Limitation Period Is Not Applicable On Refund Of Service Tax Wrongly Paid: Karnataka High Court

The appellant/assessee had entered into an agreement with Professional Lien Search LLC, a company based in the USA and providing support services to real estate property buyers in the USA. The appellant's activity was to verify the information on various issues related to the property proposed to be purchased by the prospective purchasers, such as property tax information, building permits, unpaid bills for utilities, property maintenance, etc.

The assessee obtained service tax registration and paid service tax on the consideration charged to the client periodically. It has filed returns for the half-yearly period from April to September, 2016, October 2016 to March 2017 and for the quarterly period from April to June, 2017. Subsequently, the assessee learnt that it was not liable to pay service tax on the export of services in terms of Chapter-V of the Finance Act, 1994.

On December 29, 2017, the assessee filed a claim before the Assistant Commissioner of Central Excise for a refund of Rs. 27,70,791. The Assistant Commissioner called upon the assessee to explain why a portion of the refund should not be rejected as it was beyond the period of limitation of one year. Following the hearing, the Assistant Commissioner granted a refund of Rs. 11,90,271 and denied the claim for the balance.

The assessee challenged the Order-in-Original before the Commissioner (Appeals) and it was rejected. The assessee filed a further appeal before CESTAT, which was dismissed by the order.

The assessee submitted that the assessee's services are not taxable. The Assessing Officer has held that the services provided to the client based in the USA fall under Rule 5 of Place of Provision of Services, 2012 and the activities undertaken fall under export of services. The AO has allowed a part of the claim and rejected the remaining claim on the ground that it was not filed within one year from the date of export. When the appellant was not liable to pay tax at all, the rejection of part of the claim is untenable.

The court held that the services rendered by the assessee satisfy all conditions of Rule 6A of the Service Tax Rules, 1994 and the services provided by it are export services. It is entitled to a refund of the tax.

The court set aside the order dated 12.02.2018 passed by the Assessing Authority and confirmed by the Commissioner (Appeals) and the CESTAT, so far as the refund amount of Rs.15,80,520.

Case Title: M/s Bellatrix Consultancy Services Versus The Commissioner of Central Tax

Case No: C.E.A No. 49 Of 2019

Citation: 2022 LiveLaw (Kar) 253

Dated: 30.06.2022

Counsel For Appellant: Advocate L.S. Karthikeyan

Counsel For Respondent: Advocate K.R. Vanita

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