In a recent ruling, the Hyderabad bench of the Customs, Excise, and Service Tax Appellate Tribunal ( CESTAT ) upheld the rejection of time-barred service tax refund claims filed by the appellant.
The appellant, Transmission Corporation of Telangana Ltd. had approached the CESTAT against the orders of the Commissioner (Appeals), both dated 31.01.2023, where the latter upheld the orders passed by the Original Authority rejecting their claim of refund of service tax paid under the Reverse Charge Mechanism ( RCM ), amounting to Rs. 22,77,865 for the financial year 2016-17 and Rs. 49,36,024 for 2017-18.
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The issue in both appeals is that the appellants paid service tax on a reverse charge basis for services by M/s Sterlite Power Transmission Ltd. in 2016-17 and 2017-18. Upon realizing M/s Sterlite had already paid the full tax, they filed for a refund. The appellants initially paid under the impression that the service provider, a joint venture between M/s Sterlite and M/s Continental Transtech Pvt. Ltd., was an Association of Persons ( AOP ), requiring tax payment under the reverse charge mechanism.
The original authority, after examining the claims, noted that the refund claims were filed beyond the statutory time limit under Section 11B of the Central Excise Act, which is applicable to service tax. The refund claim for the first amount was filed on 9-12-2020, and the second on 2-12-2021, both beyond the permissible period of one year.
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The appellant later approached the Commissioner (Appeals). The Commissioner (Appeals) rejected the claims on similar grounds.
The counsel on behalf of the appellant contended that the refund should not be subject to the time limit since the service tax had been paid twice due to a misconception of the law.
The counsel on behalf of the revenue contended that the refunds have been claimed beyond the statutory time limit of one year and therefore, are liable to be rejected on that ground itself.
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The CESTAT bench upheld the rejection of the claims, agreeing with the original authority that the refunds were time-barred. The bench noted that even if the service tax was paid by mistake, the statutory time limit for filing a refund claim must be adhered to.
The CESTAT bench, comprising A K Jyotishi ( Member Technical ) found no merit in the appeal and dismissed it.
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