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2016 (9) TMI 790 - HC - Service TaxRefund claim - Did the Tribunal fall into error in holding that the refund claim made by the appellant was not maintainable - construction activity - appellant deposited Service tax under protest - Held that - the CESTAT clearly fell into error of law. The proviso to Section 11B clearly indicates that if the amounts are paid under protest, the limitation prescribed by the main portion, i.e. Section 11B(1) would not apply. Even otherwise, once it is admitted that the levy itself came into force with effect from 01.07.2010 per se, amounts collected without authority of law fall beyond the imprint of expression or expropriation under pretence of authority of law. Therefore, the fundamental question of the appellant or any other assessee seeking recourse being restricted by the period of limitation under the statute authorising levy and its recovery should not arise. Furthermore, even if that reasoning were to be perused, the fact remains that the protest was lodged within reasonable time of the appellant becoming aware that the amounts were not recoverable as Service Tax. That is sufficient to attract proviso to Section 11B(1). - Decided in favour of appellant
Issues involved:
1. Maintainability of the refund claim made by the appellant. Detailed Analysis: The appellant, a builder engaged in construction activity, paid Service Tax as advised by a circular issued by the Service Tax Department. Subsequently, the appellant protested the levy and requested a refund of the amounts paid. The refund claim was filed in the prescribed format under Section 11B of the Central Excise Act, 1944, but was rejected as time-barred and inadmissible by the primary adjudicating authority. The first appellate authority also rejected the claim, citing that the levy should be calculated from the date of the original refund claim filing. The appellate authority considered that construction services were taxable only from 01.07.2010, as per relevant provisions, and relied on judicial precedents and circulars to support the decision. The appellate authority concluded that the Service Tax paid before 01.07.2010 was liable to be refunded to the appellant under Section 11B of the Central Excise Act, 1944. Consequently, the appeal was allowed by the appellate authority. The revenue appealed to the CESTAT, arguing that since the appellant continued to deposit amounts with the Service Tax Department after protesting, refund for payments made before the protest date should not be granted. The CESTAT remitted the matter for calculation of amounts and refund for the period after the protest date. The appellant contended that amounts deposited before the protest date were covered by the refund claim and that the levy was imposed for the first time from 01.07.2010. The appellant argued that the amounts collected under the levy could not be retained by the authorities due to the expiry of the refund claim period. The appellant relied on the proviso to Section 11B, stating that if a protest is lodged, the time period for claiming a refund would not apply. The respondent contended that the CESTAT's order correcting the first appellate authority should not be interfered with, as the refund claim was not made in the appropriate format and did not clearly disclaim liability for the amounts paid. The High Court held that the CESTAT erred in law, emphasizing that the proviso to Section 11B exempts the limitation period if amounts are paid under protest. The Court noted that the levy came into force from 01.07.2010, and amounts collected without legal authority should be refunded. The Court reinstated the first appellate authority's order, allowing the appeal and setting aside the CESTAT's decision to remit the matter for partial refund calculation. The Court concluded that the appellant was entitled to a refund of Service Tax paid before 01.07.2010, as the protest was lodged within a reasonable time of realizing the non-recoverability of the amounts. In conclusion, the High Court ruled in favor of the appellant, allowing the refund claim for Service Tax paid before 01.07.2010 and setting aside the CESTAT's decision to limit the refund to post-protest period amounts.
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