Case Law Details

Case Name : Indian Oil Corporation Ltd. Vs Commissioner of Central Excise & S. Tax (CESTAT Kolakata)
Appeal Number : Service Tax Appeal No. 75823, 76673-76674 of 201
Date of Judgement/Order : 02/12/2019
Related Assessment Year :
Courts : All CESTAT (895) CESTAT Kolkata (22)

Indian Oil Corporation Ltd. Vs Commissioner of Central Excise & S. Tax (CESTAT Kolakata)

Vide Notification No. 26/2014-C.E. (N.T.), dated 27-8-2014 – In the CENVAT Credit Rules, 2004, in rule 9, in sub-rule (1), after clause (f), the following clause shall be inserted, namely

“(fa) a Service Tax Certificate for Transportation of goods by Rail (herein after referred to as STTG Certificate) issued by the Indian Railways, along with the photocopies of the railway receipts mentioned in the STTG certificate; or”

Hence, Certificate issued by railway is a valid document under the Act.

Appellant’s eligibility for refund of service tax is prima facie sustainable on legal grounds. Railway circular also states that the refund claim is to be obtained from the concerned tax authority on the basis of monthly consolidated (STTG) certificate issued by Railways. The appellant’s refund claim is also not hit by the doctrine of unjust enrichment as per CA certificate produced before the bench.

FULL TEXT OF THE CESTAT JUDGEMENT

Brief facts of the case are that the appellant is engaged in the manufacture of various petroleum products classifiable under Chapter 27 of the schedule to the Central Excise Tariff Act. 1985. They had submitted 3 (three) claims of refund of Service Tax recovered from them by South Eastern Railways towards transportation of petroleum products during the months of (i) October’12, (ii) November’12 and (iii) January’13 on the ground that in terms of Notification No. 25/2012 -ST dated 20.06.2012, service by way of transportation in India by Rail of such petroleum goods were exempt from Service Tax. The refund claim was  granted to the appellant vide OIO No’s 18/REFUND/ST/TECH/HAL-I/20 13, 19/REFUND/ST/TECH/HAL-I/20 13 & 20/REFUND/ST/TECH/HAL-I/2013 dated 27.06.2013.

2. Against the above OIO’s Revenue preferred an appeal before Ld Commissioner of central Excise (Appeal-1), Kolkata and the same was allowed stating that the refund granted should be recovered from the IOCL along with interest at the appropriate rate on the ground that for getting refund of tax/duty the primary requirement is that the tax/duty/ should have been paid. In terms of section 68 of the finance Act, 1994, the service provider is liable to pay Service Tax. Hence, if paid, refund of Service Tax, if eligible is available to the person who has paid, i.e the service provider. Hence, the present appeals.

3. The ld. Advocate appearing for the appellant submits that

(i) There is no doubt that the service tax on transportation of petroleum products by railways was exempt. The South Eastern Railway has wrongly collected Service Tax and issued STTG Certificate in support of collection.

(ii)The SSTG certificate is issued by the Rail to the customer who makes payment of Service Tax. The SSTG Certificate is a valid certificate for availing Cenvat Credit in line with CCR’2004.

(iii) Further as per 11B of the Act, clearly mentions that any person from whom duty has been collected are eligible for filing refund claim.

(iv) The learned Advocate relied on the following decisions :

(a) Commr. of Cust, C. Ex. & ST Vs Indian Farmers Fertilizers Coop. Ltd – 2014(35) STR -492(All.)

(b) Mc Nally Bharat Engineering Co. Ltd. Vs CCE, Guntur – 2006(194) ELT 318 ( Tri.- Bang.)

(c) Jindal Steel & Power Ltd Vs CCE, Raipur 4 Taxmann.com 383 (New Delhi- CESTAT)

4. In addition to the above, the appellant has submitted a certificate dated 12.10.2019 from V. Singhi & Associates – Chartered Accountant in line with the direction of the Bench for verification of unjust enrichment under Section 12B of the Act.

5. The Ld. DR reiterates the finding of the impugned orders.

6. I have carefully considered the submission made by both the sides and perused the appeal records.

7. The fact that the recipient of the service is also entitled to file a claim for refund is no longer res-integra. The issue stands decided by the Constitution Bench’s decision in Mafatlal Industries Ltd Vs Union of India 1997 (89) ELT 247(SC). This ratio was followed in Indian Farmer Fertilizer Coop. Ltd. Vs C.C.E., Meerut-II 2014 (35) S.T.R. 422 (Tri. – Del.) and affirmed by Allahabad High Court 2014 (35) S.T.R. 492 (All.). The principle which has been enunciated in the Constitution Bench judgment is as follows:

“(iii) A claim for refund, whether made under the provisions of the Act as contemplated in Proposition (i) above or in a suit or writ petition in the situations contemplated by Proposition (ii) above, can succeed only if the petitioner/plaintiff alleges and establishes that he has not passed on the burden of duty to another person/other persons. His refund claim shall be allowed/decreed only when he establishes that he has not passed on the burden of the duty or to the extent he has not so passed on, as the case may be. Whether the claim for restitution is treated as a constitutional imperative or as a statutory requirement, it is neither an absolute right nor an unconditional obligation but is subject to the above requirement, as explained in the body of the judgment. Where the burden of the duty has been passed on, the claimant cannot say that he has suffered any real loss or prejudice. The real loss or prejudice is suffered in such a case by the person who has ultimately borne the burden and it is only that person who can legitimately claim its refund. But where such person does not come forward or where it is not possible to refund the amount to him for one or the other reason, it is just and appropriate that the amount is retained by the State, i.e., by the people. There is no immorality or impropriety involved in such a proposition…”

8. The appellant has produced the Ministry of Railway Circular No. TCR/1078/2011/2 dated 26.09.2012 which has clarified at Para 4(xi)

“On the written request from customers, CCM office will issue a monthly consolidated certificate to be signed by an officer authorized by CCM and duly countersigned by Dy. CAO/T or officer nominated thereto, for each customer giving details of Service Tax collected from them during the previous month, date-wise and rake-wise with breakup of (a) Service Tax (b) Education Cess, (C) Higher Education Cess and (d)Total Service Tax. This can be used by the customers for getting refund/credit of Service Tax from the concerned Superintendent of Central Excise as due to them. Service Tax once collected will not be refunded by Railways under any circumstances.”

9. Vide Notification No. 26/2014-C.E. (N.T.), dated 27-8-2014 – In the CENVAT Credit Rules, 2004, in rule 9, in sub-rule (1), after clause (f), the following clause shall be inserted, namely

“(fa) a Service Tax Certificate for Transportation of goods by Rail (herein after referred to as STTG Certificate) issued by the Indian Railways, along with the photocopies of the railway receipts mentioned in the STTG certificate; or”

Hence, Certificate issued by railway is a valid document under the Act.

10. In view of the foregoing, the appellant’s eligibility for refund of service tax is prima facie sustainable on legal grounds. Railway circular also states that the refund claim is to be obtained from the concerned tax authority on the basis of monthly consolidated (STTG) certificate issued by Railways. The appellant’s refund claim is also not hit by the doctrine of unjust enrichment as per CA certificate produced before the bench.

11. Accordingly, the impugned order is set aside. The appeals filed by the appellant are allowed with consequential benefits to the appellant.

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