2008 (7) TMI 132 - AT - Service Tax

Service tax paid on the finance charges collected from their customers refund filed on realizing that the collection was beyond the authority of law held that even in respect of illegal levy, the appellants should file the refund claim within time limit u/s 11B. Since in this case the refund claim had been filed beyond the statutory time limit, the Original Authority could not have granted the same

Summary

Issues Involved:
Appeal against order-in-revision for refund of service tax paid inadvertently on finance charges collected from customers.

Detailed Analysis:

Issue 1: Refund of Service Tax
The appellants paid service tax on finance charges collected from customers during a specific period but later realized it was not required. They filed refund claims, which were initially granted by the Assistant Commissioner. However, the Commissioner issued a fresh order-in-revision demanding recovery of the refunded amounts. The main contention was whether the refund claims were valid due to the payment made without the authority of law.

Analysis: The appellants argued that the collection of service tax on interest on loans was beyond the authority of law during the relevant period. They cited various case laws to support their contention that Section 11B should not apply to amounts paid without legal authority. On the contrary, the Departmental Representative argued that even for an illegal levy, refund claims must adhere to the time limit under Section 11B. The Tribunal found that the refund claims should be within the scope of Section 11B, emphasizing the need to comply with specific enactments when filing refund claims.

Issue 2: Application of Section 11B
The debate revolved around the applicability of Section 11B concerning the limitation period for filing refund claims. The appellants argued that the limitation under Section 11B should not apply to amounts paid without legal authority, while the Departmental Representative contended that even for an illegal levy, the time limit under Section 11B must be followed.

Analysis: The Tribunal carefully considered the arguments presented by both sides and examined relevant case laws. It was observed that the limitation under Section 11B should be applicable to refund claims, even if the levy was deemed illegal. The Tribunal disagreed with the appellants' interpretation of the Mafatlal Industries case and upheld the Orders-in-Revision, stating that the refund claims filed beyond the statutory time limit could not be granted. Therefore, the appeals of the appellants were rejected.

In conclusion, the judgment emphasized the importance of complying with statutory provisions, even in cases of refunds related to amounts paid without legal authority. The Tribunal's decision highlighted the significance of adhering to the prescribed time limits under Section 11B when seeking refunds, irrespective of the legality of the levy.