Shen Long Bio-Tech (India) Private Limited Vs Commissioner of GST And Central Excise (Madras High Court)
The Madras High Court considered a Civil Miscellaneous Appeal challenging the Tribunal’s order rejecting the assessee’s refund claim made under the Finance Act, 2017, which granted retrospective effect to an exemption relating to service tax. The principal issue before the Court was whether the appellant was entitled to the benefit of Notification No. 41/2016 dated 22.09.2016 issued by the Ministry of Finance, Government of India, exempting taxable services provided by State Government Industrial Development Corporations or Undertakings to industrial units by way of granting long-term leases of industrial plots from service tax leviable under Section 66B of the Finance Act.
The Court noted that Section 104 of the Finance Act, 2017, which came into force after receiving Presidential assent on 31.03.2017, provided that no service tax would be levied or collected on one-time upfront amounts paid in respect of taxable services provided by State Government industrial development corporations or undertakings to industrial units by way of grant of long-term leases of thirty years or more for the period from 01.06.2007 to 21.09.2016. Section 104(2) provided for refund of service tax already collected, while Section 104(3) stipulated that an application for refund had to be made within six months from the date on which the Finance Bill, 2017 received the assent of the President.
At the time of admission, the High Court framed substantial questions of law relating to the Tribunal’s rejection of the refund application, the applicability of the Finance Act, 2017 to the refund claim, whether the refund claim was barred by limitation, whether the Tribunal had adopted a technical approach despite the Government’s intention to encourage industrial development, and whether the Tribunal was justified in rejecting the claim even if the delay was only four months and twenty-six days when calculated from the date of Presidential assent.
The Court observed that the Finance Act received Presidential assent on 31.03.2017, while the appellant filed its refund application on 26.02.2018. The respondent rejected the claim as being beyond the six-month limitation period calculated from the date of assent. However, the Court found it undisputed that a refund application could be entertained only if it was accompanied by a certificate issued by SIPCOT confirming payment of service tax. In the present case, SIPCOT informed the appellant on 14.09.2017 that it was entitled to a refund and subsequently issued the required certificate on 19.12.2017.
The Court held that although the refund application was treated as time-barred when limitation was reckoned from the date of Presidential assent, it fell within six months if the limitation period was computed from the date of the certificate issued by SIPCOT. The Court referred to the decision of the Bombay High Court in M/s. JSW Dharmatar Port Pvt. Ltd. v. Union of India, reported in 2019 (20) G.S.T.L. 721 (Bom.), where it had been held that, for claiming such a refund, the six-month limitation period must be reckoned from the date of the certificate issued by SIPCOT.
Following the dictum of the Bombay High Court, the Madras High Court held that the appellant’s refund application was within the prescribed limitation period because the application was required to be accompanied by the certificate issued by the service provider, SIPCOT. The Court concluded that the Tribunal was not correct in dismissing the refund claim on the ground of limitation and had erred in reckoning the commencement of limitation from the date of Presidential assent instead of the date on which the service provider issued the certificate. The Court answered the substantial questions of law in favour of the assessee.
Accordingly, the Civil Miscellaneous Appeal was allowed. The respondent was directed to consider the appellant’s refund application and pass appropriate orders in accordance with law within two months from the date of receipt of a copy of the judgment. No order as to costs was made.
FULL TEXT OF THE JUDGMENT/ORDER OF MADRAS HIGH COURT
The order of the Tribunal rejecting the refund claim made by the assessee pursuant to the Finance Act, 2017, which was given retrospective effect, is now before this Court by way of challenge in the present Civil Miscellaneous Appeal.
2. The short point involved in this case is if the petitioner is entitled to the benefit of the Notification No.41/2016 dated 22.09.2016 issued by the Ministry of Finance, Government of India, in the interest of public, exempting taxable services provided by State Government Industrial Development Corporations/ Undertakings to industrial units by way of granting long-term lease of industrial plots from so much of service tax leviable thereon under Section 66B of the said Act. The Finance Act, 2017 got assent of the President and came into force from 01.04.2017.
3. Section 104 has been inserted in Finance Act, 2017 reads as below:
(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 21′ 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.
4. Section 104(1) of Finance Act, 2017, got amended and given retrospective effect to extend the exemption granted; sub-Section (2) of Section 104 pertains to refund to be granted to the service tax already paid and Subsection 104(3) of the Finance Act, 2017 enables the taxpayer to seek a refund within six months from the date of assent to the Act.
5. At the time of admitting the appeal, the following substantial questions of law were framed for consideration:-
(i) Whether the Appellate Tribunal in the facts and circumstances of this case was correct in dismissing the appeal in rejecting the claim of refund application?
(ii) Whether the Appellate Tribunal was correct in applying the statutory provisions for rejecting the refund claim when the refund claim is through the Finance Act, 2017?
(iii) Whether the Appellate Tribunal is justified in rejecting the claim of refund after observing that even from the letter dated 14.09.2017 of the SIPCOT still the claim is barred by limitation. Whereas, it is not so and the claim is within the period of limitation?
(iv) Whether the Appellate Tribunal is correct in adopting the technicalities and narrow approach when the intention/object of the Government itself is to encourage the development of Industries allotted by Industrial undertakings/Corporation?
(v) Whether the Appellate Tribunal was correct in dismissing the appeal even if the period of limitation is calculated from, the date of assent of the President which is only the minimal delay of four months and 26 days?
6. The assent to the Act was granted on 31.03.2017 and the refund claim made by the appellant on 26.02.2018, which was found to be beyond six-months period, was rejected by the respondent.
7. It is an undisputed fact that the application for refund will be entertained only if a certificate from SIPCOT confirming the payment of service tax is annexed. In this case, the certificate from SIPCOT was issued to the appellant on 19.12.2017. Earlier, on 14.09.2017, SIPCOT had intimated the appellant that he was entitled for refund. The two communications from SIPCOT are extracted below:-
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8. The refund request made by the appellant on 26.02.2018 was considered barred by limitation, reckoning the period from the date of assent of the amendment Act. However, if the date of certificate from service provider is taken as the date of commencement of limitation, the refund request is within six months.
9. When a similar issue came up for consideration, the Hon’ble Bombay High Court, in 111/s. JSW Dharmatar Port Pvt. Ltd. v. Union of India, reported in 2019 (20) G.S. T.L. 721 (Bom.), held that to claim refund, the six-month limitation period must be reckoned from the date of the certificate from SIPCOT. In the present case, it is undisputed that the application for refund claim should be accompanied by the SIPCOT’s certificate in confirmation of the payment of service tax. Hence, following the aforesaid dictum of the Bombay High Court, the application for refund by the appellant is construed to be within the six-month limitation. Therefore, we hold that the Tribunal was not correct in dismissing the appeal seeking refund of service tax on the ground of limitation.
10. We are of the view that the Tribunal erred in reckoning the period of limitation, which in this case commences only after the certificate by the service provider, namely SIPCOT. Hence, the substantial questions of law are answered in favour of the assessee.
11. Accordingly, the Civil Miscellaneous Appeal is allowed. The respondent is directed to consider the appellant’s refund application and pass orders in accordance with law within a period of two months from the date of receipt of a copy of this order. There shall be no order as to costs.
