Amount Deposited without Authority of law Cannot be Considered as Service Tax, Refund Allowable: CESTAT [Read Order]

The Ahmedabad Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT), ruled that the mount deposited without the authority of law cannot be considered as Service Tax and it is refundable.

The appellant, Aegis Limited, filed a refund claim of Rs. 4 crores with the Assistant Commissioner, Service tax, on the ground that the service provided by M/s Essar Engineering Limited, under the category of services “consulting Engineers Services” to M/s Minnesota Steel Industries, LLC, USA are export of services and service tax was not leviable under the Finance Act, 1994 as the services rendered by M/s Essar Engineering Ltd. were consumed outside India.

Vishal Agarwal, Counsel appearing on behalf of the appellant submitted that the issue raised before the Commissioner (Appeals) was whether the refund claim filed by the appellant could have been returned as premature, when in fact, it was complete in all aspects and no further compliance was lacking at the Appellant’s end. The Assistant Commissioner’s order cannot be considered as interim in nature and appeal against the same ought to have been admitted and allowed.

The Counsel further contended that the order-in-original was passed without considering or dealing with the ground raised in the refund claim application that Service tax was not leviable as the service rendered by the appellant were consumed outside India by ESML; and service tax being destination – based consumption tax, only such service which are consumed in India are taxable under the Finance Act, 1994.

G. Kirupanandan, Assistant Commissioner (AR) appearing on behalf of the revenue reiterated the finding of the impugned order.

A Two-Member Bench of the Tribunal comprising Ramesh Nair, Judicial Member and CL Mahar, Technical Member observed that “In the present case, the department and both the adjudicating authority nowhere disputed the facts that the services rendered by Appellant to ESML were provided and consumed at a place outside India and therefore, not leviable to Service tax, as the services was provided beyond the territorial jurisdiction of India.”

The Bench concluded by noting that in the instant case, the amount deposited by the appellants without any authority of law cannot be considered as Service Tax. Therefore, the appellant is entitled to get the refund.

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