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2020 (1) TMI 431 - AT - Service TaxRefund claim - amount deposited under a mistake of law - applicability of time limitation - Section 11B of the Central Excise Act, 1944 - HELD THAT - One has to see is whether the amount paid by the assessee under a mistaken notion was payable or not. In other words, if the assessee had not paid those amounts, the authority could not have demanded from the assessee to make such payment. In other words, the department lacked authority to levy and collect such tax. In case, the department was to demand such payment, the assessee could have challenged it as unconstitutional and without authority of law. When once there is lack of authority to demand service tax or excise duty from the assessee, the department lacks authority to levy and collect such amount and the said amount is not Service Tax or Excise duty and Section 11B of the Act has no application in such cases. Reliance can be placed in the case of MAFATLAL INDUSTRIES LTD. VERSUS UNION OF INDIA 1996 (12) TMI 50 - SUPREME COURT . Refund allowed - appeal allowed - decided in favor of appellant.
Issues Involved:
1. Applicability of Section 11B of the Central Excise Act, 1944 for refund claims. 2. Doctrine of unjust enrichment. 3. Mistake of law in the payment of Service Tax. 4. Jurisdiction and authority to levy and collect Service Tax. 5. Procedural defects in filing refund claims. Issue-wise Detailed Analysis: 1. Applicability of Section 11B of the Central Excise Act, 1944 for Refund Claims: The core issue was whether Section 11B, which prescribes a period of limitation for filing a refund claim, applies to cases where an amount is deposited under a mistake of law. The appellant argued that the refund claim fell outside the purview of Section 11B since the Service Tax was paid under a mistake of law and was not actually leviable. The Tribunal referred to the constitutional bench decision in Mafatlal Industries Limited Vs. Union of India, which held that claims arising from unconstitutional levies or mistakes of law are outside the purview of the enactment and can be made either by suit or writ petition. The Tribunal concluded that Section 11B does not apply to such cases, and the general law of limitation under Section 17 of the Limitation Act, 1963, would govern the period of limitation. 2. Doctrine of Unjust Enrichment: The appellant contended that the burden of the Service Tax was borne entirely by them and not passed on to the purchasers, thus the doctrine of unjust enrichment did not apply. The Tribunal agreed, noting that the appellant had refunded the ?65,000 received towards Service Tax to the purchasers and had made necessary declarations in the refund claim. The Tribunal found no evidence to dispute this fact at any stage of the proceedings. 3. Mistake of Law in the Payment of Service Tax: The appellant paid ?5,06,122 as Service Tax under a mistaken belief that it was due. Upon realizing that the transaction was an outright transfer of title in immovable property and not subject to Service Tax, the appellant sought a refund. The Tribunal acknowledged this mistake of law and cited several judgments, including the Mafatlal case, which supported the appellant's claim for a refund of amounts paid under a mistaken notion of law. 4. Jurisdiction and Authority to Levy and Collect Service Tax: The appellant argued that if they had not paid the Service Tax, the department could not have demanded it, as the transaction was not taxable. The Tribunal agreed, stating that the department lacked authority to levy and collect such tax, and any amount collected without authority of law is not "Service Tax" or "Excise Duty." Therefore, Section 11B was not applicable. 5. Procedural Defects in Filing Refund Claims: The appellant argued that any procedural defects in filing the refund claim should not result in the rejection of a legitimate claim. The Tribunal agreed, emphasizing that substantive rights should not be denied due to procedural lapses. The Tribunal noted that the appellant had participated in pre-show cause consultations and provided detailed replies, indicating compliance with procedural requirements. Conclusion: The Tribunal set aside the impugned orders, allowing the appeal with consequential relief. It held that the refund claim was not barred by Section 11B and was not affected by the doctrine of unjust enrichment. The Tribunal emphasized the need to follow the jurisdictional High Court's decisions and the principles laid down by the Supreme Court in similar cases. The order was pronounced in the open court on 09 January 2020.
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