Order Data: 29 August 2022

Facts-

• The Appellant, Windar Renewable Energy Pvt Ltd was made to pay certain amount of Service tax during the course of EA 2000 audit by the audit party, even the interest and penalty was also collected from the appellant.
• After such payment the appellant has submitted a letter wherein, they have given in writing that the proceedings to be concluded under Section 73(3) of the Finance Act, 1994.
• As per the appellant since, such tax along with interest and penalty was never payable but was collected from the appellant, they sought refund of the same which has been denied primarily on the ground that once the appellant paid such tax and issued letter to close the issue under Section 73(3) of the Finance Act, 1994 and also informed that they will not seek refund thereof proceedings are concluded and no refund can be sanctioned under the circumstances. 
• Being aggrieved, the appellant filed the present appeal.

Issue-

• Whether the refund claim is rightly rejected by the department?

Order-

• The Tribunal observed that the appellant’s main contention is that even though the appellant had given in writing to close the matter in terms of Section 73(3) of the Finance Act, 1994 but Service tax was not at all payable. It is also the submission of the appellant that since in the present case the department has collected a penalty under Section 78, the case otherwise does not fall under Section 73(3) of the Finance Act, 1994. 
• The Tribunal further observed that since the penalty under Section 78 was also collected by the department, the entire process is not in conformation to the provision of Section 73(3) for the reason that Section 73(3) does not provide for payment of penalty under Section 78 therefore, the present case cannot be said to have been covered by Section 73(3).
• By giving the letter to the department by the appellant for closing of the matter, the revenue could not issue any show cause notice as regard the Service tax payable. The peculiar facts of the present case is that the revenue has liberty to dispose of the refund considering the merit of the case that the service tax, interest and penalty paid by the appellant is whether legally payable or otherwise. For deciding the refund on merit non issuance of show cause notice shall not be determined. The revenue can dispose of the matter deciding the merit of the case.
• Accordingly, the impugned order is set aside and remanded the matter to the adjudicating authority for passing a fresh order considering the merit of the case and the appeal is allowed.