23 十月 2023

Refund of service tax is maintainable even when assessment/self-assessment is not challenged in appeal

The Larger Bench of the CESTAT has held that refund of service tax is maintainable in the absence of any challenge to assessment or self-assessment in appeal under the Finance Act, 1994.

It was held that the Supreme Court decision in the case of ITC Ltd. v. Commissioner, pertaining to refund under Customs Act, 1962 and holding that a claim for refund cannot be entertained unless the order of assessment or self-assessment is modified in accordance with law by taking recourse to the appropriate proceedings, is not applicable to service tax.

The LB in Shree Balaji Warehouse v. Commissioner noted that provisions regarding assessment, refund and appeals are not pari-materia in Customs Act and Finance Act, 1994 (dealing with service tax). It noted that no appeal is contemplated against the self-assessment made by the assessee through the ST-Returns and that the returns filed on self-assessment basis are not assessed/approved/ratified by the Central Excise officer.

The Larger Bench was hence of the view that once this exercise is not being done, then the ST-3 returns filed by the assessee as per their own assessment cannot be equated to an ‘order of assessment‘ against which an appeal can be filed.

It may be noted that the Larger bench while holding the issue in favour of the assessee also opined that the Department cannot take a different stand on the issue when it has accepted the same in the case of Cadila Healthcare.

The Larger Bench was also of the view that the judgement of Rajasthan High Court in Central Office Mewar Palace Organisation v. Union of India still holds the field even post the Apex Court decision in case of ITC Limited.

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