No Reopening Through Refund Claim When Assessee Voluntarily Paid Service Tax: CESTAT

The Ahmedabad Bench of Customs, Excise and Service Tax Appellate Tribunal (CESTAT), has dismissed an appeal seeking refund of service tax, interest and penalty paid on services received from foreign service providers, holding that once an assessee voluntarily opts to conclude proceedings under Section 73(3) of the Finance Act, 1994, the matter attains finality and cannot be reopened through a refund claim. The Bench of Dr. Ajaya Krishna Vishvesha (Judicial Member) has observed that once the appellant opted for voluntary payment of service tax and interest and intimate to the department, the matter shall stand closed and the department has no liberty to issue any SCN, that means the issue stands closed. Neither the assessee can dispute the same nor the department has the opportunity to issue any SCN. Therefore, at a later period coming with the refund is absolutely contrary to the provision of Section 73(3) of the Finance Act, 1994. The case arose from an enquiry initiated by the Preventive Wing of the CGST Commissionerate, Ahmedabad, into alleged non-payment of service tax under the Reverse Charge Mechanism for the financial years 2014–15 and 2015–16. During the enquiry, the assessee paid service tax along with interest and penalty, amounting to over ₹3.46 lakh, and informed the department in writing that the payment was being made voluntarily. The assessee also requested closure of proceedings under Section 73(3), which permits conclusion of cases without issuance of a show cause notice once tax dues are paid before adjudication. Subsequently, the assessee claimed to have realised that service tax was not actually payable on the impugned transactions, contending that under Rule 3 of the Place of Provision of Services Rules, 2012, the place of provision was outside India since the service providers were located abroad. On this basis, a refund claim of approximately ₹2.45 lakh—comprising tax, interest and penalty—was filed. The refund claim was rejected by the adjudicating authority primarily on two grounds: that the claim was filed beyond the prescribed limitation period, and that the payment had been made voluntarily during an enquiry, leading to closure of proceedings under Section 73(3). This view was upheld by the Commissioner (Appeals), prompting the matter to be carried before the Tribunal. The Tribunal noted that the assessee had consciously opted for settlement of the dispute under Section 73(3) by paying the tax, interest and penalty and requesting that no show cause notice be issued. Once such an option is exercised, the statute provides for finality of proceedings, barring both the department from issuing a notice and the assessee from subsequently challenging the liability or seeking refund. The Bench relied on earlier precedent holding that voluntary payment under Section 73(3) brings the matter to a close and that entertaining refund claims thereafter would defeat the statutory scheme. It observed that permitting refunds in such circumstances would prejudice the department, which forgoes the right to issue a show cause notice based on the assessee’s request for closure. The appellant had relied on a recent Delhi High Court judgment dealing with violations of natural justice and non-issuance of show cause notices. However, the Tribunal distinguished that ruling, noting that the present case did not involve any oral waiver or denial of statutory safeguards. Instead, the assessee had expressly sought closure of proceedings in writing after voluntary payment, making the High Court decision inapplicable on facts. By dismissing the appeal, the Tribunal reaffirmed the settled legal position that Section 73(3) operates as a complete code for voluntary compliance and dispute resolution under the service tax regime. Once an assessee avails this route, neither limitation arguments nor subsequent reinterpretation of tax liability can be used to undo the closure of proceedings Case Details Case Title: Amplus Capital Advisors Pvt. Limited Versus Commissioner, CGST Commissionerate, Ahmedabad Case No.: Service Tax Appeal No. 10161 Of 2022-Sm Date: 18.12.2025 Counsel For Appellant: Amit Laddha, Advocate Counsel For Respondent: Sunita Menon, Superintendent (Ar) Click Here To Read Order Read More: Conditions For Invoking Extended Period Of Limitation To Be Scrupulously Followed By Dept: CESTAT

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No Reopening Through Refund Claim When Assessee Voluntarily Paid Service Tax: CESTAT

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