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2020 (1) TMI 324 - AT - Service TaxRefund of service tax - failure to comply with the provisions of section 11-B of the Central Excise Act, 1944, as made applicable to service tax by section 83 of the Finance Act, 1994 - rejection for the reason that it was not made before the expiry of one year from the relevant date - whether the limitation provided for under section 11-B of the Excise Act for claiming refund before the expiry of one year from the relevant date, would be applicable or not to the application filed by the Appellant? HELD THAT - The Delhi High Court in M/S. NATIONAL INSTITUTE OF PUBLIC FINANCE POLICY VERSUS C.S.T., DELHI 2017 (11) TMI 1482 - CESTAT NEW DELHI clearly held that if service tax was not leviable, but it was paid by mistake, the amount had to be refunded - The Kerala High Court in M/S GEOJIT BNP PARIBAS FINANCIAL SERVICES LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE CUSTOMS AND SERVICE TAX, DEPUTY COMMISSIONER OF CENTRAL EXCISE SERVICE TAX DIVISION 2015 (7) TMI 635 - KERALA HIGH COURT also pointed out that the distinguishing feature for attracting the provisions under section 11B is that the levy should have the colour of validity when it was paid and only consequent upon interpretation of law or adjudication, the levy is liable to be ordered as refund. When payment was effected, if it has no colour of legality, section 11B is not attracted. Thus, when service tax is not leviable, but it is deposited mistakenly by the Appellant, the provisions of section 11-B of the Excise Act relating to limitation would not be applicable - In the instant case, the Commissioner (Appeals) has rejected the refund claim of the Appellant only for the reason that it was made beyond a period of one year from the date of payment of duty. Appeal allowed - decided in favor of appellant.
Issues Involved:
1. Applicability of Section 11-B of the Central Excise Act, 1944 to the refund claim. 2. Whether the refund claim filed by the Appellant was barred by limitation. 3. Entitlement of the Appellant to the refund of service tax paid under a mistaken belief. 4. Examination of relevant judicial precedents regarding refund claims and limitation periods. Issue-wise Detailed Analysis: 1. Applicability of Section 11-B of the Central Excise Act, 1944 to the refund claim: The core issue was whether the limitation period prescribed under Section 11-B of the Excise Act would apply to the Appellant's refund claim. Section 11-B mandates that any refund claim must be filed within one year from the relevant date. The Tribunal noted that the relevant date, as defined in the Explanation to Section 11-B, is the date of payment of duty. The Appellant argued that since the service tax was not due, the limitation period under Section 11-B should not apply. The Tribunal examined various judicial precedents to determine the applicability of Section 11-B to cases where tax was paid under a mistaken belief. 2. Whether the refund claim filed by the Appellant was barred by limitation: The Appellant’s refund claim was rejected by the Deputy Commissioner and upheld by the Commissioner (Appeals) on the grounds that it was filed beyond the one-year limitation period prescribed under Section 11-B. The Tribunal scrutinized multiple decisions, including the Supreme Court’s ruling in Doaba Co-operative Sugar Mills, which emphasized that claims for refund must adhere to the statutory limitation period. However, the Tribunal also considered contrary judgments like those from the Delhi High Court in M/s National Institute of Public Finance & Policy and the Karnataka High Court in KVR Construction, which held that Section 11-B does not apply to amounts paid under a mistaken belief. 3. Entitlement of the Appellant to the refund of service tax paid under a mistaken belief: The Appellant contended that the service tax paid was under a mistaken belief as the insurance services provided under the Rashtriya Swasthya Bima Yojana were exempted by a Notification dated 01 March, 2011. The Tribunal noted that the Appellant had indeed paid service tax from March 2011 to November 2011 despite the exemption. The Tribunal referred to several judgments, including the Bombay High Court’s decision in Parijat Construction, which supported the view that when tax is paid mistakenly, the refund claim should not be barred by the limitation period under Section 11-B. 4. Examination of relevant judicial precedents regarding refund claims and limitation periods: The Tribunal examined various judicial precedents to resolve the issue. The Tribunal referred to the Delhi High Court’s decision in M/s National Institute of Public Finance & Policy, which held that if service tax was not leviable but paid by mistake, the amount must be refunded regardless of the limitation period under Section 11-B. Similarly, the Karnataka High Court in KVR Construction and the Bombay High Court in Parijat Construction held that Section 11-B does not apply to amounts paid under a mistaken notion. The Tribunal also considered the decision of the Larger Bench in Veer Overseas Ltd., which upheld the applicability of Section 11-B but noted that certain High Courts had taken a different view. Conclusion: The Tribunal concluded that when service tax is not leviable but is paid mistakenly, the provisions of Section 11-B regarding limitation do not apply. The Commissioner (Appeals) had rejected the refund claim solely on the ground of limitation. The Tribunal set aside the order of the Commissioner (Appeals) and allowed the appeal, granting the Appellant the refund of the claimed amount with interest. The Tribunal emphasized that the view taken by the jurisdictional High Court must be followed, and in this case, the Delhi High Court’s decision was binding. The appeal was allowed, and the order was pronounced in open court on 09 January, 2020.
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