At, Customs Excise Service Tax Appellate Tribunal South Zonal Bench At Bangalore
By, THE HONORABLE JUSTICE: S.S. GARG
For Petitioner: C. Ramachandran, Consultant And For Respondents: Pakshi Rajan, AR
1. Both the appeals are directed against the common impugned order dated 17-11-2016 passed by Commissioner (Appeals) whereby the Commissioner (Appeals) has rejected the appeal of the appellant. Briefly the facts of the case are that the appellant is a Proprietor/Director of G-Tech Computer Education Centres situated at Kakkattil and Kallachi. On intelligence that the appellant is not observing Rules and Regulations of Service Tax, action was initiated against him by collecting the details of services provided by them. Show cause notice No. 14/2010, dated 16-3-2010 for an amount of Rs. 1,79,439/- and another show cause notice No. 19/2010, dated 17-3-2010 for an amount of Rs. 1,20,641/- for the period October, 2006 to December, 2008 and October, 2007 to December, 2008 pertaining to Kakkattil and Kallachi centres respectively were issued. However, the appellant paid the service tax liability before issuance of the above said show cause notices. Vide Order-in-Original Nos. 34 & 35/2010-S.T., the demands along with interest were confirmed after allowing the benefit of cum-tax value, and penalties were also imposed under Section 77 & 78 of Finance Act, 1994 and the Service Tax already paid by the appellant was appropriated towards tax liability. The appellant filed appeal with Commissioner (Appeals) to set aside the penalty imposed. As per Order-in-Appeal Nos. 143 & 144 2014/S.T., dated 26-2-2014 it was found that the demand prior to one year from the date of show cause notice is time barred, and to recalculate the demand accordingly, which means the demand as a whole is time barred. Subsequently the appellant filed refund application to the lower authority, and the lower authority vide the impugned orders refused to sanction the same on the ground that the amount paid as Service Tax is based on self-assessment and filed ST 3 returns voluntarily that too before issuance of show cause notice shows that they accepted the liability. That the appellant had not produced any documents to prove that the incidence of Service Tax was not passed over to the clients; that Commissioner (Appeals) had not nullified the self-assessment made by the appellant; that the appeal order will not have any effect on the self-assessment made by the appellant prior to issuance of show cause notice and rejected the refund claim accordingly.
2. Aggrieved by the order-in-original appellant filed appeal before the Commissioner (Appeals) who has also rejected the appeal of the appellant and hence the present appeals. Heard both the parties and perused the records. Learned counsel for the appellant submitted that the impugned order rejecting the refund of the appellant by both the authorities is wrong and not sustainable in law as the same is contrary to the binding judicial precedents. He further submitted that the department is bound to honour final judgment in the case irrespective of whether the outcome of it is for or against the Revenue. He further submitted that the order of the Commissioner (Appeals) is the final judgment in the case and remain unchallenged by either side. Final judgment makes it clear that the appellant has no liability for the period prior to one year from the date of the show cause notice. He further submitted that if the tax liability is recalculated as per the order of the Commissioner (Appeals) it will be nil and therefore the appellant is eligible for refund of tax in respect of the disputed period. In support of his submission he relied upon the decision in the case of CC, Cochin v. Shree Simandar Enterprises [2012 (283) E.L.T. 369 (Kerala)] wherein the Hon'ble High Court has observed in para 6 that when an appellate authority allows an appeal filed against imposition of tax, duty, fine, penalty, etc., it is the bounden duty of the assessing authority, as part of a democratic Government, to refund the amounts covered by orders of the appellate authority, when appeals are allowed fully or partially. The same shall be refunded even without a formal request for the same. Certainly, on a request made for refund, the same shall be refunded immediately, failing which the assessing authority is bound to pay interest on the amount from the date when the refund became due. On the other hand learned AR reiterated the findings of the impugned order. After considering the submissions of both the parties, I find that when the Commissioner (Appeals) vide his order dated 26-2-2014 has held that the appellant is entitled to pay the interest for the normal period and set aside the tax liability beyond the normal period by setting aside the invocation of extended period of limitation. The learned Commissioner (Appeals) has also set aside the penalty under Sections 77 & 78 also. Further the order of the Commissioner (Appeals) was not challenged by the Revenue and the same has become final and the appellant in pursuance of the order of the Commissioner (Appeals) filed a refund application which was rejected by the original authority and the appeal of the appellant before the Commissioner (Appeals) has also been rejected. Rejection of the refund merely on the ground that the appellant has voluntarily paid the tax is not legally correct. Having accepted the decision of the Commissioner (Appeals), the department cannot turnaround and [de
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cided not to] implement the decision of the Commissioner (Appeals). Further in the case of Shree Simandar Enterprises cited (supra), the Hon'ble High Court of Kerala has held that it is the bounden duty of the assessing authority to follow the decision of the appellate authority and grant the refund amount covered by the orders of the appellate authority. By following the ratio of the said decision, I hold that the impugned orders denying the refund in both the appeals is not justified and correct and therefore I set aside the impugned order with consequential relief if any.