2018 (1) TMI 197 - HC - Service Tax

Refund claim - time limitation - Section 11B of Customs Act - Held that - the appeal is of less than ₹ 20,00,000/- tax effect and covered by latest circular F.No.390/Misc./163/2010-JC/Pt Government of India - Central Board of Excise & Customs fixes the monetary limit below which appeal shall not be filed in the High Court as ₹ 20,00,000/- - appeal disposed off.

Summary

Issues Involved:

1. Whether the Tribunal was justified in holding that the assessee was entitled to a refund of ?8,26,637/- despite the bar of limitation under Section 11B of the Central Excise Act.
2. Whether the Tribunal was justified in holding that the assessee was entitled to a refund of ?7,94,490/- after an order by the Commissioner (Appeals) and whether the assessee provided necessary evidence for unjust enrichment.

Detailed Analysis:

Issue 1: Refund of ?8,26,637/- and Bar of Limitation

The Tribunal's decision to grant a refund of ?8,26,637/- was contested on the grounds that it was barred by the limitation period specified under Section 11B of the Central Excise Act. The Tribunal, however, held that the limitation period did not apply in this case, referencing precedents such as Union of India v. Inani Builders and Commissioner Central Excise v. Shive Builders. These cases established that the refund claims should not be rejected solely based on unjust enrichment if the service tax was not legally payable. The Tribunal's stance was that the amount paid erroneously as service tax should be refunded irrespective of the limitation period, aligning with the principle that an unconstitutional levy cannot be retained by the department.

Issue 2: Refund of ?7,94,490/- and Evidence of Unjust Enrichment

The Tribunal also addressed the refund of ?7,94,490/-, which was initially sanctioned by the Adjudicating Authority but later contested by the Commissioner in a review order. The Tribunal found that once the Commissioner (Appeals) had passed an order, any subsequent review by the Commissioner was unsustainable. Additionally, the Tribunal noted that the assessee had provided satisfactory evidence to prove that there was no unjust enrichment, as the service tax paid was shown as receivable from the Excise Department in their accounts. This position was supported by the Tribunal's reliance on the ruling in Shravan Banarasilal Jejani v. Commissioner of C. Ex. Nagpur, where it was held that if the service tax was not legally payable, the provisions of Section 11B did not apply.

Supporting Judgments and Legal Precedents:

1. Shravan Banarasilal Jejani v. Commissioner of C. Ex. Nagpur: This case highlighted that if service tax was not legally payable, the refund claim should not be barred by the limitation period under Section 11B.
2. Andrew Telecom (I) Pvt. Ltd. v. Commissioner of Cus. & C. Ex. GOA: The Bombay High Court emphasized that the rule of limitation under Section 11B must be applied strictly unless the levy itself was unconstitutional.
3. Jubilant Enterprises P. Ltd. v. Commissioner of C. Ex. Mumbai: The Tribunal ruled that if service tax was not required to be paid, the provisions of Section 11B did not apply, and the refund claim should not be time-barred.
4. Suchitra Components Ltd. v. Commissioner of Central Excise, Guntur: The Supreme Court held that beneficial circulars should be applied retrospectively, while oppressive ones should be applied prospectively, reinforcing the principle that taxpayers should not be unduly penalized by retrospective application of circulars.

Conclusion:

The High Court upheld the Tribunal's decision, affirming that the assessee was entitled to the refunds claimed. The judgments emphasized that the limitation period under Section 11B should not bar refunds of taxes that were not legally payable, and that the assessee had provided adequate evidence to negate unjust enrichment. The appeal was disposed of in light of these legal principles and the monetary limits set by the Central Board of Excise and Customs for filing appeals.