2013 (10) TMI 1162 - AT - Service Tax

Refund of service tax paid on import of services for the period prior to 18.4.2006 - claim for refund filed beyond one year - period of limitation - Rule 2 (1) (d) (iv) of Service Tax Rules, 1944 - Receipt of services of testing, evaluation and consulting engineering services from service providers located abroad during the period 01-04-05 to 17-04-05 - Held that - no claim for refund is permissible except under and in accordance with Rule 11 and Section 11B. An order or decree of a court does not become ineffective or unenforceable simply because at a later point of time, a different view of law is taken. If this theory is applied universally, it will lead to unimaginable chaos. It is, however, suggested that this result follows only in tax matters because of Article 265. The explanation offered is untenable as demonstrated hereinbefore. As a matter of fact, the situation today is chaotic because of the principles supposedly emerging from Kanhaiyalal and other decisions following it. Every decision of this Court and of the High Courts on a question of law in favour of the assessee is giving rise to a wave of refund claims all over the country in respect of matters which have become final and are closed long number of years ago. We are not shown that such a thing is happening anywhere else in the world. Article 265 surely could not have been meant to provide for this. We are, therefore, of the clear and considered opinion that the theory of mistakeof law and the consequent period of limitation of three years from the date of discovery of such mistake of law cannot be invoked by an assessee taking advantage of the decision in another assessee s case. All claims for refund ought to be, and ought to have been, filed only under and in accordance with Rule 11/Section 11B and under no other provision and in no other forum. An assessee must succeed or fail in his own proceedings and the finality of the proceedings in his own case cannot be ignored and refund ordered in his favour just because in another assessee s case, a similar point is decided in favour of the manufacturer/assessee. In the case of Indian National Ship Owners Association, the Hon. Bombay High Court and Apex Court did not consider the levy to be unconstitutional in the sense it was not a levy beyond the powers given by Constitution. This position is clear because after insertion of section 66A of the Act, now such tax is being collected without any successful challenge to the said section. Prior to 18-04-2006 when 66A was introduced the only issue was that the Rule under which the tax was collected was considered to be not authorized by provisions in Finance Act, 1994. So the levy has to considered only as without authority of law and not as unconstitutional Following decision of Mafatlal Industries Ltd. Vs UOI 1996 (12) TMI 50 - SUPREME COURT OF INDIA - refund not to be allowed - Decided in favor of revenue.

Summary

Issues Involved:
1. Whether the refund claim was time-barred under Section 11B of the Central Excise Act, 1994.
2. Whether the provisions of Rule 2 (1) (d) (iv) of Service Tax Rules, 1994 were unconstitutional or merely without authority of law.
3. Applicability of the doctrine of unjust enrichment in the context of the refund claim.

Issue-wise Detailed Analysis:

1. Time-barred Refund Claim:
The respondent filed a refund claim on 5.5.2010 for the service tax amount paid during 01-04-05 to 17-04-05. The adjudicating authority rejected the claim as time-barred under Section 11B of the Central Excise Act, 1994, which mandates a one-year limitation period for refund claims. The Commissioner (Appeals) overturned this decision, stating that the time limit under Section 11B was not applicable in this case. However, the Revenue argued that the payments were made as service tax and thus Section 11B applied. The Tribunal upheld the Revenue's stance, emphasizing that all claims for refund must comply with Section 11B, as established by the Supreme Court in Mafatlal Industries Ltd. vs. UOI.

2. Constitutionality vs. Without Authority of Law:
The respondent argued that the service tax was collected without authority of law, referencing the Bombay High Court's decision in the Indian National Ship Owners Association case, which was upheld by the Supreme Court. The Revenue contended that the rule was not declared unconstitutional but merely without authority of law. The Tribunal agreed with the Revenue, noting that the levy was not beyond constitutional powers but was unauthorized by the Finance Act, 1994. Therefore, the refund claim was subject to the provisions of Section 11B.

3. Doctrine of Unjust Enrichment:
The respondent claimed that the tax was paid from their own funds and the incidence was borne by them, thus the doctrine of unjust enrichment did not apply. The Tribunal, however, emphasized that the burden of proving that the tax incidence was not passed on lies with the claimant. The Tribunal noted that the courts have consistently held that refund claims must be adjudicated under Section 11B, which includes considerations of unjust enrichment.

Conclusion:
The Tribunal concluded that the refund claim was time-barred under Section 11B of the Central Excise Act, 1994. It also held that the levy was not unconstitutional but without authority of law, and the refund claim should be processed under Section 11B. The Tribunal set aside the Commissioner (Appeals) order and rejected the refund claim, emphasizing adherence to the statutory provisions and the principles laid down by the Supreme Court.