted that service provider has claimed the entire contract value and applicable service tax from them before levying of SBC and KKC and the amount on which Cesses have been paid, were already the adjusted amounts on which due taxes were paid earlier, as such no Cess was required to be paid, but the said Cesses were paid to Govt. Exchequer due to mistaken notion of law, hence refund of such amount is warranted. From the available documents it is clear that service provider has been given Rs.7,84,36,91,229/- as advances on which due Service Tax Appeal No.70656 of 2018 53 service tax was said to be paid, time to time and against which the service provider has also issued invoices of gross. amount Rs.7,29,25,57,096/- and amongst them only amount of Rs.5,54,50,47,376/- have been adjusted through the said invoices, issued time to time, after completion of work and an amount of Rs.2,29,86,43,853/- was not adjusted but contrary to this, service provider has also paid an additional amount of Service Tax of Rs.21,68,11,410/- on the value of Rs.1,74,75,09,720/- • time to time on the above said invoices also. This gives conclusion that if service provider was having the tax paid value with them, why the said value has not been utilized fully, for adjustment during issuance of invoices and service tax has been paid on the said part of* invoice value. As per chart submitted, the service provider has issued invoices after full adjustments of value on such invoices since 01.10.2015; but claimant has failed to produce documents in support of their contention i.e. the details of advances given time to time and utilization thereof, and remaining balance at the relevant time, also they failed to prove why the advance amount on which service tax was paid by the service provider, has not been utilized during issuance of invoices and the service tax charged on net taxable value by service provider has been paid by them. The claimant has also failed to submit the evidences of payment of SBC/KKC, as charged by the service provider to them. This itself clarify that the claimant has failed to prove with documentary evidences that tax paid in advance value, of services, by the service provider has been properly utilized and SBC/KKC paid on nil net value, was not payable, accordingly, they were right to claim for refund of such service tax amount paid advertently and unknowingly to the Govt. Exchequer.
Service Tax Appeal No.70656 of 2018 54 I also observe that the claimant has also failed to produce substantial documents in their support viz ST-3 Returns, Challans for Service Tax deposits for the interim period which may give a correct and evidential picture in their support.
The claimants' contentions that legally they are entitled for the refund of such undue service tax deposit in view of service tax provisions read with disclaimer letter from the service provider is not supported with proper and correct evidences in their support, as discussed supra. Therefore, it appears that the claimant is hot entitled for refund of the amount so claimed and such claim is liable to be rejected on the grounds discussed herein above."
10. Aggrieved by the aforesaid Order, Appellant preferred an Appeal before the Commissioner (Appeals), who also vide impugned Order-in-Appeal dated 23.03.2018, affirmed the rejection of claim, though on different grounds as returned in para nos. 4.4.3 to 4.5of Order-in-Appeal which read as under: -
4.4.3 Since, in this case, there is no dispute that M/s BIDCO had provided continuous supply of services, the invoices issued for the progressive works, which required the appellant to make payments to M/s BIDCO, by way of adjustment from the advances, are, thus, required to be considered for the purpose of Rule 5 of the Point of Taxation Rules, 2011, in terms of Rule 4A of the Service Tax Rules, 1994 read with Rule 2(d) of the Point of Taxation Rules, 2011, and the aforesaid clarification dated 18.07.2011 issued by the Central Board of Excise & Customs and not the invoices issued for the advances.
4.4.4 Thus, on applying the aforesaid statutory provisions & clarifications to the facts of the case, I find that in this case, though the payments had been received before the levy of Swachh Bharat Cess and Krishi Kalyan Cess, the invoices for the progressive Service Tax Appeal No.70656 of 2018 55 works (i.e., the invoices issued under Rule 4A of the Service Tax Rules, 1994 showing the value of taxable services, were issued after the introduction of these new levies! Thus, where such invoices had been issued within fourteen days of these levies, I find there was no requirement to pay Swachh Bharat Cess and Krishi Kalyan Cess. Further, where the invoices had been issued on or after fourteen days of these levies, Swachh Bharat Cess and Krishi Kalyan Cess were required to be paid.
4.4.5 Further, on going through the charts for the two contracts submitted by the Appellant, it is observed that there are only two invoices in the contract for erection, installation & commissioning and four invoices in the contract for civil construction and structural works which were issued within fourteen days of the levy of Swachh Bharat Cess and the remaining invoices had been issued on or after 01.12.2015. Thus, in respect of such invoices involving Swachh Bharat Cess of Rs.2,48,418/-, there was no requirement for paying Swachh Bharat Cess.
4.4.6 Similarly, it is observed that there are only eleven invoices in the contract for erection, installation & commissioning and three invoices in the contract for civil construction and structural works which were issued within fourteen days of the levy of Krishi Kalyan Cess and the remaining invoices had been issued on or after 15.06.2016. Thus, only in respect of such invoices involving Krishi Kalyan Cess of Rs.6,32,596/-, there was no requirement for paying Krishi Kalyan Cess. 4.5 I also find that in terms of Section 11B of the Central Excise Act, 1944 as made applicable to the Service Tax matters, the relevant date for filing the refund in this case was one year from the date of payment of Service Tax, as the refund was filed by the appellant i.e., the service receiver). Further, on going Service Tax Appeal No.70656 of 2018 56 through the documents submitted by the appellant, it is observed that Swach Bharat Cess of Rs.2,48,418/- was paid vide challan dated 04.12.2015. Since in this case, refund was filed on 04.01.2017, I find that refund of Swachh Bharat Cess of Rs.2,48,418/- was barred by time limitation."
11. The present Appeal under consideration has been preferred by Appellant against the aforesaid Order-in-Appeal.
12. I find that in terms of Section 66 of Finance Act, 1994 as substituted by Finance Act, 2007, Service Tax was leviable on the value of taxable services enumerated in various clauses of said Section, which, inter alia, included" erection, commissioning, commissioning and installation services" under clause (zzd) and "work contract services" under clause (zzzza). For better comprehension, the provisions of Section 66 are extracted below -
"66. Charge of service tax There shall be levied a tax (hereinafter referred to as the service tax) at the rate of twelve per cent of the value of taxable services referred to in sub-clauses ........."
Vide the Finance Act, 2012, scope of charge of Service Tax was enlarged vide insertion of Section 66B to include "services provided or agreed to be provided" within the ambit and scope of Service Tax and thus, with effect from 01.06.2012, contractual services to be provided on a later date were brought under the purview of Service Tax. The said Section read as under -
"66B. Charge of service tax on and after Finance Act, 2012 - There shall be levied a tax (hereinafter referred to as the service tax) at the rate of twelve per cent on the value of all services, other than those services specified in the negative list, provided or agreed to be provided in the taxable territory by one person to another and collected in such manner as may be prescribed."
Service Tax Appeal No.70656 of 2018 57 Thus, I find that during the relevant period, in terms of Section 66 read with Section 66B of the Finance Act, 2012, all services falling in any of the clauses enumerated under Section 66, provided or agreed to be provided by one person to person, were leviable to Service Tax.
13. I further find that in terms of Rule 4A of the Service Tax Rules, 1994 as obtaining during the relevant period envisaged that in case of continuous supply of service, service provider was to issue an Invoice within 30 days from each event specified in the Contract which required service recipient to make any payment to service provider. The Rule is extracted below for ease of reference.
4A. Taxable service to be provided or credit to be distributed on invoice, bill or challan (1) Every person providing taxable service, not later than thirty days from the date of [completion of such taxable service or receipt of any payment towards the value of such taxable service, whichever is earlier,] shall issue an invoice, a bill or, as the case may be, a challan signed by such person or a person authorized by him in respect of [such] taxable service provided or to be provided and such invoice, bill or, as the case may be, challan shall be serially numbered and shall contain the following, namely:--
(i) the name, address and the registration number of such person;
(ii) the name and address of the person receiving taxable service;
(iii) description, classification and value of taxable
service provided or to be provided; and
(iv) the service tax payable thereon:
Provided that in case the provider of taxable service is a banking company ........
Service Tax Appeal No.70656 of 2018 58 Provided further that in case the provider of taxable service is a goods transport agency ......... Provided also that in case of continuous supply of service, every person providing such taxable invoice shall issue an invoice, bill or challan, as the case may be, within thirty days of the date when each event specified in the contract, which requires the service receiver to make any payment to service provider, is completed.
Provided also that in case the provider of taxable service is a banking company .......
Provided [also] that in case the provider of taxable service is aircraft operator .......
Provided also that wherever the provider of taxable service receives an amount upto rupees one thousand in excess of the amount indicated in the invoice and the provider of taxable service has opted to determine the point of taxation based on the option as given in Point of Taxation Rules, 2011, no invoice is required to be issued to such extent.
14. I further find that with effect from 01.04.2011, Government introduced Point of Taxation Rules, 2011 vide Notification No. 18/2011-ST dated 01.03.2011, defining the point of taxation. The pertinent provisions relevant for present appeal are extracted below-
2. Definitions In these rules, unless the context otherwise requires,
(a) "Act" means the Finance Act, 1994 (32 of 1994);
(b) "associated enterprises" shall have the meaning assigned to it in section 92A of the Income Tax Act, 1961 (43 of 1961);
(c) "continuous supply of service" means any service which is provided, or to be provided continuously, under a contract, for a period exceeding three months, or where the Central Government, by a notification in the Official Service Tax Appeal No.70656 of 2018 59 Gazette, prescribes provision of a particular service to be a continuous supply of service, whether or not subject to any condition;
(d) "invoice" means the invoice referred to in rule 4A of the Service Tax Rules, 1994 and shall include any document as referred to in the said rule;
(e) "point of taxation" means the point in time when a service shall be deemed to have been provided;
(f) "taxable service" means a service which is subjected to service tax, whether or not the same is fully exempt by the Central Government under Section 93 of the Act. 3 Determination of point of taxation For the purposes of these rules, unless otherwise provided, 'point of taxation shall be,--
(a) the time when the invoice for the service provided or to be provided is issued;
PROVIDED that where the invoice is not issued within fourteen days of the completion of the provision of the service, the point of taxation shall be date of such completion.
(b) in a case, where the person providing the service, receives a payment before the time specified in clause
(a), the time, when he receives such payment, to the extent of such payment.
Explanation: For the purpose of this rule, wherever any advance by whatever name known, is received by the service provider towards the provision of taxable service, the point of taxation shall be the date of receipt of each such advance.
4 Determination of point of taxation in case of [change in effective rate of tax] Service Tax Appeal No.70656 of 2018 60 Notwithstanding anything contained in rule 3, the point of taxation in cases where there is a *[change in effective rate of tax] in respect of a service, shall be determined in the following manner, namely:
(a) in case a taxable service has been provided before the *[change in effective rate of tax],-
(i) where the invoice for the same has been issued and the payment received after the *[change in effective rate of tax], the point of taxation shall be date of payment or issuing of invoice, whichever is earlier;
or
(ii) where the invoice has also been issued prior to *[change in effective rate of tax] but the payment is received after the*[change in effective rate of tax], the point of taxation shall be the date of issuing of invoice; or
(iii) where the payment is also received before the *[change in effective rate of tax,] but the invoice for the same has been issued after the *[change in effective rate of tax, the point of taxation shall be the date of payment;
(b) in case a taxable service has been provided after the "[change in effective rate of tax],
(i) where the payment for the invoice is also made after the *[change in effective rate of tax] but the invoice has been issued prior to the *[change in effective rate of tax], the point of taxation shall be the date of payment; or
(ii) where the invoice has been issued and the payment for the invoice received before the *[change in effective rate of tax], the point of taxation shall be Service Tax Appeal No.70656 of 2018 61 the date of receipt of payment or date of issuance of invoice, whichever is earlier; or
(iii) where the invoice has also been raised after the *[change in effective rate of tax but the payment has been received before the*[change in effective rate of taxi, the point of taxation shall be date of issuing of invoice.
Explanation: For the purposes of this rule, "change in effective rate of tax shall include a change in the portion of value on which tax is payable in terms thereunder of a notification issued under the provisions of Finance Act, 1994 or rules made
5. Payment of tax in cases of new services then,-
Where a service, not being a service covered by rule 6, is taxed for the first time, then, -
(i) no tax shall be payable to the extent the invoice has been issued and the payment received against such invoice before such service became taxable;
(ii) no tax shall be payable if the payment has been received before the service becomes taxable and invoice has been issued within the period referred to in rule 4A of the Service Tax Rules, 1994.
6. Determination of point of taxation in case of continuous supply of service Notwithstanding anything contained in rule 3, 4 or 8, in case of continuous supply of service, the "point of taxation' shall be,--
(a) the time when the invoice for the service provided or to be provided is issued;
Service Tax Appeal No.70656 of 2018 62 PROVIDED that where the invoice is not issued within fourteen days of the completion of the provision of the service, the point of taxation shall be date of such completion.
(b) in a case, where the person providing the service, receives a payment. before the time specified in clause
(a), the time, when he receives such payment, to the extent of such payment.
Explanation 1: For the purpose of this rule, where the provision of the whole or part of the service is determined periodically on the completion of an event in terms of a contract, which requires the service receiver to make any payment to service provider, the date of completion of each such event as specified in the contract shall be deemed to be the date of completion of provision of service.
Explanation 2: For the purpose of this rule, wherever any advance, by whatever name known, is received by the service provider towards the provision of taxable service, the point of taxation shall be the date of receipt of each such advance.]
15. In view of the of the aforesaid statutory provisions, I am of the considered opinion that Invoice issued by BIDCO for advance payment qualified as an Invoice under the provisions of Rule 2(d) of POTR, 2011 and Rule 4A(1) of the Service Tax Rules, 1994, 3rd proviso; and thus, BIDCO had correctly charged and collected Service Tax and Cesses as applicable on the date of issuance of 12 + 62 Invoices for such advance payments. It is also evident from appeal paper book that Appellant had paid the Tax + Cesses as applicable to BIDCO, who in turn, had deposited the same with exchequer. Thus, in my considered opinion, advance amount paid by Appellant was Tax paid amount i.e. an amount for rendering of service on which applicable Tax was Service Tax Appeal No.70656 of 2018 63 duly discharged on the date of payment of advance amount by Appellant against which no service was provided on the date of receipt/ payment of aforesaid amount and the service was to be rendered on a later date.
16. I also find that in all the 75 + 61 Invoices issued after introduction of SBC and KKC; and in respect whereof Appellant is claiming refund, BIDCO had adjusted entire value of service quantified in those Invoices against the advance payment received earlier along with Tax as applicable on the date of receipt of advance indicating Invoice value as 'zero'. However, despite Invoice value being zero, BIDCO had charged SBC and KKC from Appellant. Hence, in my considered opinion, the entire value of service having suffered Tax as applicable on the date of receipt of advance, there was no liability of KKC and/ or SBC. I, therefore, find force in Appellant's submission that BIDCO had wrongly charged KKC and SBC and Appellant had erroneously paid the same.
17. I also find force in learned Counsel's submission that the said amount had suffered EC and SHEC under Invoices for advances and again SBC and KKC under the Running Invoices involving zero Invoice value. Thus, collection and payment of SBC and KKC being without authority of law, I hold that Appellant is entitled to refund thereof.
18. In the present case, the law propounded by co-ordinate benches of this Tribunal in Vigyan Gurukul; Bajaj Alliance Insurance Co. Ltd.; Carrier Point; and Indian Ispat Works Pvt. Ltd. squarely apply to the facts of present case as in the present case, Appellant had suffered the incidence of duty, which were not leviable at all as payment of the services rendered subsequent to the introduction of SBC and KKC but payment in lieu whereof was realised much before introduction of SBC and KKC as advance whereupon the Tax liability as on date on receipt of the amount of issuance of Invoice was duly discharged.
(i) Vigyan Gurukul Vs. Commissioner of C. Ex., Jaipur-I - 2012 (25) STR 459 (Tri. - Del.) Service Tax Appeal No.70656 of 2018 64 "12. We have also examined the Explanation in Rule 6(1). This explanation does not make any provision as to which rate of tax will apply in situation like the one at hand (whether that on date of receipt of value or that on date of providing service). This explanation says that the service provider need to pay tax only on that portion of value for which service has been provided. In the instant case the Appellant paid tax on the full value received. The department did not take any objection to such payment in advance. So at a later date when the rate went up, there is no reason for the department to turn around and say that the Appellant should not have paid tax in advance. So we do not find it proper to rely on this explanation to conclude that the rate of tax as prevalent at the time of providing service (This date itself is not clear date in this case) will apply. We are of the view that during the relevant time the rate that was applicable at the time of receipt of value of service will apply in case where the assessee chose to pay tax on the advance amount received.
13. We also take note that provisions in Rule 4(b)(ii) and Rule 9 of the new Point of Taxation Rules, 2011 as amended by Notification 25/2011-ST dated 30.03.2011 have the same effect as our conclusion. For convenience Rule 9 of the said Rules is reproduced below:
'9. Transitional Provisions. - Nothing contained in this sub-rule shall be applicable, -
(i) where the provisions of service is
completed, or
(ii) where invoices are issued prior to the date on which these rules come into force.
Service Tax Appeal No.70656 of 2018 65 Provided that services for which provision is completed on or before 30th day of June, 2011 or where the invoices are issued up to the 30th day of June, 2011, the point of taxation shall, at the option of the taxpayer, be the date on which the payment is received or made, as the case may be.'
14. For the reason explained above we allow the appeal with consequential beliefs."
(ii) Bajaj Allianz General Insurance Co. Ltd.
Vs. Commr. of C. Ex., Pune - 2009 (13) STR 259 (Tri. - Mumbai) as affirmed by Hon'ble Supreme Court - Commissioner of Central Excise, Pune-III Vs. Bajaj Allianz General Insurance Co. Ltd. - 2022 (64) GSTL 53 (SC) "2. The Learned Tribunal, by a detailed judgment and order [2009 (13) STR 259 (Tri. - Mum.)] and considering the fact that the entire premium was paid prior to 10.09.2004 i.e. before the change in the rate of tax, has observed and held that the assessee is not liable to pay the enhanced rate of tax."
(iii) Carrier Point Vs. Commissioner of Central Excise, Jaipur - 2018 (10) GSTL 213 (Raj.) "28. We have heard the counsel for the parties.
29. Before proceeding with the matter it will not be out of place to reproduce Article265 which reads as under:-
Service Tax Appeal No.70656 of 2018 66 '265. Taxes not to be imposed save by authority of law. - No tax shall be levied or collected except by authority of law.'
30. The assessee herein has entered into a concluded Contract much prior to coming into force of Service Tax lawand in view of the clarification which has been issued in 2005 which clearly made out the case for the appellant inasmuch as the legislation has now used the language after 2005 which clearly states as under:
"Taxable service means any service or to be provided to any person by a Commercial training or coaching classes in relation of the Coaching".
31. In that view of the mater, it is very ciear that prior thereto, there is authority interpretation of the provision as services which are referred to be provided in future was not covered. Even otherwise in view of the law Concluded Contract cannot be revived in view of subsequent development which will lead to a very odd situation with the assessee and he has to suffer in his business and has to face the breach of contract.
32. In that view of the matter when we have to interpret the taxing statute, we have to interpret Article 265 and the possibility of interpretation should not be avoided to be very impracticable for either of the side.
33. In that view of the matter, we make it clear that any payment of contract which are Service Tax Appeal No.70656 of 2018 67 entered after 1-7-2003 will invite Service Tax and any contract which is concluded prior to 1-7-2003 will not invite imposition of Service Tax.
34. In that view of the matter, the issue is required to be answered in favour of the assessee.
35. Regarding the second issue, any contract of payment received prior to 1-7-2003 is not the condition for taxing. The tax will be imposed on the payment received thereafter. It is stated that the payment is already received prior to 1-7- 2003.
36. In that view of the matter, the interpretation put forward by the department is required to be reversed.
37. In third appeal, regarding the second issue, in view of the fact that first issue is answered in favour of the assessee, the second issue will not arise. Therefore omission of any issue in the first notice will not come in the way of the department.
38. In that view of the matter, all the issues are required to be answered in favour of the assessee against the department.
39. The appeals stand allowed."
(iv) Commissioner of C. Ex., Raipur Vs. Indian Ispat Works (P) Ltd. - 2006 (3) STR 161 (Tri. - Del.) Service Tax Appeal No.70656 of 2018 68 "5.Considered the submission of the DR and perused the records. I find that the Respondents are SSI and were availing Service of the GTO. The department directed them to deposit the Service Tax, though the same was not payable by the respondent. The respondents contention, it seems were correct, as Section 160 of Finance Act, 2003, amends the Notification No. 43/97-ST retrospectively, in other words the respondents were not taxable for the Service availed to them from the G.T.O. The respondents were not required to pay the amount, as tax, for the whole period i.e. from 16-7-97 to 16-10-93. The department has allowed the claim of the respondents for the period 16-11-97 to 1-6- 98,but rejected the refund claim for the previous period and subsequent period as time barred. The rejection of the claim of refund is wrong as it can be seen from the records, that the amount paid by the respondents is not a tax, but an amount collected by the department e without any authority of law.
Division Bench of Tribunal in the case of Hexacom (I) Ltd. v. CCE, Jaipur - 2003 (156) E.L. T. 357 (Tri. - Del.) at Para No. 2 has held as follows: -
'It is not in dispute that no service tax was leviable during the period in question. Therefore, whatever payment was made did not relate to service tax at all. It was merely an erroneous collection by DOT and payment by the appellants. Therefore, provisions relating to refund of service tax, including those relating to unjust enrichment, cannot have any application to the return of the amount in question.' Service Tax Appeal No.70656 of 2018 69 The learned Commissioner (Appeals) has also correctly relied upon the Hexacom (I, Ltd (supra) case and come to conclusion that the respondents are eligible for refund. The case laws relied upon by the learned DR, discuss about the refund claim of the amount of paid as duty and do not address to the issue of amount not payable as Tax. Hence they are not relevant for the issue in this case.
6. Under the circumstances, I do not see any reason to interfere with the order-in-appeal dated 24-5-2004. The departments appeal is dismissed."
The aforesaid judgments squarely support my findings.
19. In para 4.8 above, learned Member (T) has affirmed rejection of refund on the ground that as ST-3 Returns filed by BIDCO have not been revised or modified, Appellant's claim for refund is not maintainable, however, I respectfully differ and do not agree with the said finding, firstly as in view of my findings supra, SBC and KKC on impugned zero value Invoices was not payable and hence, Appellant is entitled to refund and secondly as this ground was neither taken in the Show Cause Notice nor in the Order-in-Original or at the First Appeal stage and therefore, this being an entirely new ground, cannot be raised at Second Appeal stage.
20. To sum up, I hold that Appellant is entitled to Refund and hence, I allow the appeal with consequential relief, as per law.
Sd/-
(P. K. CHOUDHARY) MEMBER (JUDICIAL) Service Tax Appeal No.70656 of 2018 70 Difference of Opinion In view of difference in opinion expressed by Member (Judicial) and Member (Technical), following questions are referred to the Hon'ble President for referring the same either by himself or by referring the same to a third member for his opinion on the following questions: -
Whether in view of the fact that ST-3 Returns has not been revised or modified till date, the Refund Application cannot be entertained and the same has rightly been rejected by authorities below as held by learned Member (Technical) or under the provisions of the Finance Act, 1994, the Service Tax Rules, 1994 and Point of Taxation Rules, 2011, the amount of SBC and KKC charged by service provider and paid by Appellant was not chargeable and Appellant is entitled to refund of the same as held by learned Member (Judicial).
(Order pronounced in open court on-27 September, 2024) Sd/-
(P. K. CHOUDHARY) MEMBER (JUDICIAL) Sd/-
(SANJIV SRIVASTAVA) MEMBER (TECHNICAL) LKS Service Tax Appeal No.70656 of 2018 CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL ALLAHABAD REGIONAL BENCH - COURT NO.I Service Tax Appeal No.70656 of 2018 (Arising out of Order-in-Appeal No.187/ST/Alld/2018 dated 23.03.2018 of the Commissioner (Appeals) CGST & Central Excise, Allahabad) M/s Lalitpur Power Generation Company Ltd.,..Appellant (Mirchwara, Lalitpur) VERSUS Commissioner, Central Excise & Service Tax, Allahabad ....Respondent (Central Excise Division, Jhansi) APPEARANCE:
Shri Piyush Kumar, Advocate & Shri Jitendra Singh, Advocate for the Appellant Mrs. Chitra Srivastava, Authorised Representative for the Respondent CORAM: HON'BLE MR. R. MURALIDHAR, MEMBER (JUDICIAL) INTERIM ORDER NO.13/2025 DATE OF HEARING : 02.06.2025 DATE OF DECISION : 02.06.2025 R. MURALIDHAR:
In the present appeal the matter has been referred to me, as a third Member reference Bench, framing following questions:-
"Whether in view of the fact that ST-3 Returns has not been revised or modified till date, the Refund Application cannot be entertained and the same has rightly been rejected by authorities below as held by learned Member (Technical) or under the provisions of the Finance Act, 1994, the Service Tax Rules, 1994 and Point of Taxation Rules, 2011, the Service Tax Appeal No.70656 of 2018 2 amount of SBC and KKC charged by service provider and paid by Appellant was not chargeable and Appellant is entitled to refund of the same as held by learned Member (Judicial)."
2. The learned counsel appearing on behalf of the Appellant submits that the Appellant has been paying the advance amount to M/s Bajaj Infrastructure Development Company Ltd.
(hereinafter referred to as BIDCO) through a bill to provide services by BIDCO which is in the nature of continuous supply. In respect of the advances paid to BIDCO, they have paid the applicable Service Tax on account of the running bill raised by them from time to time for the continuous services provided by them. The Swachh Bharat CESS (hereinafter referred to as SBC) and Krishi Kalyan Cess (hereinafter referred to as KKC) was brought into effect w.e.f. 15.11.2015 & 01.06.2016 respectively. In respect of that running services provided after 15.11.2015 & 01.06.2016 BIDCO has issued invoices showing adjustment of the advances paid and net amount payable as zero and still charged SBC & KKC as applicable. Having paid this amount to BIDCO, the appellants have made a representation to them to seek a refund from the Department and return this amount back to them. However, BIDCO issued a letter to the appellant stating that the amount collected has already been deposited in the exchequer and they are not filing any refund claim for SBC & KKC. After this Appellant filed refund claim on 04.01.2017 for the SBC & KKC paid by them on various invoices of BIDCO wherein the net amount payable was shown as NIL but still SBC & KKC was being charged.
3. A Show Cause Notice was issued on 07.03.2017 on the ground that the Appellant has not brought in proper evidence towards SBC/KKC not being leviable in these cases. After due process the Adjudicating Authority rejected the refund of Rs.61,15,061/-. On appeal the learned Commissioner (Appeals) has held that in some cases the Appellant was not at all required to pay SBC/KKC and hence they are not liable for refund claim. In some cases they are not eligible for refund claim on account Service Tax Appeal No.70656 of 2018 3 of their failure to prove that they have not passed on the Service Tax burden to any other person. In some cases they have filed refund claim after one year. On these grounds he rejected the Appeal. Being aggrieved, the Appellant has filed the appeal before the Tribunal.
4. When the matter came up before the Division Bench the issue was argued extensively and the Hon'ble Member (Technical) has held Appellant is not eligible for refund as per the question framed above and Hon'ble Member (Judicial) has held that they are eligible for refund as has been observed in his part of the order. The matter stands referred to me.
5. Learned Advocate appearing on behalf of the appellant submits that in the Show Cause Notice both the clauses under Section 11B of Central Excise Act, 1944 i.e. 'time barred aspect' and 'unjust enrichment aspect' was not raised, nor was this dealt by the Adjudicating Authority in the Order-In-Original. Only while passing the Order-In-Appeal, learned Commissioner (Appeals) has dealt with these issues which clearly proves that he has travelled beyond the scope of the Show Cause Notice.
6. So far as the merits is concerned, he submits that documentary evidence clearly proves that the amounts have to be paid in advance and as per Rule 6 of the Point of Taxation Rules, 2011 the service provider is required to pay service tax as and when the amount is received by them. It is proved beyond doubt that when the amount was paid, at that time there was no levy of SBC/KKC. Only such advances were being adjusted in subsequent bill in 2015-16 i.e. after coming into effect of SBC/KKC. Therefore, on deemed services, question of payment of SBC/KKC would not arise. The fact that the net amount is shown as zero clarifies that it is not a case of fresh invoice raised by BIDCO but is on account of adjustment for the amount of earlier advances. On a specific inquiry from the Bench he takes me to Pg.No.43 wherein the invoices raised by BIDCO is annexed. One of the same is reproduced below:-
Service Tax Appeal No.70656 of 2018 4 Service Tax Appeal No.70656 of 2018 5
7. In view of the above submissions he prays that the refund made may be allowed as has been held by the Hon'ble Member (Judicial).
8. The learned Authorized Representative appearing on behalf of the Revenue takes me through the Show Cause Notice provisions wherein it is clearly stated that the Appellant has not brought in any proper documentary evidence to prove that the Service Tax was being discharged on account of SBC/KKC. The Appellant was given ample opportunities to bring in proper documentary evidences to prove the same. Apart from this, the Appellant has also filed refund claim on 04.01.2017 because of which part of KKC refund claim would be time barred. She further takes me to the findings of the learned Commissioner (Appeals) at Para 4.6.2 of the Order-In-Appeal wherein he has given the finding that the Appellant has failed to show that they have borne the incidence of KKC. She also take me to Para 4.5 Service Tax Appeal No.70656 of 2018 6 of the Order-In-Appeal wherein it is held that the Appellant have filed refund claim belatedly. In view of the above submissions she prays that the Appeal may be dismissed, as has been held by Hon'ble Member (Technical).
9. Heard both sides and perused the appeal papers, synopsis and other documents and submissions made by both the sides.
10. I find that the point of difference to me is specifically confined to consider whether the refund claim is to be rejected since ST3 Returns have not been revised/modified by BIDCO as has been held by the Hon'ble Member (Technical) or the amount of SBC/KKC charged by the services provided and paid by the Appellant is not chargeable in terms of the Finance Act 1994, Service Tax Rules 1994, Point of Taxation Rules 2011 and hence they are eligible for refund, as has been held by Hon'ble Member (Judicial).
11. So far as point made by the Hon'ble Member (Technical) is concerned, I do not find any reference whatsoever has been made either in the Show Cause Notice or in the Order-In-Original or in the Order-In-Appeal to the effect that ST-3 Returns have not been revised or modified by BIDCO. Since this was not the ground of Show Cause Notice, the same cannot considered at the Tribunal stage to reject the refund claim on this ground.
12. So far as the stand taken by the Hon'ble Member (Judicial) is concerned I find that Rule 6 of the Point of Taxation Rules 2011 reads as under:-
6. Determination of point of taxation in case of continuous supply of service Notwithstanding anything contained in rule 3, 4 or 8, in case of continuous supply of service, the "point of taxation' shall be,--
(a) the time when the invoice for the service provided or to be provided is issued;
PROVIDED that where the invoice is not issued within fourteen days of the completion of the provision of the service, the point of taxation shall be date of such completion.
Service Tax Appeal No.70656 of 2018 7
(b) in a case, where the person providing the service, receives a payment. before the time specified in clause (a), the time, when he receives such payment, to the extent of such payment.
Explanation 1: For the purpose of this rule, where the provision of the whole or part of the service is determined periodically on the completion of an event in terms of a contract, which requires the service receiver to make any payment to service provider, the date of completion of each such event as specified in the contract shall be deemed to be the date of completion of provision of service.
Explanation 2: For the purpose of this rule, wherever any advance, by whatever name known, is received by the service provider towards the provision of taxable service, the point of taxation shall be the date of receipt of each such advance.]
13. I find that in this particular case BIDCO was providing continuous supply of services. Admittedly Appellant was paying advance amounts through running bills. As per Rule 6(a) the Point of taxation would be when the invoice for service "provided" or for "to be provided" is issued. In this case BIDCO was required to pay the service tax for the service "to be provided" when the invoices were issued and advances were received by them. From the extract of invoices at Pg. 49 & 50 reproduced above, it is seen that against the total Bill of Rs.51,41,614/- they have adjusted 20% and other advances to this extent and have arrived at assessable value as zero. However, they have charged the SBC of Rs.25,709/-. This amount is not required to be paid by them since this is only adjustment running bill and not any invoice for provision of fresh service. Therefore, I find that the refund would be eligible for such payments. In this case the refund claim has been made by the appellant as the person bearing the Service Tax burden. There is nothing to indicate in the Show Cause Notice that the Revenue has any objection on this issue.
Service Tax Appeal No.70656 of 2018 8
14. While no specific point of reference has been made with regard to time bar and unjust enrichment in the point of reference, I find from the order drafted by Hon'ble Member (Technical) that he has also dealt with the issue of unjust enrichment at Para 4.9. After citing several case laws, he concludes at Para 4.10 as under:-
"4.10 In view of the above referred decisions of the Hon'ble Supreme Court and High Court we do not find any merits in this appeal. We also do not find that the decision relied upon by the appellant would support their case contrary to the above referred decision."
15. Therefore, I have spent sometime on going though this issue also.
16. On going through the Show Cause Notice I find that the only ground taken therein is as under:
"In view of above, it is evident that the claimant is a service recipient and M/s. BIDCO is a service provider. The service provider appears to have provided their services to the service recipient and appears to have received the amount alongwith service tax and Cess.
The service tax alongwith Cess have been deposited by the service provider. Since the Cess was wrongly charged from the recipient by the service provider and was deposited in Government exchequer by the service provider as such the service provider was required to claim such undue deposits if any, however, the claimant has filed the claim with a disclaimer letter received from service provider that they will not claim any refund of SBC / KKC, wrongly charged and paid. But the claimant on other side has failed to provide the details of payment made in full to the service provider before the completion of services or the progressive payments made time to time viz, Mobilization advances / other advances etc. which have been adjusted by subsequent invoicing, by the service provider. They have also failed to submit the evidences that the payment so made were inclusive of Service tax or exclusive of service tax and the Service Tax Appeal No.70656 of 2018 9 that the said payments were full and final to the contracted value. They have also failed to clarify that the SBC/KKC were not liable to paid according to the provisions of Service Tax / Rules. The claimant's contention that Rule 5 of the point of Taxation Rules would be applicable in their case, appears not proper as the services which have been provided by the BIDCO were already taxed and the claimant was receiving services in a continuous process. Therefore, it appears that the claimant is not entitled for refund of the amount so claimed and such claim is liable to be rejected on the grounds discussed herein above."
17. From the Show Cause Notice, I do not find any reference was made to the clauses of Section 11B i.e. to the effect of 'time limit' or 'unjust enrichment' to deny the refund claim. The Appellant was never put to notice of these issues. Even in the Order-in-Original there is no reference to these two issues. Only at the later stage while passing the Order-In-Appeal, the Commissioner (Appeals) has taken and discussed these issues and rejected part of the refund claim on these grounds. This is a clear case of traversing beyond the scope of the Show Cause Notice. Hence, the Commissioner (Appeals) is in error in invoking the Section 11B of Central Excise Act, 1944 provision in the impugned order. Hence, these issues are not required to be considered at the Tribunal's stage.
18. In view of the above discussions, I hold that the Appellant is eligible for refund. The reference is answered thus.
19. I remit this case back to the Division Bench for subsequent order.
(Dictated & pronounced in open court) Sd/-
(R. MURALIDHAR) MEMBER (JUDICIAL) Nihal Service Tax Appeal No.70656 of 2018 10 In view of the majority order, the appeal is allowed with consequential relief, as per law.
(Order pronounced in open court 10.07.2025) Sd/-
(P. K. CHOUDHARY) MEMBER (JUDICIAL) Sd/-
(SANJIV SRIVASTAVA) MEMBER (TECHNICAL) LKS