Limitation cannot Start to Run unless Right to Receive a Claim or Refund Crystallized: CESTAT sets aside order Rejecting Refund Claim [Read Order]

The Customs, Excise & Service Tax Appellate Tribunal (CESTAT) Ahmedabad bench presided by Mr. Ramesh Nair, Member (Judicial) and Mr. Raju, Member (Technical) has held that limitation cannot start to run unless the right to receive a claim or refund crystallized and set-asides order rejecting refund claim.

The appellant, Balkrishna Textiles Pvt Ltd is engaged in the manufacture and export of Woven Fabrics of Syn and Staple-fibre. The refund claims of accumulated credit in respect of service tax paid on Commission Agent’s service filed by the appellant were rejected by the Assessing Officer alleging that the appellant has not fulfilled the conditions of limitation as laid down in the Notification No. 41/2007-ST. Aggrieved by the orders, the appellant filed an appeal before the Commissioner (Appeals) who also rejected the appeals. Hence, the appellant approached CESTAT.

The counsel for the appellant submitted that an exporter can file a refund claim for service tax in respect of taxable services used for export, only if service tax was paid on the service, and not if no service tax was paid. The right or locus to claim the refund was acquired only when service tax was paid on Commission Agent’s Service and no service tax has been paid on such services during when the export was made, the appellant had no right to claim the refund at that time. Notification No. 41/2007-ST does not contemplate a situation where a refund claim has to be filed by the exporter even if service tax was not paid because the pre-condition for claiming any refund is the payment of any amount as tax or duty.

The Tribunal observed that the goods have been exported by the appellant during the period April 2008 to March 2009 by utilizing the services on which service tax was payable for the exported goods. The payment of service tax on commission agent service was made only on 31-3-2008 and 21.04.2010 and therefore refund claim is within the time limit of one year from the date of payment of service tax. The ‘relevant date’ for computing six months periods under Notification No. 41/2007-ST is to be taken as the date when service tax is paid and not the first day of the month following the quarter in which export made.

By relying on the case of Pacific Leather Finishers the CESTAT has held that merely on the ground of limitation refund cannot be rejected.

Advocate Mr. Amal Dave appeared for the appellant and Mr.  Dharmendra Kanjani appeared for the respondent.

To Read the full text of the Order CLICK HERE

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