2019 (6) TMI 1280 - HC - Service Tax

Refund of Service Tax - service tax paid during the period between 27.08.2012 and 06.03.2013 - applicability of Section 11B(1) of the Act - Time Limitation - whether the application for refund of the amount filed by the assessee was beyond the period of limitation provided under Section 11B(1) of the Act? - HELD THAT - Section 11B of the Act makes it clear that an application for refund of duty of excise (service tax in the case at hand) has to be made in the prescribed form before the expiry of one year from the relevant date. Explanation (B) to Section 11B of the Act states what is meant by relevant date. As per Clause (ec) of Explanation (B) to Section 11B, in case where the duty becomes refundable as a consequence of judgment, decree, order or direction of appellate authority, Appellate Tribunal or any court, the relevant date is the date of such judgment, decree, order or direction. As per Clause (f) of Explanation (B) to Section 11B, in any case other than provided under clauses (a) to (ec), the relevant date is the date of payment of duty. There is no dispute with regard to the fact the service tax payable by the appellant would come within the ambit of duty of excise mentioned in Section 11B(1) of the Act. However, the contention of the appellant is that the amount paid by it was actually not due from it as service tax because the value of the materials supplied free of cost by the service recipients cannot be included in computing the taxable value of the services - There is no basis for the contention raised by the learned counsel for the appellant that the amount was paid by the appellant on account of coercion and threat made by the authorities. There is no material produced in support of this contention. In the instant case, as noticed earlier, when the amount was levied from the appellant, the demand for levy was legal. The amount was paid by the appellant as service tax. The amount paid lost the colour of tax only when the issue was finally decided by the Supreme Court in COMMISSIONER OF SERVICE TAX ETC. VERSUS M/S. BHAYANA BUILDERS (P) LTD. ETC. 2018 (2) TMI 1325 - SUPREME COURT to the effect that value of materials supplied free of cost by service recipient is not exigible to service tax - Applying the dictum laid down by the Supreme Court in MAFATLAL INDUSTRIES LTD. VERSUS UNION OF INDIA 1996 (12) TMI 50 - SUPREME COURT it is held that the claim for refund of amount made by the appellant comes within the purview of Section 11B(1) of the Act - decided against assessee. The amount was paid by the appellant on different dates during the period between 27.08.2012 and 06.03.2013. The last date of payment was 06.03.2013. It was on 23.10.2014 the appellant filed an application dated 14.10.2014 in the prescribed form for refund of the amount. The application for refund in the prescribed form was filed beyond the period of one year from the last date of payment of duty - whether the appellant can take advantage of the decision of the Supreme Court in COMMISSIONER OF SERVICE TAX ETC. VERSUS M/S. BHAYANA BUILDERS (P) LTD. ETC. 2018 (2) TMI 1325 - SUPREME COURT to contend that the application for refund of amount filed by him in the prescribed form was within the time stipulated under Section 11B(1) of the Act? Clause (ec) of Explanation (B) to Section 11B of the Act states that in case where the duty becomes refundable as a consequence of judgment, decree, order or direction of appellate authority, Appellate Tribunal or any court, the relevant date from which the period of limitation is to be computed, is the date of such judgment, decree, order or direction - The proceedings pending before the Tribunal, at the time when the Supreme Court rendered the decision in Bhayana Builders , were not proceedings against assessment of service tax on the value of materials supplied free of cost by the service recipients. The appeal pending before the Tribunal was against the order passed by the authorities rejecting the application for refund of amount. In other words, levy of service tax from the appellant for the relevant period had attained finality by the time the Supreme Court rendered the decision in Bhayana Builders . In such circumstances, the appellant cannot take advantage of the decision in Bhayana Builders to contend that the application for refund filed by it was within the prescribed time. Thus Tribunal was correct in finding that the application for refund filed by the assessee was beyond the period of limitation provided under Section 11B(1) of the Act - decided against assessee. Appeal dismissed - decided against assessee.

Summary

Issues Involved:
1. Applicability of Section 11B(1) of the Central Excise Act, 1944 to the refund claim.
2. Timeliness of the refund application under Section 11B(1) of the Act.
3. Consideration of payment under protest.
4. Impact of the Supreme Court decision in Bhayana Builders (P) Limited on the refund claim.

Detailed Analysis:

1. Applicability of Section 11B(1) of the Central Excise Act, 1944 to the Refund Claim:
The appellant, a private limited company engaged in construction services, claimed a refund of ?53,48,526/- paid as service tax. The Assistant Commissioner rejected the refund application, citing it was filed beyond the one-year period stipulated in Section 11B(1) of the Central Excise Act, 1944. The Tribunal upheld this decision, noting that the refund claim fell within the purview of Section 11B(1), as the amount was initially paid as service tax and had the "colour of tax" until the Supreme Court's decision in Bhayana Builders (P) Limited clarified that materials supplied free of cost by the service recipient should not be included in the taxable value of services.

2. Timeliness of the Refund Application under Section 11B(1) of the Act:
The appellant paid the service tax between 27.08.2012 and 06.03.2013 but filed the refund application on 23.10.2014, beyond the one-year limitation period. The court emphasized that Section 11B(1) requires refund applications to be made in the prescribed form within one year from the relevant date. The appellant's letter dated 13.09.2013 was not considered a valid refund application as it did not meet the prescribed form and manner requirements.

3. Consideration of Payment Under Protest:
The appellant contended that the payment was made under coercion and threat, and thus under protest. However, the court found no material evidence to support this claim. The second proviso to Section 11B(1) exempts the one-year limitation if the payment is made under protest, but the court found no indication that the payment was made under protest at the relevant time.

4. Impact of the Supreme Court Decision in Bhayana Builders (P) Limited on the Refund Claim:
The appellant argued that the limitation period should be computed from the date of the Supreme Court's decision in Bhayana Builders (P) Limited, which clarified that the value of materials supplied free of cost by the service recipient is not exigible to service tax. The court rejected this argument, stating that Clause (ec) of Explanation (B) to Section 11B applies only to judgments, decrees, orders, or directions in cases involving the same parties. The court cited Mafatlal Industries Limited v. Union of India, emphasizing that an assessee must succeed or fail in its own proceedings and cannot claim a refund based on another person's case.

Conclusion:
The court held that the refund claim was governed by Section 11B(1) of the Act and was filed beyond the prescribed limitation period. The appellant's contention that the payment was made under protest was unsupported by evidence. The Supreme Court's decision in Bhayana Builders (P) Limited did not extend the limitation period for the appellant's refund claim. However, the Tribunal's decision allowed the appellant to file a fresh refund application based on a new cause of action provided by the Commissioner (Appeals), which was not challenged by the department. Consequently, the appeal was dismissed, but the appellant was granted liberty to file a fresh refund application before the original authority.