The Delhi Bench of the Customs, Excise and Service Tax Appellate Tribunal ( CESTAT ) while dismissing the appeal filed by the appellant held that self assessment could not be modified during refund proceedings .
The Appellant Kalyan Toll Infrastructure Ltd provided services to Madhya Pradesh Power Generating Company Ltd.. It was entitled to exemption notification no. 25/2012-ST for these services. However, it self assessed and paid service tax and filed ST 3 returns accordingly.
After one year of the assessment proceedings the appellant filed a refund application of the service tax paid amounting to Rs. 5,07,76,894/- under section 11B of the Central Excise Act, 1994 which is made applicable to service tax matters by section 83 of the Finance Act, 1994.
Accordingly the application was rejected by the original authority as the application was not filed within one year from the payment of the service tax as laid down in section 11B
Aggrieved, the appellant filed an appeal before the Commissioner (Appeals) who upheld the order , Accordingly the assessee filed appeal before the tribunal.
Arvind Singh Chawla, Counsel for appellant submitted that “Since no tax was payable, what was deposited was not tax at all and should be considered as deposit and the Government has no right to retain it as per Article 265 of the Constitution”.
Although the amount was paid as service tax and although the refund application was filed under section 11B of the Excise Act as made applicable to service tax matters, the time limit under section 11B should not apply to its case.
Rajeev Kapoor, Counsel for the department submitted that the service was taxable and the appellant was entitled to an exemption notification which it had not claimed. Therefore, it squarely falls within the scope of service tax and section 11B applies in its full force.
It was observed by the tribunal that the appellant rendered a taxable service, self-assessed service tax, paid it, and filed ST-3 returns. While self assessing, it could have claimed the benefit of an exemption notification which it had not claimed.
Further relied upon the decision of the supreme court in case Collector of Central Excise vs Flock (India) Pvt. Ltd observed that refund can only be sanctioned in pursuance of the assessment not such as to have the effect of changing the assessment.
Thus, it was held that through refund proceedings, the assessment (including self-assessment) cannot be modified.
Further the bench noted that Refund proceedings are in the nature of execution proceedings and they cannot modify an assessment including self-assessment. Refund can only be sanctioned or denied as per the assessment- be it self-assessment by the assessee or the best judgment assessment by the officer.
A Two-Member Bench comprising Dr. Rachna Gupta ( Judicial Member ) and P.V. Subba Rao, Technical Member held that “Since the appellant had self-assessed service tax without applying the notification and the assessment has not been modified, it cannot be modified now in the refund proceedings.”
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