2019 (1) TMI 1928 - AT - Central Excise

Refund of Service Tax - services provided to foreign customers being export of services - applicability of time limitation u/s 11B of the Central Excise Act 1944 read with the Finance Act 1994 - Rule 6A of the Service Tax Rules 1994 - April 2016 to March 2017 - HELD THAT - Undisputedly the services provided to foreign customers are not exigible to service tax and the appellants have paid the service tax by mistake. The issue as to whether the time prescribed under Section 11B ibid is applicable to such a situation when the service tax is paid by mistake has been analyzed by the Hon ble jurisdictional High Court in the case of M/S. 3E INFOTECH VERSUS CUSTOMS EXCISE SERVICE TAX APPELLATE TRIBUNAL COMMISSIONER OF CENTRAL EXCISE (APPEALS-I) 2018 (7) TMI 276 - MADRAS HIGH COURT relied by the Ld. Counsel for the appellant. The rejection of refund claim is unjustified - Appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Refund claim for service tax paid on services provided to foreign customers.
2. Rejection of refund claim based on limitation under Section 11B of the Central Excise Act, 1944.
3. Applicability of limitation when service tax is paid by mistake.

Analysis:
1. The appellants provided Management or Business Consultant Services to foreign customers and paid service tax on these services. Later, they realized that these services were exempt from service tax as they constituted an export of services. A refund claim was filed under Rule 6A of the Service Tax Rules, 1994 for an amount of ?4,93,059/- for the period from April 2016 to March 2017.

2. The Original Authority sanctioned ?4,12,549/- but rejected ?80,509/- as time-barred under Section 11B of the Central Excise Act, 1944. The Commissioner (Appeals) upheld the rejection, leading the appellants to appeal before the Tribunal.

3.1 The appellant's counsel argued that the service tax was paid by mistake, and since the services were outside the taxable territory, the time prescribed under Section 11B should not apply. He referred to a decision by the Hon'ble jurisdictional High Court to support his argument.

3.2 The respondent's representative supported the findings of the impugned Order.

4. After hearing both sides, the Tribunal noted that the services provided to foreign customers were not subject to service tax, and the tax was paid by mistake.

5. The Tribunal analyzed the issue of whether the time prescribed under Section 11B applies when service tax is paid in error, citing a relevant decision by the Hon'ble jurisdictional High Court. The Court held that a refund claim cannot be time-barred if service tax was paid by mistake, as it would be contrary to established law.

6. Consequently, the Tribunal found the rejection of the refund claim unjustified and set aside the impugned Order, allowing the appeal with consequential reliefs.

This detailed analysis of the judgment highlights the key issues, arguments presented, legal precedents relied upon, and the final decision of the Tribunal regarding the refund claim and the applicability of limitation under Section 11B in cases of service tax paid by mistake.