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2009 (10) TMI 3 - AT - Service TaxRefund of service tax on non taxable services period of limitation department contended that the service tax had been paid during the period from 04/3/06 to 04/9/06, the refund claim has been filed after expiry of period of one year on 13/9/07 and hence the same is time barred, that the service tax whose refund is sought was not been paid under protest and hence the limitation period would be applicable, that even if the respondent are treated as covered by the Board s Circular dated 23/8/07 and their activity is treated as non-taxable held that - even if some tax is collected by the authorities under the Act by misinterpreting or misapplying any of the rules, regulations or notifications or erroneous determination of relevant facts, the same may be called an illegal levy, however, for the refund of such amount, though illegally collected, a claim has to be necessarily preferred under and in accordance with the respective enactments before the authorities prescribed thereunder and within the period of limitation prescribed therein refund beyond one year rejected.
Issues:
1. Whether the service tax paid by the respondent is refundable. 2. Whether the limitation period prescribed under Section 11B is applicable to the refund claim. 3. Whether the respondent's activity is taxable under the service tax laws. Analysis: 1. The respondent obtained service tax registration and paid service tax on the construction of a residential complex. However, they later claimed a refund based on a circular issued by the Central Board of Excise and Customs, stating that they were only builders and not engaged in providing the service of constructing residential complexes. The Assistant Commissioner rejected the refund claim, but the Commissioner (Appeals) allowed it, citing a judgment of the Hon'ble Gujarat High Court. The Revenue appealed against this decision. 2. The Departmental Representative argued that the refund claim was time-barred as it was filed after the expiry of one year from the relevant date of payment. He contended that even if the respondent's activity was considered non-taxable as per the circular, the limitation period under Section 11B should apply. He referenced a judgment of the Hon'ble Delhi High Court to support his argument. 3. The Counsel for the respondent argued that the tax collected without the authority of law should not be subject to the limitation period under Section 11B. He relied on a judgment of the Hon'ble Delhi High Court and Tribunal decisions to support this position. The Counsel also disputed the Department's claim that the respondent was aware of their non-taxable status before the circular was issued. 4. The Member (Technical) considered both arguments and reviewed the facts of the case. It was noted that the respondent paid the service tax without protest and only filed for a refund after the circular clarified their non-taxable status. Referring to relevant legal precedents, including judgments of the Hon'ble Supreme Court, it was held that the limitation period under Section 11B applies to refund claims, even if the tax was collected erroneously. As the refund claim was filed after the limitation period, it was deemed time-barred. Consequently, the impugned order allowing the refund was set aside, and the Revenue's appeal was allowed. 5. The judgment was pronounced on 07/10/2009 by Shri Rakesh Kumar, Member (Technical) of the Appellate Tribunal CESTAT, New Delhi. This detailed analysis covers the issues of the refund claim, the applicability of the limitation period, and the taxable status of the respondent's activity as discussed in the legal judgment.
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