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3 Jun 2016

Service Recipient can file refund claim before the Central Excise & Service Tax Authorities of his tax jurisdiction

Recently in the case of Chambal Fertilizers & Chemicals Ltd. v. Commissioner of Central Excise, Jaipur-I (2016) 69 taxmann.com 328 (New Delhi-CESTAT) held that recipient of the services can file refund application of excess service tax before its jurisdictional statutory authorities.

In the present case, a service recipient was manufacturing exempted products ‘urea’ using raw material ‘natural gas’, which the appellant procures from M/s Reliance Gas Transportation Infrastructure Ltd. Mumbai (RGTIL). Transmission charges for transportation of Natural gas are regulated by PNGRB. During the period April 2009 to May 2010, RGTIL supplied natural gas to the applicant at the rate of 68.56 MMBTU. The natural gas is regulated and the price is determined by the regulatory authority and the charges for the said period were finalized on 9.6.2010 by PNGRB @ 67.64 MMBTU. For adjusting excess amount charged, the supplier M/s RGTIL issued two number of credit notes to the appellant, of Rs 1,19,78,338/- towards the value of service. However, no credit notes were issued representing the excess payment of service tax into the government exchequer. The appellant is the recipient of services and the incidence of service tax has been borne by it, the appellant had filed refund application before the jurisdiction Service Tax Authorities.

The refund application was denied by the authorities below on the ground that the service tax amount has not been paid by the appellant and the same has been paid by the service provider M/s RGTIL, and thus, the refund claim filed by the appellant is not maintainable. The other ground assigned for rejection of the refund application is that the appropriate authority for sanction of the refund amount is the service tax authorities having jurisdiction over the premises of the service provider and not the service receiver. Therefore the refund application has been filed before the wrong authority, the same is not maintainable.

The hon’ble CESTAT held that appellant being a service recipient has borne the burden of service tax thus he is entitled for refund and refund claim filed before its Authorities is maintainable.