No refund if demand overlaps for the same period unless refund amount is substantiated from demand

Bharat Cylinders Vs Commissioner of GST & Central Excise (CESTAT Chennai)

In the case of M/s. Bharat Cylinders v. Commissioner of GST & Central Excise [Service Tax Appeal No. 40090 of 2014 dated June 01, 2023], the CESTAT (Customs, Excise and Service Tax Appellate Tribunal) in Chennai determined that if a refund request coincides with a period in which a demand has been established, the taxpayer will only be eligible for a refund if the demand is overturned.

Facts:

M/s. Bharat Cylinders (“the Appellant”) is inter alia providing goods transport agency services (“GTA services”). The Appellant being a service provider transported cylinders to the bottling unit and mistakenly paid service tax under forward charge in the year 2010, since in case of GTA services the recipient of service is liable to pay GST.

The Appellant filed refund claim of INR 54,736/- for the period January 2010 to December 2010. However, the Adjudicating Authority rejected the refund claim. Aggrieved by rejection Order the Appellant filed an Appeal before the Commissioner of Central Excise (Appeals), Madurai who vide Order-in-Appeal No. 125/2013 dated September 30, 2013 (“the Impugned Order”) rejected the appeal of the Appellant.

Aggrieved by the Impugned Order the Appellant filed an appeal before the CESTAT, Chennai.

Before the CESTAT, the Revenue contended that the Appellant is not eligible for refund since, the demand against the Appellant related to GTA service for the period October 01, 2009 to September 30, 2010. Since, the refund period overlaps with the demand period, the Appellant is not eligible for refund unless the demand for such period is set aside.

Issue:

Whether the Appellant can claim refund for the period which overlaps with the demand period?

Held:

The CESTAT in [Service Tax Appeal No. 40090 of 2014] held as under:

• Noted that, the Appellant was not able to differentiate the amount on which the demand order not applies.
• Held that, the period involve in the present appeal overlaps with the period for which the demand has been confirmed and therefore appellant is not eligible for any refund.

FULL TEXT OF THE CESTAT CHENNAI ORDER

Brief facts are that the appellant is registered as an assessee for providing services of Technical Inspection and under Goods Transport Agency service. It is submitted by the learned counsel Smt. Pallavi Ganesh appearing on behalf of the appellant that they paid service tax under GTA service for transportation undertaken by them for the transportation of the cylinders to the bottling unit. The said service tax was paid by mistake and that they are not liable to pay service tax as the burden to pay service is under the service recipient. The appellant has thus filed refund claim for the period January 2010 to December 2010 for an amount of Rs.54,736/. The authorities below have rejected the refund claim. It is submitted by the learned counsel that as the amount was paid by mistake the refund claim may be allowed.

3. The learned AR Ms. K. Komathi submitted that the Tribunal for the earlier period vide Final Order No. 40753 and 40754/2019 dated 1.5.2019 had upheld the confirmation of demand of service tax on GTA service for the period 1.10.2009 to 30.9.2010. The refund claim overlaps with the present period wherein the demand has been confirmed. Without filing an appeal against such order and obtaining a favourable order setting aside the demand under GTA service, the appellant is not eligible for refund.

4. Heard both sides.

5. On perusal of the Final Order dated 1.5.2019, it is seen that there was an earlier demand for various services including GTA service for the period 1.10.2009 to 30.9.2010. The amount involved for this period from January 2010 to December 2010 is Rs.54,736/-. The learned counsel has not been able to demarcate the amount for which the earlier order does not apply. We therefore do not find any merit in the appeal filed by the appellant. After taking note of the submissions made by both sides and noting that the period involved in the present appeal overlaps with the period for which the demand has been confirmed, we hold that the appellant is not eligible for refund. The impugned order is sustained. The appeal is dismissed.

(Dictated and Pronounced in open court)

*****

(Author can be reached at [email protected])