Case Law Details
Kazakstancaspishelf India Pvt. Ltd. Vs Principal Commissioner of Customs (CESTAT Delhi)
Refund Claim Cannot Be Rejected Without Examining Double Payment of Service Tax and Eligibility of Credit in Refund Proceedings: CESTAT Delhi
The appellant is Indian subsidiary of a foreign entity. The foreign entity provided services to Oil India Limited. The appellant paid service tax on such services. Oil India also paid service tax under reverse charge basis on such services. Hence; the appellant filed refund claim. Refund of over Rs.4.4 crores was rejected. On appeal; appellate authority confirmed the same. Hence; appeal.
Hon’ble CESTAT, Delhi set aside the order and allowed the appeal. It notes: (i) the assistant commissioner had rejected the refund claim on the ground that the appellant not being a service provider; was not entitled to cenvat credit; (ii) the argument of the appellant that credit cannot be denied in refund proceedings needs to be examined; (iii) whether the appellant had paid entire amount in cash needs to be examined; (iv) revenues arguments on non challenge of ST-3 returns by placing reliance on ITC decision also needs to be evaluated; (v) accordingly; remands the matter back to the adjudicating authority to pass denovo order.
Argued by Adv. Bharat Raichandani i/b UBR Legal
FULL TEXT OF THE CESTAT DELHI ORDER
M/s. KAZAKSTANCASPISHELF India Pvt Ltd.1 filed this appeal to assail the Order in Appeal dated 13.02.20232 passed by the Commissioner (Appeals) upholding the order of the Assistant Commissioner and rejecting the appellant’s appeal. The appellant applied for refund of service tax of Rs 4,93,48,563/- The Assistant Commissioner had, in his order, sanctioned refund as service tax to the appellant to the extent of Rs. 10,89,660/-(as it was paid in cash) but rejected refund of Rs. 4,82,58,903/- (Rs. 4,76,18,075/-on the ground that it was paid using CENVAT credit which the appellant was not entitled to and Rs. 6,40,828/-on the ground of time bar). In the impugned order, the Commissioner (Appeals) upheld this order and hence this appeal.
2. The appellant’s ground for seeking refund was that it was not required to pay service tax on the services provided to M/s. Oil India Ltd.because the latter had already paid the service tax under reverse charge on the same services. The Assistant Commissioner sanctioned the refund but reasoned that if the appellant did not have to pay service tax, it also could not have availed CENVAT credit because credit was available only on the inputs and input services used to provide taxable services. If the service was not taxable, the services used by the appellant cannot be input services either.
3. We have heard learned counsels for the appellants and learned authorised representative for the Revenue and perused the records.
4. Learned counsels for the appellant submitted that in the proceedings to sanction refund, it was not open for the Assistant Commissioner to have examined the eligibility of CENVAT credit. Denial of CENVAT credit would require a separate notice to be issued. Therefore, he submitted that the Assistant Commissioner committed an error in holding that the appellant was not eligible to CENVAT credit and for that reason declining to sanction part of the refund. The Commissioner (Appeals), committed an error in passing the impugned order upholding the order of the Assistant Commissioner.
5. Learned counsels also argued vehemently that the entire amount of service tax was paid in cash. On a query from the bench, he submitted that he did not have the challans to establish this fact but the matter may be remanded to the original authority so that the documents can be presented for his examination.
6. Ms. Jaya Kumari, learned authorised representative for the Revenue, on the other hand, submitted that the well-established legal principle is that refund of duty or service tax is in the nature of an execution proceeding and it has to emanate from the assessment. No refund can be sanctioned contrary to the assessments or so as to modify the assessments. She relied on the following case laws:
a. Priya Blue Industries vs Commissioner of Customs (Preventive)3
b. ITC Limited vs Commissioner of Central Excise, Kolkata IV4
7. Ms. Jaya Kumari vehemently argued that the ST-3 Returns filed by the appellant were not modified through any appeal proceedings or otherwise and refund cannot be sanctioned so as to modify the assessment. She further submitted that the ST-3 Returns include not only details of the service tax self-assessed and paid but also the CENVAT credit taken. If the CENVAT credit taken as per the ST-3 Returns cannot be modified in a refund proceeding, neither can the service tax payable as per the ST-3 Returns. She further submitted that the judgment of the Supreme Court in ITC Limited will also apply to service tax as held by the Delhi High Court in BT (India) Pvt. Ltd. vs Union of India5and refunds cannot be sanctioned or denied so as to modify the assessment in the ST-3 Returns.
8. After hearing both sides, we find that this is a fit case to be remanded to the original authority. Without passing any remarks on the merits of the case, leaving all questions of law and fact open, we remand the matter to the Assistant Commissioner to decide the refund application afresh as per the law and based on the facts. The Assistant Commissioner shall give an adequate opportunity to the appellant to present its case and any evidence in support.
9. The impugned order is set aside and the appeal is allowed by way of remand to the Assistant Commissioner.
(Order pronounced in open Court on 12/05/2026.)
Notes:
1 Importer
2 Impugned order
3 (2005)10 SCC 433
4 (2019) 17 SCC 46
5 (2023) 13 Centax 89 (Del.)
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