Introduction: The case of Meck Mills Private Limited vs. Commissioner of Central Tax and Central Excise (CESTAT Bangalore) dealt with a dispute regarding the rejection of a refund claim by the appellant. The issue revolved around the sufficiency of documents provided by the appellant to prove the payment of service tax and the non-availment of CENVAT credit.
Analysis: The appellant had taken industrial land on a long-term lease from Kerala Industrial Infrastructure Corporation (KINFRA), with an upfront payment that included service tax. In response to Finance Act 2017, Section 104 was inserted in Chapter V of Finance Act 1994, which exempted service tax on certain upfront amounts. The appellant filed a refund claim for service tax paid on the lease amount. However, the claim was rejected by both the original authority and the first appellate authority due to insufficient documentation.
The appellant’s representative argued that Section 104 was a standalone provision, not overridden by general provisions like Section 11B of the Central Excise Act and Section 83 of the Finance Act. They submitted that they had later obtained invoices from KINFRA, proving the payment of service tax. The representative cited various cases where similar refund claims were allowed by producing invoices.
Additionally, the appellant claimed that they were not registered under Service Tax Law or Excise Laws, eliminating the question of CENVAT credit. They had capitalized the lease payment in their books and provided a certificate from a Chartered Accountant confirming non-availment of CENVAT credit and non-passage of the credit to others.
Conclusion: The CESTAT Bangalore concluded that the appellant had submitted sufficient documents, including invoices and a Chartered Accountant’s certificate, to prove the payment of service tax and the non-availment of CENVAT credit. Therefore, the rejection of the refund claim was unjustified, and the appeal was allowed. This case underscores the importance of providing adequate documentation to support refund claims and adhering to specific provisions related to taxation.
FULL TEXT OF THE CESTAT BANGALORE ORDER
The appellant has taken industrial land on long term lease from Kerala Industrial Infrastructure Corporation (KINFRA), a Kerala State Government Undertaking. The appellant paid upfront amount on long term lease with Service Tax to KINFRA, who in turn paid the service tax to the Government. In Finance Act, 2017, Section 104 was inserted in Chapter V of Finance Act 1994 with retrospective effect. As per this section no service tax, leviable on one time upfront amount (premium, salami, cost, price, development charge by whatever name called) in respect of taxable service provided or agreed to be provided by a State Government Industrial Development Corporation or Undertaking to Industrial units by way of grant of long term lease of 30 years or more of industrial plots, shall be levied or collected during the period commencing from 1st June 2007 and ending with 21st September 2016.
2. In order to provide relief to the applicants, who have already paid service tax on such one time upfront amount for long lease, sub-section (2) of Section 104, provided for refund of service tax paid during this period. Section 104 is reproduced herein below:
“Special provision for exemption in certain cases relating to long term lease of industrial plots.
104 (1) Notwithstanding anything contained in Section 66, as it stood prior to the 1st day of July, 2012, or in Section 66B, no service tax, leviable on one time upfront amount (premium, salami, cost, price, development charge or by whatever name called) in respect of taxable service provided or agreed to be provided by a State Government industrial development corporation or undertaking to industrial units by way of grant of long term lease of thirty years or more of industrial plots, shall be levied or collected during the period commencing from the 1st day of June, 2007 and ending with the 21st day of September, 2016 (both days inclusive).
(2) Refund shall be made of all such service tax which has been collected, but which would not have been so collected, had sub section (1) been in force at all material times.
(3) Notwithstanding anything contained in this Chapter, an application for claim of refund of service tax shall be made within a period of six months from the date on which the Finance Bill, 2017 receives the assent of the President.”
3. The appellant filed refund claim of service tax amounting to Rs. 3,38,368/- (Rupees Three Lakhs Thirty Eight Thousand Three Hundred and Sixty Eight only) paid by them on the upfront amount on long term lease of industrial land. The claim was rejected by the adjudicating authority vide Order-in-Original dated 26/12/2007. Aggrieved by the order the appellant filed an appeal before Commissioner (Appeals), who has upheld the order of the original adjudicating authority. Aggrieved with the order of the first appellate authority, the present appeal is filed.
4. Heard the Learned CA for the appellant and the Learned Authorized Representative for the Revenue.
5. The learned CA submits that Section 104 of the Finance Act, 1994 is an independent stand alone provision to deal with the special circumstances mentioned in Section 104 and that it cannot be controlled or limited or restricted by general provisions like Section 11B of Central Excise Act 1994 read with Section 83 of Finance Act 1994 and it is well settled law that general provisions cannot override a specific provision in statute. The learned CA submits that the issues involved in the appeal are:
(a) Whether invoice/bill issued by KINFRA is produced for the claim of refund under Section 104 of the Finance Act, 2017?
(b) Whether the documentary evidence to establish that cenvat credit has not been availed is satisfied?
6. The learned CA submits that they did not have the invoice issued by KINFRA initially, however they have submitted before the adjudicating authority as well as the first appellate authority the lease agreement, payment receipts and also declaration from KINFRA to the effect that service tax was collected from them and KINFRA in turn paid to the Government. However, their refund claim was rejected by both the authorities on the ground that no invoice/bill was produced before them. In the meanwhile, they have applied to KINFRA for the invoices/bills and KINFRA has given the invoices/bills raised by them. Hence, they are in possession of the tax invoices issued by KINFRA. The learned CA has submitted that the issue is squarely covered by the decision of this Hon’ble Tribunal in the following cases:
a) Comfort Night Linen Products and Anr. Vs. Commissioner of Central Tax & Central Excise, Calicut, Final Order No. 20652-20653/2021 dated 03/08/2021
b) Metrolite Roofing Pvt. Ltd. and others Vs. Commissioner of Central Tax & Central Excise, Calicut, Final Order No. 20160-20166/2022 dated 01/04/2022.
c) Centroid Polymer Technologies and Ors Vs. Commissioner of Central Tax & Central Excise, Calicut – Final Order No. 20689-20698/2021 dated 12/04/2022.
Wherein the Hon’ble Bench has set aside the order rejecting the refund claim of the appellant and allowed the appeal on production of invoice before the Tribunal. As regards the non-availment of Cenvat credit the learned CA submitted that they are neither registered under Service Tax Law or under the Excise Laws, therefore the question of availment of cenvat credit does not arise. Further, he submitted that they have capitalized the one time lease payment including the service tax amount in their books of account. In this regard they have enclosed the certificate from the Chartered Accountant to the effect that cenvat credit has not been availed and it has not been passed on to the others.
7. The learned AR reiterated the findings of the Commissioner (Appeals) and submitted that refund has been rightly rejected on account of non-submission of the requisite documents.
8. I have considered the submissions of both sides and perused the records. I find that the appellants filed refund claims which arose as a consequence of introduction of Section 104 of the Finance Act w.e.f. 31.03.2017. Further Notification No. 41/2016 dated 22.09.2016 has exempted taxable service provided by the State Government Industrial Development Corporation/Undertakings to the industrial units by way of granting long term lease of industrial plots from so much of service tax leviable thereon under 66B of the Finance Act, 1994 as is leviable on the one time upfront amount payable for such lease. Vide Section 104(1) exemption is provided for such services for the period from 01.06.2007 to 21.09.2016 and it has also provided that the refund claim should be filed within 6(six months) from the date on which the Finance Act, 2017 receives the assent of the President. In this case, I find that the appellant has filed refund claims in time. The reasons why the refund claims have been rejected by the original authority and upheld by the first appellate authority is that the appellants did not produce the documents namely invoices/bill evidencing that they have paid service tax through KINFRA and non availment of Cenvat credit. The appellants have now submitted the copies of invoice issued by KINFRA. The details are as under:
|1||KIITP- PLKD(33)/13- 14/33252||04-10- 2013||2,56,026||31,645||2,87,671|
|2||KIITP- PLKD(34)/13- 14/34137||26-11- 2013||12,80,130||1,58,224||14,38,354|
|3||KIITP- PLKD(45)/15- 16/45706||03-12- 2015||13,24,424||1,46,975||14,71,399|
|4||KIITP- PLKD(45)/15- 16/45732||09-12- 2015||10,538||1,519||12,057|
9. The invoices produced by the appellants during the
pendency of the appeals clearly show that they have paid the service tax to KINFRA, who in turn paid the same to the Government. Further, they have submitted a certificate from a Chartered Accountant to the effect that Cenvat credit has not been availed and that it has not been passed on to others.
10. In view of the above facts and that the appellants have now produced sufficient documents to prove that they have paid the service tax and have not availed or passed on the Cenvat credit, I do not find any justification in the rejection of refund claim. Hence, I set aside the impugned order and allow the appeal with consequential relief.
(Order pronounced in open court on 04 /08 /2023)