Appellant paying ST on behalf of company with which it sought to merge - as HC has not sanctioned merger, ST under VCES paid - Adjudicating authority to allow re-credit of Rs 79.9 cr in CENVAT account of appellant: CESTAT
By TIOL News Service
MUMBAI, JAN 26, 2015: FACTS of the case: The appellant GTL Infrastructure Ltd. is registered under the category of "Business Auxiliary Services" in respect of their activity of providing infrastructural facilities to various telecom companies.
Chennai Network Infrastructure Ltd. (CNIL) is engaged in providing similar services.
Both, the appellant and CNIL sought merger in the name of GTL Infrastructure Ltd. Consequently, they filed petitions before the respective High Courts (Bombay and Madras) seeking sanction of scheme of merger with the appellant.
The Bombay High Court sanctioned the scheme of merger of CNIL with the appellant on 22.07.2011 whereas the petition filed before the Madras High Court is still pending.
As the Bombay High Court sanctioned the scheme of merger, therefore, the appellant filed consolidated service tax returns declaring the revenues of both the appellant and CNIL altogether. CNIL did not file returns for its revenues for its activities during the impugned period. Consequent to that the appellant paid the liabilities of CNIL towards service tax amounting to Rs.79,92,56,619/- by debit entry in the appellant's CENVAT account for the period October 2010 to March 2012. Some part of the service tax liability was also paid by utilizing CENVAT credit lying in the account of CNIL.
Later on, the appellant was informed that though theBombay High Court had sanctioned the scheme of merger, the Madras High Court is yet to sanction it.
On this realization, CNIL filed a declaration under Voluntary Compliance Encouragement Scheme disclosing its service tax liability to the tune of Rs.79,92,56,619/- and discharged the same on 22.11.2013.
The designated authority issued a Discharge certificate to CNIL under ST VCES, 2013 for the above said liability. CNIL informed the appellant that the entire service tax liability has been paid by them and they have no objection to the appellant taking credit of service tax paid on behalf of CNIL.
Out of abundant caution, the appellant approached the Bombay High Court in a Writ Petition to seek approval of the High Court to re-credit the amount of service tax paid on behalf of CNIL. The Bombay High Court directed the Commissioner to decide the matter by considering the said Writ Petition as a representation before the Commissioner. On 7.3.2014, the Commissioner directed the appellant to approach the proper officer for pursuing the remedy.
The appellant challenged this order of Commissioner before the Tribunal but the appeal was dismissed as not maintainable.
This order was challenged before the Bombay High Court and vide order dated 29.09.2014 - 2014-TIOL-1785-HC-MUM-ST it was ordered -
Once this Court has directed that the representation made by the petitioner to the authorities praying for refund or credit in the CENVAT credit account be considered and a speaking order be passed thereon after hearing the petitioner, then, the Tribunal has taken a hyper technical view in dismissing the appeal - Tribunal to decide appeal on merits and in accordance with law: High Court
The matter was heard recently.
The CESTAT after hearing both sides &distinguishing the decisions cited by the special counsel for the Revenue made the following observations on the submissions made -
Limitation:
++ In this case, it is an admitted fact that the amount paid by the appellant is not required to be paid by the appellant as service tax and they have discharged the service tax liability of CNIL during the impugned period.
++ The appellant has informed vide their letters March 2012 but their claim of re-credit arose only after the issuance of discharge certificate by the competent authority on 22.11.2013 holding that the duty liability is discharged by CNIL. Therefore, the cause of action of taking re-credit of such excess amount paid by the appellant before the Bombay High Court and disposal of the same by the Bombay High Court on 27.01.2014, the same is within one year from the date of acknowledgement of discharge certificate issued by the competent authorities in favour of CNIL, therefore the claim of re-credit is filed by the appellant.
++ In these circumstances, we hold that the representation made by the appellant for re-credit of service tax paid on behalf of CNIL is within time. [Arvind Enterprises - 2009-TIOL-718-CESTAT-MUM relied upon]
Quantification:
++ We further note that from the records placed before us, it is not ascertainable that whether the appellant has paid exactly an amount of Rs.79,92,56,619/- on behalf of CNIL which is to be examined by the adjudicating authority.
++ Therefore, for the limited purpose, quantification of the amount to be re-credited in the appellant's CENVAT credit account is required and the same is to be computed by the adjudicating authority.
In fine, the matter was remanded to the adjudicating authority for the limited purpose of quantification of the amount to be re-credited & within 15 days of receipt of the order.
The Appeal was disposed of in the above terms.
(See 2015-TIOL-187-CESTAT-MUM)
