Refund Claim Cannot Be Dismissed Without Probing Double Service Tax Payment and CENVAT Credit Eligibility: CESTAT Delhi

Case Details

Case: Kazakstancaspishelf India Pvt. Ltd. Vs Principal Commissioner of Customs
Forum: CESTAT Delhi
Order Date: 12/05/2026

Background of the Dispute

Kazakstancaspishelf India Pvt. Ltd., the Indian subsidiary of a foreign entity, found itself at the center of a significant service tax refund dispute. The foreign parent company had rendered certain services to M/s. Oil India Ltd. Service tax on these services was discharged by the appellant. Simultaneously, Oil India Ltd. also deposited service tax on the very same services under the reverse charge mechanism — effectively resulting in a double payment of service tax on a single set of services.

On the basis of this dual tax payment, the appellant filed a refund claim. However, the refund proceedings did not yield the relief sought, and the matter eventually reached the Customs, Excise and Service Tax Appellate Tribunal, Delhi.

What Was Claimed and What Was Rejected

The appellant had applied for a refund of service tax amounting to Rs. 4,93,48,563/-.

The Assistant Commissioner partially sanctioned the refund but rejected a substantial portion:

  • Rs. 10,89,660/- was sanctioned — this portion had been paid in cash.
  • Rs. 4,76,18,075/- was rejected on the ground that it was discharged using CENVAT credit, which the appellant was allegedly not entitled to avail.
  • Rs. 6,40,828/- was rejected on the ground of time bar.

Thus, the total refund rejected amounted to Rs. 4,82,58,903/-, leaving the appellant aggrieved.

The Commissioner (Appeals) upheld the order of the Assistant Commissioner vide Order in Appeal dated 13.02.2023, confirming the rejection. The appellant thereafter preferred an appeal before CESTAT Delhi.

The Core Question: Why Did the Appellant Seek a Refund?

The appellant's fundamental argument for seeking the refund was straightforward — it was under no obligation to pay service tax on the services rendered to Oil India Ltd., since Oil India Ltd. had already discharged the service tax liability under the reverse charge mechanism on those very same transactions. Since the tax was paid twice on the same service, the appellant was entitled to a refund of its portion of the payment.

The Revenue's Logic for Denying CENVAT-Based Refund

The Assistant Commissioner, while sanctioning a small portion of the refund (cash-paid amount), reasoned as follows: