Commissioner Of Central Excise & ... vs M/S. Indiabulls Realtech Limited

[Arising out of Order-in- Appeal No.NSK-EXCUS-APP-000-325-13-14 dtd. 25/11/2013 and No. NSK-EXCUS-APP-000-344-13-14 dated 8/1/2014 passed by the Commissioner (Appeals) of Central Excise & Customs, Nasik]

For approval and signature:

Honble Mr Ramesh Nair, Member(Judicial)

=======================================================

1. Whether Press Reporters may be allowed to see : No the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982?

2. Whether it should be released under Rule 27 of the : CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not?

3. Whether Their Lordships wish to see the fair copy : seen of the Order?

4. Whether Order is to be circulated to the Departmental: Yes authorities? ======================================================= Commissioner of Central Excise & Customs, Nashik : Appellants

VS

M/s. Indiabulls Realtech Limited. : Respondent

Appearance

Shri. A.B. Kulgod, Asstt. Commissioner (A.R.) for the Appellants Shri. Vinay Jain, C.A. for the Respondent

CORAM:

Honble Mr. Ramesh Nair, Member (Judicial)

Date of hearing: 10/6/2015 Date of decision: /2015

ORDER NO.

Per : Ramesh Nair

These two appeals of the Revenue are directed against two Order-in-Appeal No. NSK-EXCUS-APP-000-325-13-14 dtd. 25/11/2013 and NSK-EXCUS-APP-000-344-13-14 dated 8/1/2014 passed by the Commissioner (Appeals) of Central Excise & Customs, Nasik, wherein Ld. Commissioner(Appeals) allowed the refund of Rs. 17,80,316/- and Rs. 8,72,339/- respectively.

2. The fact of the case is that the respondent M/s. Indiabulls Realtech Limited is co-developer of SEZ and received various services on which service tax was paid by the service provider. Respondent filed refund claim for Rs.18,45,940/- and Rs.8,72,339/- in respect of Service received by the SEZ developer in terms of Notification No. 40/12-ST dated 26/3/2012. The original authority rejected both refund claims on the ground that refund claim was filed beyond one year from the date of payment of 15% advance to the service provider and accordingly respondent has violated the condition of clause 3(e) of Notification No. 40/12-ST. The original authority also stated in the order that the respondent was supposed to give one to one co-relation between invoices and payment, to ascertain the service tax so paid. Aggrieved by the said order of the original authority, appellant filed appeals before the Commissioner (Appeals), who except amount of Rs. 65,624/- allowed the refund of Rs. 17,80,316/- and Rs. 8,72,339/-. Aggrieved by the said impugned orders the Revenue filed these appeals.

3. Shri. A.B. Kulgod, Ld. Asstt. Commissioner (A.R.) appearing for the Revenue submits that refund claims were filed beyond the one year from the date of payment of 15% advance and accordingly the respondent has violated the condition 3(e) of Notification No. 40/12-ST therefore the refund was rightly rejected by the original authority and wrongly allowed by the Ld. Commissioner (Appeals).

4. On the other hand, Shri. Vinay Jain, Ld. C.A. appearing for the respondent submits that condition 3(e) of Notification No. 40/12-ST clearly provides that one year should be reckoned from date of payment of service tax by the respondent of services to the service provider. He submits that initially 15% advance payment was made by the respondent to the service provider however on the final billing stage in the bill out of the total amount 15% advance was reduced and on the balance amount service tax was charged. It is his submission that refund claim was filed within one year from the date of payment against such bills. Condition 3(e) of Notification No. 40/12-ST also provides that refund should be filed within one year from date of payment of service tax to the service provider. As regard the 15% of the advance payment, since service tax itself was not paid on that amount, question of taking date of said 15% dose not arise. The fact remained that the refund was filed within one year from the actual date of payment to the service provider. Therefore it is well within the time and Ld. Commissioner considering this very fact, allowed the refund.

5. I have carefully considered the submissions made by both sides and perused the record.

6. I find from the facts narrated by the Ld. Commissioner (Appeals) that refund was filed within one year from the date of payment of service tax to the service provider, therefore it is well within the period prescribed under 3(e) of Notification No. 40/12-ST. Ld. Commissioner (Appeals) after examining the actual facts given elaborate findings in the impugned order which is reproduced below:

6. I have carefully examined the records of the case and all submissions of the appellant, both written and oral. The O-I-O dtd. 20.08.2013 is stated to have been received by the appellant on 21.08.2013 and appeal against the same is filed in this office on 17.10.2013. Thus, the appeal is filed in time as prescribed under Section 35 of CEA, 1944.

7. The adjudicating authority has rejected the refund claim of the appellant mainly on the ground that they have failed to submit documentary evidence to prove that payment made by them through RTGS on 26.07.2012 and 03.01.2012 included the amount of service tax for which refund was claimed. Since no dispute has been raised by the adjudicating Officer regarding receipt and use of the taxable services by the appellant in connection with their SEZ and other conditions of the notification, it is crucial to know whether the appellant had paid the service tax to the service provider on 26.07.2012 and 03.01.2012.

7.2 On examination of 22 concerned invoices, it is observed that the service provider M/s. IIC Ltd. has charged service tax on the net cost of provided services after adjusting 15% of the advance already paid to the service provider. For example, in invoice no. Nashik/misc/2012-13/RAB-018 dated 03.06.2012 total cost of Acquisition of service is Rs.12,24,753/- against which an advance of Rs.1,83,713/- was already paid. Hence, in this invoice an amount of Rs.1,83,713/- (i.e. 15% of Rs.12,24,753/-) is deducted from Rs.12,24,753/- to arrive at net cost of service for the purpose of charging the service tax and accordingly on the said net value i.e. Rs.10,41,040/- (Rs.12,24,753 - Rs.1,83,713) service tax of Rs.1,28,672/- is charged @ 12.36% in the invoice. It is also evident from the above illustration that the service tax paid on the advance is not reflected in the invoice and, therefore, no refund of service tax paid on advance is claimed by the appellant.

7.3 In order to prove payment of the amounts by the appellant as mentioned in the invoices, the appellant has submitted detailed chart and pertinent documents. On examination of the details given in the chart and invoices, it is observed that the payments were adjusted against different heads such as advances made to the service provider, royalty payments and third party payments made on behalf of the service provider, retention amount, TDS of income tax, Works Contract Tax etc. and after adjustment of all such amounts pertaining to the aforesaid heads the balance amount was released to the service provider which also included the service tax as charged in each invoice. Taking the example of invoice no. Nashik/misc/2012-13/RAB-018 dated 03.06.2012 again, it is found that total amount of Rs.39,80,964/- was charged which included service tax and amounts of various other heads which are mentioned below.

Total Invoice Amount, including service tax, - Rs.39,80,964/-

Adjustments of following payments 

1. Advance paid - Rs. 5,59,076/-

2. Retention amt. - Rs. 1,86,359/-

3. TDS - Rs. 68,438/-

4. WCT - Rs. 74,543/-

5. Royalty - Rs.23,47,112/-

SUB  TOTAL - Rs.32,35,528/-

Paid through RTGS on 12.07.2012 - Rs.7,45,436/ (includes S. Tax of Rs.1,28,672/-) TOTAL - Rs.39,80,964/-

7.4 Barring one invoice, the payment has been made in all other 20 invoices in the above manner. Thus, after adjustment of amounts of various heads in each invoice, balance payments in respect of all 21 invoices were finally paid by the appellant through RTGS on 12.07.2012 for Rs. 70 lakhs and on 03.01.2013 for Rs. 80 lakhs which included service tax of Rs. 17,80,316/-. To support their above claims the appellant has also submitted the relevant vouchers and bank statements showing the payments made to the service provider from which the fact of payment of service tax involved in these invoices is well established.

7.5 As the appellant had filed the refund claim within one year of the above referred two dates of payment on 12.07.2012 and 03.01.2013, filing of refund claim was entirely in time as envisaged in Notification No. 40/2012-ST dated 20.06.2012 and, therefore, Deputy Commissioners finding that refund claim is time barred is not found to have any factual or legal basis in respect of 21 invoices involving refund of Rs. 17,80,316/-. However, her above observation is found to be true in respect of one invoice no. Nashik/misc/2012-13/RAB-021 dated 29.06.2012 for which no evidence regarding actual date of payment of service tax has been provided by the appellant. But it is obvious that payment of service tax against the said invoices was made before the above referred first RGTS payment on 12.07.2012 which was certainly more than one year before their filing of refund application. Therefore, their refund claim of Rs. 65,624/- in respect of this one contention of the appellant that in this case, where payment was made in advance, the date of invoice should be taken as relevant date is not found maintainable as there is no such provision in the Notification No. 40/2012-ST dated 20.06.2012.

8. In view of the above, the appeal of M/s Indiabulls Realtech Ltd., Sinnar, Nashik, is allowed to the extent of their refund claim of Rs. 17,80,316/- and the O-I-O passed by the Deputy Commissioner, Central Excise and Customs, Nashik IV Division, is set aside to that extent.

Identical findings were given in respect of other impugned order dated 8/1/2014. In view of the above findings the Ld. Commissioner (Appeals) has verified the fact that the refund was filed within one year from the date of payment of service tax to the service provider. It is absolutely wrong on the part of Revenue taking the ground that the refund claim should have been within one year from the date of advance payment. It is observed that advance payment does not include the service tax whereas the payment subsequently made including service tax. For example in case of appeal against order in appeal dated 25/11/2013 the service tax payment was made on 12/7/12, though the advance payment was made earlier to that but as per the condition laid down in the notification, the one year period has to be reckoned from the date of payment of service tax to the service providers. Therefore refund which was filed within one year from date of payment of service tax to the service provider is well within the one year period. Similarly in other appeal service tax was paid on 1/2/2013 refund was claimed within one year from that date. Considered the facts, identical findings, I find no infirmity in the both the impugned orders and the Ld. Commissioner (Appeals) be careful, application of mind and going into detail fact of the cases, came to conclusion that refund of the respondent, which is within one year from the date of service tax, is admissible to the service provider. In view of my above discussion, I am of the considered view that one year period envisaged in the notification No. 40/12-ST in the present case was correctly reckoned from the date of payment of service tax to the service provider and not from the date of advance payment or any other payment made to the service provider. Therefore the impugned orders are sustainable. Revenues appeals are dismissed.

(Order pronounced in the court on ___________________t)

Ramesh Nair Member (Judicial)

sk

9