The Kolkata Bench of Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) granted relief to Steel Authority of India Ltd. (SAIL) by allowing their refund claim for excess Service Tax paid under the reverse charge mechanism.
M/s. Steel Authority of India Ltd,appellant-assessee, appealed against the rejection of their refund claim for excess Service Tax paid under the reverse charge mechanism during the period from October 2008 to February 2009.
Become PF & ESIC Pro: Basic to Advance Course – Enroll Today
The assessee, a manufacturer of iron and steel items, had received consultancy services from foreign service providers and paid Service Tax at a rate of 12.36%, which was the applicable rate at the time of service receipt. However, following a Central Excise Audit (CERA), it was found that the service had been provided before 24th February 2009, and thus the applicable rate should have been the one in force before that date.
Based on this audit, the assessee paid the correct amount of Service Tax under the rate of 10.3% (including cess) as per the applicable tax laws at the time of payment. Later, the assessee filed a refund claim for the excess Service Tax paid under the higher rate, relying on the fact that the service was provided before the rate change. The claim was rejected by the lower authorities, which led to the present appeal.
Become PF & ESIC Pro: Basic to Advance Course – Enroll Today
The assessee argued that the point of taxation for reverse charge mechanism services is the date of payment, as clarified in Circular No. 158/9/2012-ST and Circular No. 154/5/2012-ST. These circulars specifically state that the applicable rate of Service Tax is the one in force at the time of payment, not the date the service was provided.
A single member bench comprising Ashok Jindal (Judicial Member) upon reviewing the case, agreed with the assessee’s argument and found that they were entitled to a refund of the excess Service Tax paid.
The authority noted that the correct rate of 10.3% (including cess) should have been applied at the time of payment, which occurred after 20th April 2009. Therefore, the tribunal set aside the original order and allowed the assessee’s refund claim, granting them the consequential relief.
In conclusion, the appeal was allowed, and the assessee was entitled to receive a refund of the excess Service Tax paid.
Subscribe Taxscan Premium to view the JudgmentSupport our journalism by subscribing to Taxscan premium. Follow us on Telegram for quick updates
