2017 (10) TMI 659 - HC - Central Excise

Refund of service tax which was paid under mistake of law - denial on the ground of time limitation - Section 11 B of the CEA, 1944 - whether limitation prescribed under Section 11 B of the said Act applies to a refund claimed in respect of service tax paid under a mistake of law? - Held that - the issue is no more res-integra - the Division Bench of this Court in Hindustan Cocoa 1994 (6) TMI 18 - HIGH COURT OF JUDICATURE AT BOMBAY has held that the limitation prescribed under Section 11 B of the said Act to be not applicable to refund claims for service tax paid under a mistake of law. The impugned order is erroneous in that it applies the limitation prescribed under Section 11 B of the Act to the present case were admittedly Appellant had paid a service tax on Commercial or Industrial Construction Service even though such service is not leviable to service tax - appeal allowed - decided in favor of appellant.

Summary

Issues:
Challenge to order of Customs, Excise and Service Tax Appellate Tribunal regarding refund claim for service tax paid under a mistake of law.

Analysis:
The Appellant challenged a common order by the Customs, Excise and Service Tax Appellate Tribunal upholding Orders-in-Appeal passed by the Commissioner of Central Excise and Customs. The Appellant, engaged in providing "Commercial or Industrial Construction" service, secured a contract for construction work and paid service tax under the belief that it was applicable. A refund claim was filed, but it was rejected as time-barred under Section 11 B of the Central Excise Act, 1944. The Commissioner (Appeals) partly allowed the appeal, and the Appellate Tribunal dismissed it, citing limitation under Section 11 B.

The Appellant argued that Section 11 B does not apply to refund claims for service tax paid under a mistake of law. They relied on judgments by the High Court and the Supreme Court to support this contention. The Respondent, however, supported the impugned order, stating that the limitation under Section 11 B applies to all refund claims. The High Court noted that previous decisions by the Division Bench supported the Appellant's position that the limitation under Section 11 B does not apply to refund claims for service tax paid under a mistake of law. The Court found the impugned order erroneous in applying the limitation to the present case and allowed the Appeals, directing the Respondent to refund the amount to the Appellant.

In conclusion, the High Court held that the limitation under Section 11 B does not apply to refund claims for service tax paid under a mistake of law. The impugned order was set aside, and the refund claim of the Appellant was fully allowed. The Respondent was directed to refund the specified amount within three months, with no order as to costs.