M/S Gtl Infrastruccture Ltd vs Commissioner Of Service Tax

IN THE CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL, WEST ZONAL BENCH AT MUMBAI COURT NO. II

APPEAL NO. ST/86909/14  Mum

(Arising out of Order-in-Original No. V/S-II/HLC/HC/GTL/52/ 2013/Part.I/132 dated 7th March 2014 passed by the Commissioner of Service Tax II, Mumbai)

For approval and signature:

Honble Shri Ashok Jindal, Member (Judicial) Honble Shri P.S. Pruthi, Member (Technical)

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?

M/s GTL Infrastruccture Ltd. : Appellant

Versus

Commissioner of Service Tax, Mumbai II

Respondent

Appearance

Shri Prakash Shah, Advocate Shri Prasad Paranjape, Advocate for appellant Shri V.K. Singh, Spl. Counsel For Respondent

CORAM:

Shri Ashok Jindal, Member (Judicial) Shri P.S. Pruthi, Member (Technical)

Date of Hearing : 12.11.2014 Date of Decision :05.01.2015

ORDER NO.

Per Ashok Jindal This appeal is taken up for consideration as per the directions of the Honble Bombay High Court vide order No. 29.09.2014 which is reproduced here-in-under:-

contd

2. Brief facts of the case are that the appellant is a registered Company under the category of Business Auxiliary Services with the department to pay service tax on their activity of providing infrastructural facilities to various telecom companies. Chennai Network Infrastructure Ltd. (NIL), having a registered office at Navi Mumbai and is engaged in providing similar services. Both the appellant and CNIL sought merger in the name of GTL Infrastructure Ltd. Consequently, they filed petitions before the respective High Courts (Mumbai and Madras) seeking sanction of scheme of merger with the appellant. The Honble Bombay High Court sanctioned the scheme of merger of CNIL with the appellant on 22.07.2011 whereas the petition filed before the Honble Madras High Court is still pending for consideration of sanction of scheme of merger. As the Honble Bombay High Court sanctioned the scheme of merger, therefore the appellant filed a consolidated service tax returns declaring the revenues of both the appellant and CNIL altogether. CNIL did not file returns for its revenues for its activities during the impugned period.

Consequent to that the appellant paid the liabilities of CNIL towards service tax amounting to Rs.79,92,56, 619/- by debit entry in the appellants CENVAT account for the period October 2010 to March 2012. Some part of the service tax liability was paid by utilizing CENVAT credit lying in the account of CNIL. As the appellant got sanction of scheme of merger by the Honble High Court of Bombay, presumed that the appellant and CNIL have merged. But the approval for scheme of merger was pending before the Honble Madras High Court, therefore the appellant are not required to include taxable service of M/s. CNIL in their turnover and were not required to pay service tax there on this realization, CNIL filed a declaration under Voluntary Compliance Encouragement Scheme (VCES) disclosing its service tax liability to the tune of Rs.79,92,56,919/- and discharged the same on 22.11.2013. The designated authority issued a Discharge certificate to CNIL under VCES scheme for the above said liability. CNIL informed the appellant that all service tax liability has been paid by them and they have no objection in the appellant taking credit of service tax paid on behalf of CNIL.

Out of abundant caution, the appellant approached the Honble Bombay High Court in a Writ Petition to seek approval of the Honble High Court to re-credit the amount of service tax paid on behalf of CNIL, the Honble Bombay High Court vide order dated 27.01.2014 directed the learned Commissioner to decide the matter by considering the said Writ Petition as a representation before the Commissioner. On 7.3.2014, the learned Commissioner directed the appellant to approach the proper officer for pursuing the remedy. The appellant has challenged the order of the learned Commissioner before this Tribunal and this Tribunal has dismissed the appeal of the appellant against the impugned order holding that the same is not maintainable. The said order of this Tribunal was challenged before the Honble Bombay High Court and the Honble Bombay High Court held that the Honble Tribunal is competent to decide the appeal and should do so in accordance with law. Therefore, this appeal is before us.

3. Heard both sides.

4. The learned Counsel for the appellant submits that the learned Commissioner himself was competent to decide the issue as per Section 12E of the Central Excise Acts, 1944 read with Section 83 of the Finance Act, 1994 and he was also duty bound to honour the direction of the Honble High Court vide its order dated 27.01.2014. He further submits that the amount in dispute as claimed by the appellant as CENVAT credit has already been paid by CNIL admitting it to be its service tax liability. This fact has been confirmed by the order of competent authority by adjusting the same in VCES scheme. As the CNIL obtained the discharge certificate of service tax liability therefore, the appellant is entitled to take CENVAT credit of the amount of service tax paid on behalf of CNIL by the appellant as CNIL and the appellant has not got the sanction of scheme of merger by the Honble Madras High Court till yet. It is also submitted that the appellant has filed the service tax returns showing the turn over of CNIL with their turn over and discharge of service tax liability of themselves as well as on behalf of CNIL on the premise that after merger the appellant is required to pay service tax liability of both. The payment of service tax has been accepted by the Revenue. Asthe said amount was not required to be paid by the appellant and CNIL has paid their liability along with interest and discharge certificate has been obtained by CNIL, therefore, the appellant is entitled to re-credit the said amount paid earlier by debiting their CENVAT credit account on behalf of CNIL. In other words, it is submitted that the Revenue cannot be permitted to retain the service tax on the same taxable service from two different persons therefore, the service tax paid by the appellant on the taxable activities of CNIL ought to be allowed as credit to the appellant when the same liability has been accepted as due from CNIL and has indeed been recovered from them. By not allowing the appellant to take CENVAT credit from the appellants CENVAT account for liability of CNIL discharged by the appellant, the revenue is unjustly enriching itself by recovering the amount twice.

4.1 The appellant relied on the judgement of Honble Bombay High Court in the case of CCE vs. CEAT Ltd.  2013 (298) ELT 525 (Bom) to say that the Honble High Court of Bombay approved that the assessee taking suo motu credit of additional excise duty after having paid the same to the Revenue through PLA. He also relied upon the decision of this Tribunal in the case of Vodafone Essar Digilink Ltd.  2011 (31) STR 751 (Tri. Del) wherein this Tribunal approved suo motu claiming of credit by the assessee after payment of equal amount in cash. The learned Counsel prayed that applying the ratio of the above decisions to the present case, it is evident that CNIL has discharged its service tax liability in cash under the VCES scheme, therefore the appellant is entitled to take re-credit of the service tax paid on behalf of CNIL.

4.2 He further submitted that as per the provisions of Rule 6 (4A) of Service Tax Rules, 1994 where an assessee has paid to the credit of the Central Government any amount in excess of the amount required to be paid towards service tax liability, the assessee may adjust such excess amount paid by him against his service tax liability for the succeeding month. In the present case, it is an admitted that the appellant has paid service tax in excess of its own liability, therefore by applying the provisions of Rule 6(4A) of Service Tax Rules, 1994 the appellant will be well within their rights to claim credit of such amount.

4.3 He further submitted that when the department has accepted the duty liability discharged by CNIL, therefore the amount paid by the appellant ceases to be in the nature of service tax and is merely an excess deposit by the appellant. Therefore, the said amount is refundable to the appellant without applying the provisions of Section 11B of the Central Excise Rules, 1944. In this regard the appellant relied upon the decision of the Honble Delhi High Court in the case of Hind Agro Industries Ltd. 2008 (221) ELT 336 (Del.).

4.4 Without prejudice to the above consideration, it is submitted that the cause of action for the appellant to claim re-credit of the cenvat amount paid by them has arisen only on 22.11.2013 i.e. the date on which the revenue accepted the duty liability discharged by CNIL by accepting CNILs VCES declaration. To support this contention the learned Counsel relied on the decision in the case of Arvind Enterprises v. CC  2009 (245) ELT 570 wherein it was held that the date from which the limitation can be computed is the date on which the Revenue finally adjusted assessees duty liability. In the present case the said date is 22.11.2013 i.e. the date of acceptance of VCES declaration of CNIL. Therefore, it is submitted that the claim filed by the appellant is within time.

4.5 In these circumstances, it is prayed that the appellant be allowed to re-credit the service tax paid by the appellant during the impugned period on behalf of CNIL which was not required to be paid by the appellant.

5. On the other hand, the contentions of the learned Counsel were opposed by the learned Spl. Counsel appearing for the Revenue. He submitted that the learned Commissioner has not committed any error to direct the appellant to approach the proper officer. In fact the proper officer is competent to entertain the claim of the appellant and for the quantification of the amount paid by the appellant is required to be examined by the proper officer. He further submitted that the conduct of the appellant, for approaching the Honble High Court for every directions shows that the appellant has no faith on the Revenue Officers. He also submitted that the appellant is not entitled for re-credit of the amount paid on behalf of CNIL as the same is barred by limitation. Admittedly, the service tax has been paid by the appellant on behalf of CNIL and sought to re-credit the same after passing a period of one year, the period as prescribed under Section 11B of the Central Excise Act, 1944. He also relied on the case law in the case of Vighnahar SSK Ltd. v. CCE 2012 (275) ELT 108 (Tri. Mum), BDH Industries Ltd. v. CCE  2008 (229) ELT 364 (Tri. Mum) and Automotive4 Metal Stampings Pvt. Ltd. v. CCE  2011 (272) ELT 603 (Tri. Mum). In these circumstances, he prayed that the appeal filed by the appeal is required to be dismissed.

6. Considered the submissions made by both sides.

7. The facts of this case are not in dispute that the appellant has paid the service tax for the period October 2010 to March 2012 on behalf of CNIL considering that the appellant is liable to pay service tax on behalf of CNIL after the sanction for the scheme of merger by the Honble Bombay High Court. It is also an admitted fact that to seek permission for scheme of merger is still pending before the Honble Madras High Court, the appellant is not required to pay service tax on behalf of CNIL. As the service tax paid by the appellant was not required to be paid, the appellant is entitled to take re-credit of the same in their account. The appellant instead of taking suo motu credit, they approached the Honble Bombay High Court for specific direction and the Honble High Court directed the learned Commissioner to consider the writ petition as a representation filed by the appellant.

7.1 We note that during the course of argument, the learned Spl. Counsel appearing for the Revenue took objection that the impugned order is only a direction to the appellant to appear before the proper officer for examination of their refund claim but the appellant chose to file an appeal before this Tribunal is not correct. With this regard, we find that although the Tribunal dismissed the appeal holding not maintainable, the Honble Bombay High Court has intervened holding that the order of the Commissioner (Appeals) is for denial of re-credit of the amount hence, this Tribunal is competent to decide the case on merit. Therefore the contention of the learned Spl. Counsel is not accepted.

7.2 The learned Spl. Counsel appearing on behalf of the Revenue has also contended that the representation made by the appellant is beyond the prescribed limit of one year as per Section 11B of thee Central Excise Act, 1944 therefore, their claim is not maintainable. To support this contention he relied on various case law which we are discussing separately.

7.3 In the case of Vighnahar SSK Ltd. (supra) the assessee sought to take re-credit of the excess duty paid wrongly but the Jurisdictional Range Officer informed to the assessee that such re-credit was not admissible and re-credit could be taken only on receipt of proper orders on their refund claim. Thereafter, the assessee informed the Asst. Commissioner that they are taking re-credit as CENVAT credit Rules 2004 did not debar them from taking credit of wrongly paid amount.

In this case there is no credit taken by the appellant and they are seeking permission to take re-credit therefore, the facts of the said case are not comparable to the facts of this case.

7.4 In the case of BDH Industries Ltd. (supra) the Larger Bench of this Tribunal held that there is no provision under Central Excise Act, 1944 and Rules allowing suo motu taking of credit or refund without sanction by proper officer.

In fact, in this case, neither CNIL nor the appellant got the refund or took suo motu credit. Therefore, the facts of BDH Industries Ltd. (supra) are not applicable.

7.5 In the case of Automotive Metal Stampings Pvt. Ltd. (supra) this Tribunal held that the learned Advocate for the appellant was requested whether the appellants could reverse the credit taken by them suo motu with interest and file a refund claim which can be considered by the department as fast as possible, in that situation the appellants was directed to reverse the credit taken suo motu.

In this case, the appellant is seeking permission to re-credit the amount of service tax paid. Therefore, the case law relied by the learned Spl. Counsel for the Revenue is of no help to him to deny the re-credit.

7.6 We have seen that the learned Spl. Counsel has also raised the issue of limitation. In this case, it is an admitted fact that the amount paid by the appellant is not required to be paid by the appellant as service tax and they have discharged the service tax liability of CNIL during the impugned period. We further note that the appellant has informed vide their letters dated 05.01.2012 and 09.04.2013 about the fact of paying service tax on behalf of CNIL and are filing service tax returns including the turn over of CNIL in their turn over and paying service tax. Therefore, the amount paid by the appellant in excess of their service tax liability ceased to be in nature of service tax paid by them and is merely an excess deposit paid by the appellant. Therefore, such excess deposit paid by the appellant is refundable to the appellant and the provisions of Section 11B of the Central Excise Act, 1944 are not applicable to the facts of this case as held by the Honble Delhi High Court in the case of Hind Agro Industries Ltd. (supra) wherein the Honble High Court held that  16.?There can be no manner of doubt that the custom authorities in the instant case were bound to refund the cess erroneously paid by the Appellants for the period from 15th January, 2001 till 19th February, 2002 under a mistake of law. They had paid the cess when in fact no such cess was payable. There is no question of processing a claim of refund of such amount in terms of the Customs Act at all because the payment made mistakenly was not under that Act. In the circumstances, the period of limitation under Section 27 of the Act would not apply, as explained in Salonah Tea Company Limited. The applications for refund having been made well within the period of three years after discovery of mistake by the Appellants, are not barred by limitation. Question (a) in para 7 above is accordingly answered in favour of the Appellants. Consequently, the need to answer question (b) does not arise.

7.7 In alternate, we further find that in this case the service tax although was paid by the appellant during October 2010 to March 2012 but their claim of re-credit arose only after the issuance of discharged certificate by the competent authority on 22.11.2013 holding that the duty liability discharged by CNIL. Therefore, the cause of action of taking re-credit of such excess amount paid by the appellant arises only on 22.11.2013 and the representation filed by the appellant before the Honble Bombay High Court and disposal of the same by the Honble High Court on 27.01.2014, the same is within one year from the date of acknowledgement of discharge certificate issued by the competent authorities in favour CNIL, therefore the claim of re-credit is filed by the appellant. Same view has been taken by this Tribunal in the case of Arvind Enterprises (supra) wherein this Tribunal held that -

4.?After hearing both the sides, we find that admittedly the appellants liability to pay duty on the imported goods, was finally adjusted by the department on 13-6-97. In the adjudication order, it was clearly held that the duty payable on the scrap was being adjusted from the duty originally paid by the appellant. As such, it can be concluded that the refund of excess amount paid by the assessee was due to them as consequence of the adjudication order. The use of expression adjusted also indicates that the excess deposits are required to be refunded. In any case, the appellant had filed the refund application on 14-10-97 i.e. within a period of six months from 13-6-97, when their duty liability was finally adjudicated. Admittedly the appellant would not know before 13-6-97 that the duty required to be paid by them by treating the goods as C.A. scrap was on the lower side. As such, we agree with the adjudicating authority that the refund was available to the assessee and stand rightly sanctioned by him.

In these circumstances, we hold that the representation made by the appellant for re-credit of service tax paid on behalf of CNIL is within time. We further note that from the records placed before us, it is not ascertainable that whether the appellant has paid exactly an amount of Rs.79,92,56,619/- on behalf of CNIL which is to be examined by the adjudicating authority. Therefore, for the limited purpose for quantification of the amount to be re-credited in the appellants CENVAT credit account is required and the same is to be computed by the adjudicating authority. In these circumstances, we remand the matter back to the adjudicating authority for only limited purpose of quantification of the amount to be re-credited which shall be done by the adjudicating authority within 15 days of receipt of this order. The appellant is also directed to co-operate with the adjudicating authority for the quantification of the amount.

8. Appeal is disposed of in the above terms.

(Pronounced in Court on 05.01.2015)

(P.S. Pruthi) Member (Technical)

(Ashok Jindal) Member (Judicial)

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