Workplace Options Pvt Ltd vs Commissioner Of Central Tax, Bengaluru East

The present appeal is directed against the impugned order dt. 08/02/2021 passed by the Commissioner of Central Tax(Appeals), Bangalore

whereby the appeal of the appellant was rejected.

Briefly the facts of the present case are that the appellant is registered with the Service Tax Department for providing taxable services under the

category of Business Auxiliary Service and are availing the facility of cenvat credit under the provisions of CENVAT Credit Rules, 2004. Appellant

filed a refund claim dt. 31/10/2016 for refund of unutilised cenvat credit of service tax amounting to Rs.3,25,927/- availed on input services for the

period October 2015 to December 2015 under the provisions of Notification No.27/2012 CE(NT) dt. 18/06/2012 issued in terms of Rule 5 of

CENVAT Credit Rules, 2004. Thereafter appellant received a show-cause notice from Assistant Commissioner of Service Tax dt. 16/01/2017

proposing to deny refund of unutilised cenvat credit. Appellant filed detailed justification for each of the grounds raised in the show-cause notice along

with documentary evidences. After following due process, the learned Assistant Commissioner rejected the refund claim on time bar vide its order dt.

27/03/2017. Aggrieved by the said order, appellant filed appeal before the Commissioner(Appeals) who vide order dt. 14/07/2017, allowed the appeal

on the ground of limitation and remanded the matter for examination on merits by the Assistant Commissioner. Thereafter the appellant filed their

letter dt. 19/07/2017 resubmitted the documents but the learned Assistant Commissioner vide his order dt. 28/12/2018 summarily rejected the

explanation of the assessee and merely stated that the debit has not been made in accordance with Notification No.27/2012 CE. Aggrieved by the said

de-novo order, the appellant filed appeal before the Commissioner(Appeals) and the learned Commissioner(Appeals) rejected the appeal vide the

impugned order. Hence the present appeal.

Learned consultant for the appellant submitted that the impugned order is not sustainable in law as the same has been passed without properly

appreciating the documentary evidences and the binding judicial precedents. He further submitted that both the authorities below have wrongly

concluded that the claim of refund of Rs.3,25,927/- has not been debited in the cenvat register of the appellant. He further submitted that both the

authorities have conveniently ignored the evidence placed on record to prove the debit of the refund amount. He further submitted that the objective of

the debit condition in the Notification No.27/2012 CE is to ensure that after encashment of the refund, the applicant does not continue to enjoy the

cenvat credit i.e. a dual benefit of credit and refund should not be claimed and in the present case, no authority alleged or established that the appellant

has claimed any dual benefit of credit and/or refund. He further submitted that the appellant has already excess debit of Rs.7,41,358/- while filing the

refund of the subject period. He also submitted that this amount of refund has not been transitioned in to GST regime. He further submitted both the

authorities have ignored the debit made in the cenvat register of the appellant which has been certified by the statutory auditor. He also submitted that

the appellate authority erred in denying the refund despite concluding that the excess debit made for previous claims should have been taken as a suo-

moto recredit and a separate debit of Rs.3,25,927/- ought to be made by the appellant, when such an activity of reclaim and debit would not serve any

material purpose apart from disclosure. He further submitted that the substantive right of the appellant to claim refund has been denied on account of

procedure lapse when substantive condition of refund involving export, receipt of foreign exchange etc. has been satisfied. He also prayed for sanction

of interest on delayed refund in view of the following decisions:

i. Ranbaxy Laboratories Ltd. Vs. UOI [2011-TIOL-105-SC]

ii. Xerox Business Services India Pvt. Ltd. Vs. CCT &CE [2019-TIOL-508-HC-KERALA]

iii. Reliance Industries ltd. Vs. CCE [2014-TIOL-1486-CESTAT-Ahmedabad]

On the other hand, the learned AR reiterated the finding of the impugned order and submitted that the appellant has failed to comply with the

condition of the Notification No.27/2012-CE dt. 18/06/2012.

After considering the submissions of both the parties and perusal of the material on record, I find that the limited issue for consideration in this case

is whether the appellant has satisfied the condition in terms of Rule 2(h) of Notification No.27/2012CE dt. 18/06/20212 which requires the appellant to

debit the amount of the refund in their cenvat credit account. In order to satisfy this condition, the appellant produced evidences in the form of cenvat

ledger, ST3 returns, reconciliation cenvat credit between accounts and ST3 returns, Chartered Accountant certificate but both the authorities did not

examine these documents carefully and conveniently rejected the refund by merely observing that appellant was not eligible for the service tax refund

without due consideration of the debit evidences in the cenvat ledger accounts of the appellant. Further I find that appellant has proved before me also

by way of documentary evidences on record that there was excess debit of Rs.7,41,358/- during immediately previous period and hence there was no

need to debit it again during the subject period. This excess reversal has not been appreciated by the appellate authority which claimed that debit

should be for the exact amount and debit of the past period, though may be excess, cannot be used for this purpose. I find that this observation of the

appellate authority is hyper technical in nature which tends to defeat the substantive rights of the appellant to claim refund. Further I find that the

appellant has debited the refund amount in cenvat ledger account as is clearly reflected by the document placed at page 171 of the appeal paper book

but both the authorities conveniently ignored the same. Further I also find that the statutory auditor of the appellant has issued a certificate which is on

record and was also submitted before both the authorities below and as per this certificate, the appellant has reversed the amount of Rs.7,41,538/-

twice and has not reclaimed until June 2017 and has also not carried forward under GST regime and hence are eligible for refund in terms of Rule 5 of

CCR, 2004. Further I find that the appellant has explained in detail in their grounds of appeal, reasons of the excess debit in their letter dt. 21/12/2018

but both the authorities did not consider the same.

I find the Division Bench of the Tribunal at Delhi in the case of CST, Delhi Vs. Convergys India Pvt. Ltd. [2009(16) STR 198 (Tri. Del.)] has held

that “There cannot be two different yardsticks, one for permitting credit and the other for eligibility for granting rebate. Whatever credit

has been permitted to be taken, the same are permitted to be utilised and when the same is not possible there is provision for grant of refund

or rebate. Without questioning the credit taken, the eligibility to rebate cannot be questioned.â€​

Further I find that same officer granted refund for immediate past period based on debit in ledger accounts but surprisingly failed to adopt the

consistent stand for the impugned period. I also find that the original authority had erred in not appreciating the cenvat ledger account which showed a

positive balance of Rs.21,51,584/- at the time of filing the refund application for the subject period and erroneously concluded that the amount lying in

balance is only Rs.2,42,312/-. In view of my discussion, I hold that the appellant is entitled for refund of unutilised cenvat credit.

7.1. As far as claim of interest on delay in refund is concerned, I find that as per the decision in the case of Ranbaxy Laboratories (supra), appellant is

also entitled for grant of interest on delayed refund claim beyond the period of three months. It is pertinent to note that the apex court in the case of

Ranbaxy Laboratories (supra) has held as under:

“9. It is manifest from the afore-extracted provisions that Section 11BB of the Act comes into play only after an order for refund has

been made under Section 11B of the Act. Section 11BB of the Act lays down that in case any duty paid is found refundable and if the duty is

not refunded within a period of three months from the date of receipt of the application to be submitted under sub-section (1) of Section 11B

of the Act, then the applicant shall be paid interest at such rate, as may be fixed by the Central Government, on expiry of a period of three

months from the date of receipt of the application. The Explanation appearing below Proviso to Section 11BB introduces a deeming fiction

that where the order for refund of duty is not made by the Assistant Commissioner of Central Excise or Deputy Commissioner of Central

Excise but by an Appellate Authority or the Court, then for the purpose of this Section the order made by such higher Appellate Authority or

by the Court shall be deemed to be an order made under sub-section (2) of Section 11B of the Act. It is clear that the Explanation has

nothing to do with the postponement of the date from which interest becomes payable under Section 11BB of the Act. Manifestly, interest

under Section 11BB of the Act becomes payable, if on an expiry of a period of three months from the date of receipt of the application for

refund, the amount claimed is still not refunded. Thus, the only interpretation of Section 11BB that can be arrived at is that interest under

the said Section becomes payable on the expiry of a period of three months from the date of receipt of the application under sub-section (1)

of Section 11B of the Act and that the said Explanation does not have any bearing or connection with the date from which interest under

Section 11BB of the Act becomes payable.

….

….

15.      In view of the above analysis, our answer to the question formulated in para (1) supra is that the liability of the revenue to

pay interest under Section 11BB of the Act commences from the date of expiry of three months from the date of receipt of application for

refund under Section 11B(1) of the Act and not on the expiry of the said period from the date on which order of refund is made.â€​

7.2. Further, Kerala High Court in the case of Xerox Business Services India Pvt. Ltd. (supra) and also apex court in the case of UOI vs. Hambard

(Waqf) Laboratories [2017(51) STR 214 (SC)], have held that the assessee is eligible for interest on refund amount sanctioned, in case, there is a

delay beyond the stipulated period of three months as prescribed under the law. Hence, I hold that appellant is entitled for the interest on the delayed

sanction of the refund.

In view of my discussion above, I am of the considered view that the impugned order is not sustainable in law and I set aside the same by allowing

the appeal of the appellant, on above terms.

(Order was pronounced in Open Court on 03/08/2021)