2017 (9) TMI 884 - AT - Service Tax

Refund claim of service tax paid mistakenly - time limitation - Held that - the respondent was not required to pay service tax in terms of N/N. 25/2012-ST dated 20.06.2012, but they have paid service tax mistakenly and filed refund claim. As service tax was not payable by the respondent, therefore, the amount paid by the respondent is not an amount of service tax, therefore, Section 11B of the Act are not invokable - refund allowed - appeal dismissed - decided against Revenue.

Summary

Issues:
Refund claim sanctioned by Ld. Commissioner (A) - Applicability of Section 11B of the Act - Interpretation of Notification No. 25/2012-ST - Comparison with previous judgments - Mistake of fact vs. mistake of law in payment of service tax - Validity of levy - Admissibility of refund claim beyond one year.

Analysis:
The appeal before the Tribunal concerns the refund claim of ?28,34,127 sanctioned by the Ld. Commissioner (A). The respondent paid service tax under the reverse charge mechanism for Manpower Recruitment/Supply Agency services but was not liable to pay tax as per Notification No. 25/2012-ST. The refund was allowed within one year but denied beyond that as per Section 11B of the Act. The respondent appealed, citing the decision in Swastik Sanitarywares Vs. UOI. The Revenue contended that the case differs from Geojit BNP Vs. CCECST and Swastik Sanitarywares as it involves a mistaken payment, not a pre-deposit scenario.

During the hearing, it was noted that the respondent mistakenly paid service tax despite not being required to do so under the notification. The Tribunal referred to the Hon'ble High Court of Kerala's decision in Geojit BNP case, emphasizing the distinction between mistake of fact and mistake of law in tax payments. The court held that if a payment lacks legality at the time of payment, Section 11B is not applicable. As the payment was made under a mistake of fact, not law, it did not qualify as service tax, thus not invoking Section 11B.

The Tribunal concluded that the Ld. Commissioner (A) correctly approved the refund claim, finding no fault in the decision. Therefore, the appeal by the Revenue was dismissed. The judgment underscores the importance of differentiating between mistake of fact and mistake of law in tax matters, particularly concerning the applicability of refund provisions under the law.