2012 (7) TMI 22 - HC - Service Tax

Refund limitation refund claim on the ground that building construction which was done by assessee was to a non-profit organization - construction service provided by it to non-profit organization was not liable to service tax under Circular No. 80/10/2004, dated 17-9-2004 Held that - they have paid the amount by mistake and therefore they are entitled for the refund - once there was no compulsion or duty cast to pay this service tax, amount paid by petitioner under mistaken no objection, would not be a duty or service tax payable in law. Therefore, once it is not payable in law there was no authority for the department to retain such amount - appellant authorities is directed to refund

Issues Involved:
1. Applicability of Section 11B of the Central Excise Act, 1944.
2. Maintainability of the Writ Petition.
3. Nature of the amount paid (whether it was a service tax or a deposit).
4. Refund of the amount paid under mistaken impression.

Detailed Analysis:

1. Applicability of Section 11B of the Central Excise Act, 1944:

The core issue was whether Section 11B of the Central Excise Act applied to the refund claim. The petitioner argued that the amount paid was not a duty but a deposit made under a mistaken notion. The Assistant Commissioner and the Commissioner (Appeals) held that the refund claim was time-barred under Section 11B, which prescribes a one-year limitation period for refund claims. However, the learned Single Judge and the High Court concluded that Section 11B was inapplicable since the amount paid was not a duty but a deposit, and thus, the limitation period under Section 11B did not apply.

2. Maintainability of the Writ Petition:

The Department contended that the Writ Petition was not maintainable as the petitioner had an alternative remedy of appeal under Section 35B(1)(b) of the Central Excise Act. The High Court, however, noted that the writ jurisdiction under Article 226 of the Constitution remains unaffected by Section 11B, and the court must consider the legislative intent while exercising this jurisdiction. The High Court concluded that the Writ Petition was maintainable since the amount paid by the petitioner was not a duty but a deposit, making Section 11B inapplicable.

3. Nature of the Amount Paid (Service Tax or Deposit):

The petitioner paid the amount under the mistaken impression that it was liable to pay service tax for construction services rendered to a non-profit organization. The Assistant Commissioner, in his order, acknowledged that the amount paid was not a service tax but a deposit with the Government, as the services rendered were exempt from service tax under Circular No. 80/10/2004 dated 17-9-2004. The High Court affirmed this view, stating that the amount paid was not a duty but a deposit, and the Department had no authority to collect or retain it.

4. Refund of the Amount Paid Under Mistaken Impression:

The High Court emphasized that the petitioner was entitled to a refund of the amount paid under a mistaken impression. The court noted that the amount paid by the petitioner did not constitute "service tax" and was not liable to be paid. Therefore, the Department lacked the authority to retain the amount. The High Court directed the Department to refund the amount within six weeks from the date of receipt of the order.

Conclusion:

The High Court dismissed the Department's appeal, affirming the learned Single Judge's order that Section 11B was inapplicable, the Writ Petition was maintainable, and the amount paid by the petitioner was a deposit and not a service tax. The court directed the Department to refund the amount within six weeks.

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