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ST - It is common sense that there is no separate legal status of proprietary concern - rejection of refund claim on ground that claim was made by firm whereas ST was paid by Proprietor is serious error: CESTAT

By TIOL News Service

MUMBAI, SEPT 01, 2016: THE refund claim was rejected by the lower authoritieson the ground that the claim was made by M/s. A. K.Associates, a proprietary firm, whereas the Service Tax for which refund was sought for was paid by Shri. Kishor Hiralal Daga . It was also observed by lower authority that the original documents were not filed alongwith the refund claim.

The appellant is before the CESTAT.

None appeared on behalf of the appellant despite notice.

The AR justified the rejection of the claim by reiterating the findings given by the lower authorities.

The Bench observed -

++ There is no dispute that M/s. A.K. Associates is a proprietary concern of proprietor Shri. Kishnor Hiralal Daga. In such case the proprietary firm and proprietor of the firm is one and the same, they are not two different entities.

++ The PAN number is given in the name of proprietor and not in proprietor's firm's name. For all the purpose of Income tax, Bank Account the PAN number of the proprietor is recognized as there being no separate PAN for proprietary concern in the present case M/s. A.K. Associates. Therefore, if any refund arise, the same can be released either to Shri. Kishor Hiralal Daga or M/s. A.K. Associates.

++ In both the cases, the refund shall be credited in the account of Shri. Kishor Hiralal Daga as the bank account, even if it is in the name of the A.K. Associates but it will be based on the PAN of Shri. Kishor Hiralal Daga.

++ The authority below at the most can verify from bank that M/s. A.K. Associates is a proprietary firm of Shri Kishor Hiralal Daga and PAN number registered for bank account is of Shri. Kishor Hiralal Daga. Therefore both the lower authorities seriously erred in rejecting the claim on this ground.

++ It is a common sense that there is no separate legal status of proprietary concern. For all legal purpose, it is the proprietor only has locus standi for any operation of the proprietorship firm. Therefore I hold that refund is not liable to be rejected on the issue of proprietor Shri. Kishor Hiralal Daga and proprietorship firm, M/s. A.K. Associates.

As for the other ground for rejection of refund viz. non-submission of documents, the Bench observed that the same could be submitted, if it was not submitted earlier. It was emphasized that only due to non-availability of all the documents, refund cannot be rejected; that if the payment of service tax is established even on the basis of other corroborated documents, refund can be given.

Holding that the appellant is prima facie entitled for refund, after verification of documents, the appeal was allowed by way of remand to the Adjudicating authority. It was directed that the said proceedings should be completed within three months.

(See 2016-TIOL-2274-CESTAT-MUM )


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