2018 (11) TMI 231 - AT - Service Tax

Refund of service tax paid - rejection of refund on the ground of time limitation - section 11B of Central Excise Act 1944 - Held that - In a similar issue in respect of appellant s own case, view has been taken by the Bench (wherein one of us Shri M.V. Ravindran was also a Member) relying upon the judgment of Hon ble High Court of Bombay in the case of Parijat Construction 2017 (10) TMI 659 - BOMBAY HIGH COURT . The Larger Bench decision of Veer Overseas 2018 (4) TMI 910 - CESTAT CHANDIGARH has not agreed with the judgment of Bombay High Court as to non-applicability of time limit prescribed under 11-B of Central Excise Act, 1944 to the refund of an amount not payable as tax. It is a well settled law that the judgment of Hon ble High Court is to be preferred against any judgment of the decision of Tribunal. This law was settled by a five member Bench of the Tribunal in the case of Khanbhai Esoofbhai vs. Collector of Central Excise, Calcutta 1998 (11) TMI 141 - CEGAT, NEW DELHI . The decision relied upon by the Revenue, more specifically the Larger Bench decision, may not carry the case further - appeal allowed - decided in favor of appellant.

Summary

Issues:
- Rejection of refund claims by lower authorities
- Applicability of Section 11-B of Central Excise Act to refund claims
- Interpretation of judgments by Hon'ble High Courts and Larger Bench

Analysis:
1. Rejection of Refund Claims: The appellant entered into an agreement with Korea Plant Service & Engineering Company Limited for operation and maintenance of a power plant, paying a consideration for the services. KPS assessed and paid the service tax liability without contesting it. Subsequently, the appellant filed refund claims for the service tax paid to KPS, which were rejected by the lower authorities, leading to the appeal.

2. Applicability of Section 11-B: The appellant argued that the provisions of Section 11B do not apply when no tax is payable, citing decisions by the Hon'ble High Courts of Madras and Gujarat. However, the Department contended that the time limit under Section 11B governs refund claims, as held by the Larger Bench in the case of Veer Overseas Limited. The Department also relied on judgments emphasizing the necessity to follow statutory time limits for refunds.

3. Interpretation of Judgments: The Tribunal considered the appellant's reliance on a previous decision in their own case and the judgment of the Larger Bench in Veer Overseas. The Tribunal noted a divergence in views with the judgment of the Hon'ble High Court of Bombay in the case of Parijat Construction regarding the applicability of the time limit under Section 11-B to refund claims. Ultimately, the Tribunal preferred the judgment of the Hon'ble High Court of Madras, emphasizing that the High Court's decision should be preferred over the Tribunal's decision.

4. Final Decision: After analyzing the arguments and legal precedents, the Tribunal held that the impugned orders rejecting the refund claims were unsustainable. The Tribunal set aside the orders and allowed the appeals in favor of the appellant, emphasizing the importance of following the decision of the Hon'ble High Court over the Tribunal's decision in such matters. The judgment was pronounced in open court on 01.11.2018 by the Tribunal.