2026-VIL-1871-CESTAT-CHE-ST
  1. Home
  2. 2026-VIL-1871-CESTAT-CHE-ST

SERVICE TAX CESTAT Cases

Service Tax - Refund to SEZ Unit - Tax distributed through ISD invoices - Condition of one claim for every quarter under paragraph 3(III)(f) of Notification No. 12/2013-ST - Appellant, a unit in a Special Economic Zone, claimed refund for two quarters of service tax on specified services distributed to it by its corporate office registered as Input Service Distributor, including tax paid under reverse charge. The Adjudicating Authority and the FAA rejected a substantial part of the claims as the tax was paid in quarters other than the quarter of the claim - Whether refund of tax distributed through ISD invoices could be denied on the ground that the tax was not paid during the quarter of the claim - HELD - Paragraph 3(III)(f) provides that only one claim of refund shall be submitted for every quarter. It limits the number of claims and does not provide that a claim for a quarter may comprise only tax paid during that quarter. The Appellant filed one claim for each quarter, so the lower authorities read into the clause a condition which its words do not bear. The amount refundable under paragraph 3(III)(b)(ii) is the amount distributed to the SEZ unit, which comes into being only when the ISD distributes it by an invoice under Rule 7 of the Cenvat Credit Rules, 2004. No such amount existed to be included in any earlier claim, and there was no finding of an earlier refund, so the objection is one of form and not of double refund. Even otherwise, a condition in a notification issued under Section 93 of the Finance Act, 1994 cannot cut down the exemption conferred by Section 26(1)(e) and protected by Section 51 of the SEZ Act, 2005, as held by the High Court in the decision affirmed by dismissal of the Special Leave Petition. Tax paid under reverse charge stands on the same footing - The refund could not be denied on this ground, the impugned order is set aside and the appeals are allowed with consequential relief including interest, subject to verification that no part of the amounts was refunded earlier - Refund to SEZ Unit - Denial for want of Form A-1 and approval of services - Ground not raised in SCN - Appellant claimed refund of tax paid on accommodation, air travel agent and club membership services. The SCN proposed rejection only on the ground that these were not specified services. The Adjudicating Authority rejected the claim for want of approval by the Unit Approval Committee, and the FAA found the services in the approved list but denied refund for want of Form A-1 verified by the Specified Officer - Whether the refund could be denied for want of Form A-1 or of approval of the services - HELD - The finding of the FAA that the services find place in the approved list was not assailed by the Respondent. No authority alleged that the services were not used for the authorised operations. The only ground of the SCN, that the services were not specified, failed on the finding of the FAA himself. The ground of Form A-1 did not figure in the SCN or the order in original, and the Appellant was never called upon to meet it. The Supreme Court has held that proceeding on a basis different from that of the notice makes a new case, which is impermissible, and this binds the FAA as he sits in appeal on the case set up in the notice. The ground is also unsound on merits, since the High Court held that the SEZ exemption cannot be denied for not filing Forms A-1 and A-2 as Rule 22 of the SEZ Rules does not prescribe them - Once the services are approved by the Unit Approval Committee and used for the authorised operations, the refund cannot be withheld and the rejection is set aside - Refund to SEZ Unit - Limitation under paragraph 3(III)(e) of Notification No. 12/2013-ST - Reckoning from date of ISD invoice - Appellant claimed refund of tax paid by its corporate office to service providers in an earlier period and distributed to the SEZ unit by an ISD invoice. The Adjudicating Authority held the amount barred by limitation under paragraph 3(III)(e) and Section 11B of the Central Excise Act, 1944, reckoning one year from payment by the corporate office. The FAA declined to extend time on the premise that the power extends only to amounts of the present quarter - Whether the refund of tax distributed through the ISD invoice is barred by limitation - HELD - Paragraph 3(III)(e) speaks of the month in which the SEZ unit actually paid the tax to the registered service provider. Where common services are paid for by the head office and distributed under Rule 7, the SEZ unit has paid nothing to the provider and its entitlement under paragraph 3(III)(b)(ii) is to the amount distributed, which arises on the date of the ISD invoice. Reckoning from payment by the head office would make the period begin, and possibly end, before the refundable amount is ascertained, and a notification which prescribes distribution before refund cannot be read so as to defeat the refund it grants. The same answer follows under Section 11B, as what is refunded is not a duty paid by the SEZ unit but the amount distributed to it. Rule 7 prescribes no time limit for issue of ISD invoices, so delay at the ISD level cannot be laid at the door of the SEZ unit. The limitation that the power to extend time covers only amounts of the present quarter is nowhere found in paragraph 3(III)(e) - The period runs from the date of the ISD invoice, the claim was filed within one year of it, the rejection as time barred cannot be sustained, and the refund is to be sanctioned with applicable interest.
Download File

Quick Search

/

Advance Search

GST Resources

/

Gst Rate Finder

Tax Vista

Your Weekly Tax Recap

By Dr. G. Gokul Kishore

Weekly Summary

VIL Video

GST Adjudication & Appeals Reform
By CA Vivek Jalan

Create Account

Security-Code
New Code?

Log In

New User ? Forgot Password ?

Forgot Password

Security-Code
New Code?
Please Note: This facility is only for Subscribing Members.

Email this page

Security-Code
New Code?

Feedback this page

Schedule a Demo

Schedule a demo to know the features and advantages of VILGST portal. Get to know the tips to find the desired results in faster way.

Security-Code
New Code?

Caselaw Request Form (CRF)

Didn’t find what you are searching for? No worries, please give us the following details and VIL will email you the desired Caselaws at the earliest:

Security-Code
New Code?