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2017 (2) TMI 23 - HC - Service TaxRefund - period of limitation - service tax was paid under pressure from the department - Whether the CESTAT was correct in allowing the Appeal of the Respondent contrary to the ground of limitation under the provisions of Section 11 B of the Central Excise Act, 1944 as made applicable to the service tax matters? - Held that - A conjoint reading of the letters establishes that the payments were made under protest. If the payments were made voluntarily and without reservation the assessee would not have addressed either of the letters dated 07.06.2006. The fact that by the letters the assessee contended that it was not liable to pay the tax, sought a clarification and protested about it being required to pay the amount under pressure from the Department indicates that the assessee made the payments under protest. The nature of the contents of the letter further establishes the same. The assessee referred to the provisions of law, analysed the same and expressly contended that it was not liable to service tax. In that view of the matter, it cannot be said that the payments were made voluntarily and without protest - appeal allowed - decided in favor of assessee.
Issues:
1. Whether the Judgment and order passed by the Ld. CESTAT is proper and legal? 2. Whether the CESTAT was correct in allowing the Appeal of the Respondent contrary to the ground of limitation under the provisions of Section 11 B of the Central Excise Act, 1944 as made applicable to the service tax matters? 3. Whether the Tribunal is correct in holding that the extended period of limitation is not invokable in terms of provisions of law as well as instructions issued by the CBEC? 4. Whether the Tribunal is correct not to consider the theory of unjust enrichment? Analysis: Issue 1: The High Court admitted the appeal only in respect of Question (ii) as Questions (i), (iii), and (iv) were either formal or decided in favor of the respondent/assessee. The focus was on the correctness of the CESTAT's decision regarding the limitation under Section 11 B of the Central Excise Act, 1944. Issue 2: The case involved the appellant, a developer, who contended that it was pressurized by revenue authorities to pay service tax despite not being liable. The appellant made payments under protest and sought clarification on the taxability of transactions. The Central Board of Excise and Customs issued a circular supporting the appellant's position that service tax was not payable. The High Court found that the payments were made under protest, as evidenced by the appellant's letters challenging the liability to pay tax, seeking clarification, and protesting against pressure from the Department. The Court held that the limitation under Section 11 B did not apply as the payments were made under protest, in line with the second proviso of the section. Issue 3: Regarding the theory of unjust enrichment, the Tribunal observed that the purchasers' liability to pay tax was contingent upon the appellant's liability to do so, based on letters sent to prospective purchasers. The Court considered this a factual matter without raising any legal question. The Tribunal's decision on this issue was upheld, and the appeal was dismissed accordingly. In conclusion, the High Court upheld the appellant's position that the payments were made under protest, rendering the application for refund not barred by limitation. The Court dismissed the appeal, finding in favor of the appellant on the key issue of limitation under Section 11 B of the Central Excise Act, 1944.
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