GAIL India Ltd Vs Commissioner of GST & Central Excise (CESTAT Chennai)
CESTAT Chennai held that refund under section 11B duly available as there can be no levy of service tax on the activity of transportation of gas up to delivery point at customer’s premises as it pertains to self-service.
Facts- The appellants were registered with the Service Tax Department and were engaged in the business of transporting and trading of industrial gases through their own pipelines on which they were discharging service tax. The tariff charges are fixed by the Government agency known as Petroleum and Natural Gas Regulatory Board (PNGRB). Until the pendency of approval of the pipeline tariff from PNGRB, the appellants collected the previously agreed contractual provisional rates from their customers in consideration with their services for transportation of gas through pipeline network along with service tax and deposit the same to the Government.
The appellant has filed a refund claim of Rs.10,54,78,124/- under Rule 173S of the Central Excise Rules, 1944 in respect of service tax paid on gas transmission charges collected by them from their customers and duly remitted to the Government during the period 1.4.2011 to 31.7.2014. The said refund claim arose due to differential price charges i.e. the difference between tariff already charged as per contract by the appellant and the tariff amount as received by PNGRB.
On scrutiny of the ST-3 returns of the appellant, it appeared to the Department that the said refund amount had already been adjusted / utilized by the appellant under Rule 6(3) of Service Tax Rules, 1994. Hence after due process of law, the refund claim was rejected by the original authority. Aggrieved by the same, the appellant filed appeal before Commissioner (Appeals) who has also upheld the Order in Original.
Conclusion- Hon’ble New Delhi Tribunal’s vide its Final Order No. 55445/2017 has held that there can be no levy of service tax on the activity of transportation of gas up to delivery point at customers premises as it pertains to self-service. Hence on this ground too they would be eligible for a refund under section 11B of the Central Excise Act, 1944. While this is a fresh legal issue which has not been examined by the Original Authority, it is no longer in dispute that claims for refund, even where tax has been paid under a mistake of service tax law are to be filed and decided upon under Section 11B of the Central Excise Act, 1944, subject to the claimant establishing that burden of duty has not been passed on to third parties. However, we find that the only issue for rejecting the refund claim is a data entry in the ST-3 Return, which when claimed to be erroneous by the appellant was not verified for its correctness just because the original authority mistakenly found himself ‘bound by the legal framework’. We hold that the appellant’s claim was wrongly dismissed without examining the claim based on verifiable facts. Hence the impugned order merits to be set aside.
FULL TEXT OF THE CESTAT CHENNAI ORDER
This appeal is filed by M/s. GAIL India Ltd., Karaikal against Order in Appeal No. 510/2018 (CTA-I) dated 26.9.2018.
2. Brief facts are that the appellants were registered with the Service Tax Department and were engaged in the business of transporting and trading of industrial gases through their own pipelines on which they were discharging service tax. The tariff charges are fixed by the Government agency known as Petroleum and Natural Gas Regulatory Board (PNGRB). Until the pendency of approval of the pipeline tariff from PNGRB, the appellants collected the previously agreed contractual provisional rates from their customers in consideration with their services for transportation of gas through pipeline network along with service tax and deposit the same to the Government. The appellant has filed a refund claim of Rs.10,54,78,124/- on 9.7.2015 under Rule 173S of the Central Excise Rules, 1944 in respect of service tax paid on gas transmission charges collected by them from their customers and duly remitted to the Government during the period 1.4.2011 to 31.7.2014. The said refund claim arose due to differential price charges i.e. the difference between tariff already charged as per contract by the appellant and the tariff amount as received by PNGRB. On scrutiny of the ST-3 returns of the appellant, it appeared to the Department that the said refund amount had already been adjusted / utilized by the appellant under Rule 6(3) of Service Tax Rules, 1994. Hence after due process of law, the refund claim was rejected by the original authority. Aggrieved by the same, the appellant filed appeal before Commissioner (Appeals) who has also upheld the Order in Original. The relevant portion of the impugned order is extracted below:-
“7. The only ground for rejection of the refund by the respondent is that on verification of the ST-3 returns of the period in dispute, it was seen that the appellant had adjusted an amount of Rs.11,47,41,041/- under Rule 6(3) of the Service Tax Rules, 1994 towards their service tax liability. The appellant on the other hand claimed that this was an inadvertent error and that in fact they had adjusted only an amount of Rs.66,24,847/-. However, there is no evidence on record placed by the appellant to prove that they had not taken credit of Rs.11,47,41,041/- into their books of accounts. Pertinently, the appellant had also not endeavoured to set right the error claimed to have been done by them inasmuch as the appellant had not filed any revised ST-3 returns in terms of Rule 7B of the Service Tax Rules, 1994 for amending the figures.
8. Thus, inasmuch as it is not evidenced as to whether the amount of Rs.11,47,41,041/- was adjusted fully or not during subsequent periods and also since no amendments or revised returns were filed by the appellant, the balm claim of the appellant that it was a technical error remains largely unsubstantiated and hence cannot be accepted.
9. The appellant has placed reliance on case laws. However, these cases are of different material facts where there were procedural lapses, whereas the case on hand in not one of a procedural or technical lapse, but attempting to derive double benefit by the appellant by seeking refund under section 11B of the Act on one hand, and by taking credit in terms of Rule 6(3) of the Service Tax Rules, 1994 on the other hand. Therefore, the various case laws cited by the appellant are of no relevance to the case on hand.
10. In view of the above, the impugned order is upheld in toto and the appeal of the appellant merits rejection.”
3. Aggrieved by the impugned order, the appellant is now before the Tribunal assailing the impugned order.
4. No cross-objections have been filed by Respondent-Department.
5. We have heard Shri G. Natarajan, learned counsel for the appellant and Shri R. Rajaraman, learned AR for the Revenue.
5.1 The learned counsel for the appellant has stated that the total excess amount of service tax paid by them due to the revision in the tariff of gas transmitted by them for the period from 1.4.2011 to July 2014 was Rs.11,47,41,041/-. However, they have sought a refund of Rs.10,54,78,124/- as detailed below:-
