LILASONS BREWERIES LTD. Vs. CCE

JUDGEMENT

(1.) THE Appellant raised bills to their franchisees wherein franchise and service tax was separately mentioned and according to the Appellant, against those bills only the franchise fee plus service tax was received from franchisees. The Appellant, however, claim that by mistake paid service tax on the gross amount inclusive of the service tax and when they realized their mistake, they filed refund claim for an amount of Rs. 1,76,194/ -. The refund claim was rejected by the Dy. Commissioner on the ground that no excess amount of service tax has been paid warranting any refund. The Dy. Commissioner's order was upheld by the Commissioner (Appeals).

(2.) SHRI M.K. Sharma, Advocate, Ld. Counsel on behalf of the Appellant pleaded that in the debit notes, which are nothing but invoices raised by the Appellant to their franchisee, the franchise fee and service tax at the rate of 12.24% is separately mentioned, but when the payment was received against the debit notes, the Appellant by mistake paid service tax on the gross amount collected, while the tax was payable only on the portion representing the franchise fee, as a result of which the service tax actually paid by the Appellant is more than the amount of service tax shown in the debit notes and according to them, the excess amount, is refundable to them. He also pleaded that this excess amount is not hit by the principles of unjust enrichment, as the service tax actually paid by them is more than the amount which has been charged from franchisees as service tax in the debit notes. Ld. Counsel also mentioned that no notice mentioning the ground for rejecting the refund claim was issued to the Appellant only an employee of the Appellant was called by the Central Excise Officers on phone to explain the calculation and refund claim was decided based on the clarification given by the employee and as such neither the basis for rejecting the refund was communicated to them nor proper personal hearing has been given to them. He also cited the decision of Hon'ble High Court of Allahabad in the case of Straw Board Manufacturing Co. Ltd. v. UOI reported in, 1994 (09) LCX. 0065 in support of his plea that refund claim cannot be rejected without issue of a notice mentioning the ground for rejecting the claim.

(3.) AS per the provision of Section 67(2) of the Finance Act, 1994 where the gross amount charged by a service provider, for the service provided is inclusive of service tax payable, the value of such taxable service shall be such amount as, with the addition of tax payable, is equal to the gross amount charged. In other words if, for example, the gross amount inclusive of service tax charged is Rs. X and the rate of service tax is r%, the assessable value for calculating service tax would be Rs. 100 X/100+r). In this case from the impugned order, it is not clear as to whether this aspect has been examined. The impugned order, therefore, is set aside and the matter is remanded to the Dy. Commissioner for denovo adjudication of the refund claim. The Dy. Commissioner is to ascertain as to whether the service tax was paid was cum tax amount and if this is so, the value is to be determined as per the provisions of Section 67(2). The appeal is disposed of as above.