CESTAT Rejects Service Tax Refund Claim Due To Unchallenged Self-Assessments

The Customs, Excise and Service Tax Appellate Tribunal (CESTAT) bench of New Delhi has held that a refund claim cannot be entertained until and unless the self- assessment order is challenged by way of appeal.

The bench comprising of Ms. Binu Tamta (Judicial Member) and Mr. P.V Subba Rao (Technical Member) has held that the refund claim of the appellant / assessee is unsustainable and dismissed the appeal.

The appellant / assessee, engaged in renting of motor vehicles, entered into a contract with NPCIL for renting of certain buses and motor vehicles. As per the work order, tax on abated value i.e. 40% was deducted by NPCIL and paid under Reverse Charge Mechanism. Moreover, NPCIL asked the appellant / assessee to pay service tax on the balance 60% of value which was to be reimbursed by NPCIL.

Consequently, on recommendation of NPCIL, a refund claim was filed by the appellant / assessee under Section 11B of the Central Excise Act, 1944 read with Section 83 of the Finance Act, 1994 amounting to Rs. 8,43,105/-. The Adjudicating Authority rejected the entire refund claim. The appeal filed by the appellant / assessee was partly allowed. Therefore, the appeal was filed before the tribunal.

The bench placed reliance on the judgement of the Supreme Court in ITC Limited vs CCE, Kolkata-IV [2019 (368) ELT 216 (SC) ]. It was held that since refund proceedings are in the nature of execution proceedings, no refund can be granted without modification of the assessment order. Reliance was also placed on the judgment of the Delhi High Court in B.T India Pvt. Ltd. [W.P (C ) 13968/2021] wherein the law stated above was also made applicable to service tax cases. In the present case, the Adjudicating Authority held that the refund claim was filed incorrectly as the assessee themselves were liable to pay service tax on 50% of total value. Thus, the tribunal held that the refund claim cannot be entertained.

The order was upheld by the tribunal.

Case Details

Case title: Shri R.C Gupta vs Commissioner of Central Excise

Case No: Service Tax appeal 52455 of 2018

Date of decision: 26.03.2025

Counsel for Appellant: Shri Vijay Kumar

Counsel for Respondent: Ms. Jaya Kumari

Read More: Govt. Mandates Half-Yearly Reporting of Delayed Payments to MSMEs