Full Judgment
2. The respondents had availed the service of consignment agents during the period July, '97 to July, 99 and had paid service tax (Rs. 3,17,526/-) thereon. Later on, on the strength of the Hon'ble Supreme Court's judgment in Laghu Udyog Bharati v. Union of India [1999 (112) E.L.T. 365 (S.C.)], they filed a refund claim. The Assistant Commissioner of Central Excise sanctioned the claim but ordered crediting of the amount to the Consumer Welfare Fund on the ground of unjust enrichment. His Order dated 1-12-1999 was taken in appeal to the Commissioner (Appeals). The appellate authority examined the invoices, challans etc., produced by the assessee and took the view that their burden of service tax had not been passed on to any other person.
Accordingly,, Id. Commissioner (Appeals) allowed cash refund of the above amount. Hence this appeal of the Revenue.
3. Ld. DR reiterates the grounds of this appeal and submits that the assessee was liable to pay service tax on the service received by them during the period of dispute, under the relevant provisions of the Finance Act, 1994 and the Service Tax Rules, 1995 framed thereunder read with Section 117 of the Finance Act, 2000 and, therefore, they were not entitled to refund of such tax. In this connection. Id. DR relies on the following decisions of the Tribunal:Chambal Fertilisers and Chemicals Ltd. v. CCE, Jaipur [2001 (132) E.L.T. 185]Mangalam Cement Ltd. v. CCE, Jaipur 4. I have considered the relevant provisions of law and the decisions referred to by Id. DR. Both the lower authorities appear to have taken a view that the respondents were liable to pay the service tax. The original authority, however, held that they had passed on the incidence of tax to their customers and accordingly directed the service tax amount to be credited to the Consumer Welfare Fund. But the first appellate authority held to the contrary and allowed cash refund of the amount to the assessee. The Revenue has now taken the view that the service tax amount paid by the party was not liable to be refunded to them. Therefore, the question arising for consideration is whether the respondents had service tax liability in respect of the service availed by them during the period of dispute. This question must be determined with reference to the provisions of Section 117 of the Finance Act, 2000 which reads as under :- "117. Validation of certain action taken under Service Tax Rules. - Notwithstanding anything contained in any judgment, decree or Order of any court, tribunal or other authority, Sub-clauses (xii) and (xvii) of Clause (d) of Sub-rule (1) of Rule 2 of the Service Tax Rules, 1944 as they stood immediately before the commencement of the Service Tax (Amendment) Rules, 1998 shall be deemed to be valid and to have always been valid as if the said Sub-clauses had been in force at all material times and accordingly, (i) any action taken or anything done or purported to have been taken or done at any time during the period commencing on and from the 16th day of July, 1997 and ending with the day the Finance Act, 2000 receives the assent of the President shall be deemed to be valid and always to have been valid for all purposes, as validly and effectively taken or done; (ii) any service tax refunded in pursuance of any judgment, decree or Order of any court striking down Sub-clauses (xii) and (xvii) of Clause (d) of Sub-rule (1) of Rule 2 of the Service Tax Rules, 1994 before the date on which the Finance Act, 2000 receives the assent of the President shall be recoverable within a period of thirty days on the date on which the Finance Act, 2000 receives the assent of the President, and in the event of nonpayment of such service tax refunded within this period, in addition to the amount of service tax recoverable, interest at the rate of twenty-four per cent per annum shall be payable, from the date immediately after the expiry of the said period of thirty days, till the date of payment.
Explanation. - For the removal of doubts, it is hereby declared that no act or omission on the part of any person shall be punishable as an offence which would not have been so punishable if this Section had not come into force." The above provision was considered by the Tribunal in the cases of M.R. F. Ltd., Sriram Cement Works and Chambal Fertilisers and Chemicals Ltd. (supra) and it was held that, on account of validation, with retrospective effect, of the provisions of Service Tax Rules under Section 127 of the Finance Act, 2000, the service tax paid by the assessee on goods transport service during the period 16-11-1997 to 1-6-1998 was not affected by anything contained in the Supreme Court's judgment in Laghu Udyog Bharati (supra). In the instant case, the original authority held the respondents refund claim to be allowable on the strength of the Supreme Court's ruling in Laghu Udyog Bharati, at a time when the said ruling had the force of law. It was only on 12-5-2000 that Section 117 of the Finance Act, 2000 came into force, giving retrospective validation to the relevant Service Tax Rules. On account of such validation of Rules, the respondents became liable for payment of service tax on the service received by them during the period of dispute. This aspect was apparently ignored by Id.
Commissioner (Appeals). He ought to have given effect to the law enacted under Section 117 of the Finance Act, 2000, by rejecting the refund claim. This is the view taken by this Tribunal in Mangalam Cements (supra).
5. In the result, the impugned Order is set aside and this appeal is allowed.