2015 (9) TMI 1031 - AT - Service Tax

Denial of refund claim - payment of service tax which was not leviable - Bar of limitation - Unjust enrichment - held that - Sanctioning of the amount of ₹ 76,400/- indicate that the issue of unjust enrichment and non chargeability of Service Tax on the activities of the appellants are not questioned by the Revenue. The only aspect which is required to be decided is whether limitations for filing refund claim, specified in Section 11-B of the Central Excise Act, 1944 will be applicable to the amounts paid under mistaken belief that Service Tax on the activities carried out by appellant was leviable. It is now well settled, as per the relied upon case laws, that duty paid but not statutorily leviable has to be considered as a deposit with the Govt. and time limit specified in Section 11-B of the Central Excise Act, 1944 will not be applicable. - Decision in the case of Natraj & Venkat Associates vs. Asst. Commr. of S.T., Chennai-II 2009 (10) TMI 36 - MADRAS HIGH COURT - Decided in favour of assessee.

Issues:
1. Applicability of time limit under Section 11-B of the Central Excise Act, 1944 on refund claims.
2. Consideration of amount deposited with the Revenue as a deposit due to non-leviability of service tax.
3. Sustainability of orders passed by the first appellate authority.
4. Justification for rejecting refund claims as time-barred.

Analysis:
1. The appellant contended that the amount deposited with the Revenue should be considered as a deposit since no service tax was leviable on their activities, thus arguing against the applicability of the time limit under Section 11-B of the Central Excise Act, 1944. The argument was supported by case laws such as Swastik Sanitary Wares Ltd. vs. UOI and Gujarat Engineering Works vs. Commissioner of Central Excise Ahmedabad-II, emphasizing that duty paid but not statutorily leviable should be treated as a deposit, exempt from the time limit for refund claims.

2. The respondent, represented by the Authorized Representative, opposed the appellant's claim by arguing that the refund claims were filed after the prescribed time limit under Section 11-B and were rightfully rejected. The lower authorities defended their decision based on the time-barred nature of the refund claims, indicating a disagreement on the interpretation of the applicable time limits for filing refund claims.

3. Upon hearing both parties and examining the case records, the Adjudicating Authority acknowledged the remand directions and sanctioned a partial refund claim while rejecting the remaining amount as time-barred. The Authority noted that the issue of unjust enrichment and non-chargeability of service tax on the appellant's activities was not disputed by the Revenue. The crucial aspect to be determined was whether the time limit specified in Section 11-B would apply to amounts paid under a mistaken belief of service tax liability.

4. The judgment referenced the case of Natraj & Venkat Associates vs. Asst. Commr. of S.T., Chennai-II, highlighting the precedent set by the Madras High Court. The Court's decision emphasized that the limitation under Section 11B(1) applies only to those claiming refund of duty of excise, not to amounts paid that were not legally due. Therefore, in line with established legal principles and case law interpretations, the appeals filed by the appellant were allowed, granting them consequential relief.

In conclusion, the judgment resolved the issues by clarifying the treatment of amounts paid under mistaken belief of service tax liability, ultimately allowing the appeals and providing relief to the appellant based on legal precedents and settled propositions of law.

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