2015 (11) TMI 1350 - AT - Service Tax

Denial of refund claim - Bar of limitation - Held that - Respondent filed refund claim consequential to the dropping of demand under adjudication order dated 27/11/2009. Since the matter of demand was sub-judice before the adjudicating authority the respondent neither could have filed any refund nor the Revenue could have disposed of such refund. After passing of the adjudication only it was confirmed that the amount deposited by them was not payable and accordingly it matured for refund to the respondent. Therefore, filing of refund within three months from the date of adjudication order under which the demand was dropped is not time-barred. - refund arose out of the adjudication order and the same was filed within three months from the date of such order and hence it is not time-barred - it is apparent that test of unjust enrichment has not been passed either during adjudication of the refund or at the stage of lower appellate authority - Matter remanded back - Appeal disposed of.

Summary

Issues:
1. Timeliness of the refund claim filed by the respondent.
2. Interpretation of Section 11B(1) of the Central Excise Act, 1944.
3. Application of the explanation to Section 11B(1) regarding the relevant date for refund.

Issue 1: Timeliness of the refund claim
The respondent filed a refund claim after the dropping of a demand under an adjudication order. The Revenue contended that the claim was time-barred as it was filed beyond one year from the payment of service tax. However, the Commissioner (Appeals) allowed the appeal, stating that the refund claim arose as a consequence of the adjudication order, and thus, was not time-barred. The Tribunal agreed, emphasizing that the refund claim was filed within three months from the date of the adjudication order, making it timely.

Issue 2: Interpretation of Section 11B(1)
The Revenue argued that the adjudication order did not fall under the explanation to Section 11B(1), thus the respondent could not seek relief. However, the Tribunal disagreed, stating that the explanation covers orders from both adjudicating authorities and higher forums. The Commissioner (Appeals) correctly interpreted the explanation, allowing the respondent's appeal based on the refund claim's connection to the adjudication order.

Issue 3: Application of the explanation to Section 11B(1)
The Commissioner (Appeals) found that the refund claim was directly linked to the adjudication order and was filed within the stipulated time limit under Section 11B. The Tribunal concurred, highlighting that the refund claim was not time-barred as it was submitted within three months of the adjudication order. The Tribunal upheld the Commissioner's interpretation of the explanation to Section 11B(1) and dismissed the Revenue's argument against the timeliness of the refund claim.

In conclusion, the Tribunal dismissed the Revenue's appeal, upheld the Commissioner (Appeals) decision, and directed the adjudicating authority to re-examine the refund on the unjust enrichment aspect. The judgment clarified the timeliness of the refund claim in relation to the adjudication order and affirmed the application of Section 11B(1) and its explanation in determining the relevant date for refund claims.