2018 (6) TMI 1217 - AT - Service Tax

Refund of service tax paid - The appellant has paid the service tax and later on realized that service tax is not leviable and thereafter filed the refund application - denial on the ground of time limitation and also on the ground of unjust enrichment - Section 11B of Central Excise Act read with Section 83 of the Finance Act - Held that - Since the amount claimed as refund by the appellant can be refunded only under Section 11B, the limitation provided in the said section shall also be applicable for sanction of refund. There is no other provision for refund of service tax/excise duty except Section 11B of the Act. Therefore, limitation is applicable - reliance paced in the case of LNG Security Services Pvt Ltd. Vs. CST, Delhi 2017 (5) TMI 466 - CESTAT NEW DELHI , where it was held that provision of Section 11B of the Central Excise Act, 1944 dealing with refund/rebate have been made applicable to service tax by virtue of Section 83 of the Finance Act, 1994. Any application for refund of tax must be filed before the expiry of one year from relevant date. Principle of unjust enrichment - Held that - Though the appellant has produced certain letters, which have been written by BSNL to them claiming the refund of service tax paid by them but the same has not been refunded to them so far and therefore the principle of unjust enrichment is applicable in the present case since the appellant has collected the service tax from BSNL. Appeal dismissed - decided against appellant.

Summary

Issues Involved:
1. Timeliness of the refund claim under Section 11B of the Central Excise Act.
2. Applicability of unjust enrichment principle.

Detailed Analysis:

1. Timeliness of the Refund Claim Under Section 11B of the Central Excise Act:

The appellant filed a refund claim for the service tax paid, asserting that the construction services provided to M.G. University were exempt from service tax. The Assistant Commissioner rejected the claim, citing Section 11B of the Central Excise Act, which mandates a one-year limitation period for refund claims. The Commissioner (Appeals) upheld this decision.

The appellant argued that the service tax was paid erroneously and did not constitute a tax liability, thus Section 11B's limitation should not apply. They relied on several judicial precedents, including:
- Nataraj and Venkat Associates Vs. AC, Service Tax (Mad)
- Corporation Bank Vs. Saraswati Abharansala and another (SC)
- Saraswati Abharanasala Vs. Corporation Bank (Ker)
- South India Corporation (P) Ltd. Vs. AC of Sales Tax
- Munch Food Products Ltd. Commissioner & another (Del.)
- CCE(Appeals) vs. KVR Constructions

These cases supported the principle that erroneous payment of service tax should not be subject to Section 11B's limitation.

However, the respondent countered with Supreme Court rulings emphasizing that all refund claims, regardless of the nature of the payment, must adhere to Section 11B's statutory time limit. Cases cited included:
- MCI Leasing (P) Ltd., Mysore Vs. CCE, C&ST Mysore
- Benzy Tours & Travels Pvt. Ltd. Vs. CST, Mumbai-I
- LNG Security Services Pvt Ltd. Vs. CST, Delhi
- Rajasthan State Mines & Minerals Ltd. Vs. CCE, Jaipur-1

The Tribunal concluded that Section 11B applies to all service tax refunds, as reinforced by the Supreme Court and various High Court rulings. Even if the payment was made under a mistake of fact, the limitation period under Section 11B is binding.

2. Applicability of Unjust Enrichment Principle:

The appellant collected service tax from BSNL and argued that BSNL withheld final payments due to the pending refund of the service tax. They presented letters from BSNL indicating that the service tax amount would be recovered from future bills if not refunded.

The respondent maintained that the appellant did not provide documentary proof of refunding the collected service tax to BSNL. The Tribunal agreed, noting that the principle of unjust enrichment applies because the appellant had collected the service tax from BSNL and failed to refund it.

Conclusion:

The Tribunal upheld the impugned order, dismissing the appeal. The refund claim was barred by the one-year limitation period under Section 11B, and the principle of unjust enrichment was applicable since the appellant did not refund the collected service tax to BSNL. The order was pronounced on 25/5/2018.