Biscuits Can Qualify As ‘Food Stuff’ To Be Eligible For Service Tax Refund: CESTAT

The Kolkata Bench of Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) has held that biscuits can qualify as foodstuff so as to be eligible for the service tax exemption.

The bench of R. Muralidhar (Judicial Member) and K. Anpazhakan (Technical Member) has allowed the refund, which was rejected by the adjudicating authority on the ground of limitation. The limitation would not be applicable if an amount is paid under a mistaken notion, as it is not required to be paid towards any duty or tax.

The appellant/assessee is a manufacturer of biscuits. Apart from being registered under Central Excise, they are also registered with Service Tax Authorities for paying Service Tax under the Reverse Charge Mechanism for the GTA services utilized by them. They were paying service tax on a “reverse charge basis” on GTA services.

It was notified by the government that when “foodstuff” is transported, it will be exempt from payment of service tax towards GTA expenses. However, without noticing this exemption, the appellant continued to pay the service tax on a “reverse charge basis during the period from July 2013 to March 2014. After noticing that they had paid service tax, which is not required to be paid because of the exemption granted under Notification No. 25/2012 dated June 20, 2012, the assessee filed their refund claim.

A show cause notice was issued seeking to explain why the refund claim filed on September 9, 2015, should not be rejected as it is time-barred as per Section 11B of the CEA, 1944. A corrigendum was issued on October 23, 2015, adding further allegations that the relevant documents regarding the non-passing of the duty incident to others were not submitted. After due process, the adjudicating authority, in his order, has rejected the refund claim under Section 11B, read with Section 83 of the Finance Act, 1994. On appeal, the Commissioner (Appeals) has upheld the order.

In respect of the rejection of the refund claim on account of the time bar in terms of Section 11B, he submits that the appellant has paid the service tax, which was not required to be paid in the first place. In such a case, it has been held by the various tribunals and the Supreme Court that when service tax has been paid by mistake, the provision of Section 11B cannot be applicable.

The tribunal held that when there was no compulsion or duty cast to pay the service tax, the amount paid by the petitioner under the mistaken notion would not be a duty or “service tax” payable in law. Therefore, once it is not payable by law, there is no authority for the department to retain the amount. By any stretch of the imagination, it will not amount to the duty of excise to attract Section 11B.

Counsel For Appellant: Ankit Kanodia

Counsel For Respondent: K. Chowdhury

Case Title: M/s. Bansal Biscuits Private Limited Versus Commr. of Central Excise & Service Tax, Patna

Case No.: Service Tax Appeal No. 75363 of 2016

Click Here To Read The Order