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2018 (8) TMI 822 - HC - Service TaxRefund of service tax due to retrospective exemption - period of limitation - Retrospective exemption - Validity and Vires of Section 103(3) of the Finance Act, 1994 - The main ground on which the first Authority as well as the learned CESTAT has rejected the claim of the petitioner is that the application submitted by the petitioner for refund of claim was beyond the period of six months prescribed in subsection (3) of Section 103 of the Finance Act, 1994. Held that - It is required to be noted that as such the service in question was subjected to service tax for the period between 01.04.2015 to 29.02.2016 and therefore, the service tax was allowable to be paid during the aforesaid period and infact the petitioner paid the same which was reimbursed by the petitioner to the service provider. However, by Finance Bill, 2016, section 103 came to be inserted in Finance Act, 2014 and the exemption which was available prior to 01.04.2015 which as such was withdrawn between 01.04.2015 to 29.02.2016 came to be restored retrospectively. However, the very section 103 of the Finance Act, 2014 provided that the assessee shall be entitled to the relief of all such service tax which has been collected but which would not have been so collected on subsection (1) within force at all material times and it further provided that notwithstanding anything contained in the said Chapter, an application for claim of refund of service tax shall be made within a period of six months from the date on which the Finance Bill, 2016 receives the assent of Hon ble The President. It cannot be disputed that but for section 103 of the Finance Act, 2014 and the exemption being granted retrospectively, the petitioner could not have as a matter of right claimed such exemption and/or even consequently the refund of the tax paid. As such the Union Government was not under any obligation to provide the exemption retrospectively and that too with refund of the tax already paid. By way of policy decision which was culminated into section 103 of the Finance Act, 2014, such an exemption was provided retrospectively and the refund was provided, however subject to subsection (3) of section 103 of the Finance Act, 2014. Even the prayer of the petitioners to direct the respondents to compute six months period within which the refund claim was to be filed in terms of section 103 of the Finance Act, 1994, from the date the requisite certificate was issued by Ministry of Shipping also cannot be granted in exercise of powers under Article 226 of the Constitution of India. No directions can be issued in exercise of powers under Article 226 which shall be contrary to the statutory provision. Grant of such relief in exercise of powers under Article 226 of the Constitution of India would be contrary to the statutory provision. The substantive right to claim the refund in favour of the petitioner would be under Section 103 of the Finance Act, 2014. Therefore, subsection (3) of Section 103 of the Finance Act, 1994 cannot be said to be discriminatory and/or violative of Article 14 of the Constitution of India as contended on behalf of the petitioner. The refund application submitted by the petitioner is rightly rejected as the same was beyond the period of limitation prescribed under subsection (3) of Section 103 of the Finance Act, 1994 - Petition dismissed.
Issues Involved:
1. Constitutionality of Section 103(3) of the Finance Act, 1994. 2. Interpretation and application of Section 103(3) of the Finance Act, 2016. 3. Validity of the rejection of the refund claim based on the limitation period. 4. Whether procedural delays by the Ministry can affect the limitation period. 5. Whether Section 103(3) is discriminatory and violative of Article 14 of the Constitution of India. Issue-Wise Detailed Analysis: 1. Constitutionality of Section 103(3) of the Finance Act, 1994: The petitioner argued that Section 103(3) of the Finance Act, 1994 is arbitrary, unconstitutional, and ultra vires to Article 14 of the Constitution of India. The court rejected this argument, stating that the provision is a policy decision and not subject to judicial review. The court emphasized that the exemption and refund provided under Section 103 are conditional and a matter of privilege, not a right. Therefore, the provision cannot be deemed arbitrary or unconstitutional. 2. Interpretation and Application of Section 103(3) of the Finance Act, 2016: The petitioner contended that the six-month period for claiming a refund should start from the date of receipt of the requisite certificate from the Ministry of Shipping, not from the date the Finance Bill, 2016 received the President's assent. The court held that Section 103(3) clearly states that the refund application must be made within six months from the date of assent, and there is no ambiguity requiring the provision to be read down. The court further stated that making an application for refund was not dependent on obtaining the certificate from the Ministry. 3. Validity of the Rejection of the Refund Claim Based on the Limitation Period: The refund claim was rejected because it was filed beyond the six-month period stipulated in Section 103(3). The court upheld this rejection, stating that the statutory provision is explicit and must be strictly followed. The petitioner filed the refund application on 28.11.2016, which was beyond the six-month period from the President's assent on 14.05.2016. Therefore, the rejection of the refund claim was valid. 4. Whether Procedural Delays by the Ministry Can Affect the Limitation Period: The petitioner argued that the delay in obtaining the certificate from the Ministry should extend the limitation period. The court rejected this argument, stating that the application for refund could have been made within the six-month period, with a note that the certificate was awaited. The court emphasized that the statutory provision does not link the limitation period to the receipt of the certificate. 5. Whether Section 103(3) is Discriminatory and Violative of Article 14 of the Constitution of India: The petitioner claimed that the six-month limitation period under Section 103(3) is discriminatory compared to the one-year period under Section 11B of the Central Excise Act, 1944. The court dismissed this argument, stating that the right to claim a refund under Section 103 is a specific statutory right with its own conditions, and the limitation period prescribed therein is neither discriminatory nor violative of Article 14. Conclusion: The court dismissed the petition, upholding the rejection of the refund claim as it was filed beyond the six-month limitation period prescribed under Section 103(3) of the Finance Act, 1994. The court also held that the provision is not arbitrary, unconstitutional, or discriminatory.
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