2021 (10) TMI 1230 - AT - Service Tax

Refund of excess service tax paid - time limitation - refund claim rejected holding that the tax payment having been made vide challan dated 20.7.2017 and 1.6.2017, the refund claim filed on 29.11.2018 is beyond one year period as prescribed under section 11B of the Central Excise Act, 1944 - HELD THAT - It is not disputed that the appellant has made excess payment of ₹ 3,05,175/-. Returns were belatedly filed only on 23.10.2018. However, tax was paid by cash in advance vide challans dated 20.7.2017 and 1.6.2017. The department has computed the period of one year from these dates of the challan to hold that the refund claim is barred by limitation. It has to be mentioned that the appellant has come to know about the excess payment only after the filing of the returns on 23.10.2018. The refund claim having been filed on 29.11.2018 when computed from the date of filing of the ST-3 returns, it cannot be said that there is a delay in filing the refund claim. Section 11B of Central Excise Act, 1944 does not talk about the relevant date for computing the period of limitation in the case of payment of service tax. In the present case, the refund arises out of excess payment. The excess payment can be ascertained only when the appellant files the ST-3 returns. When such facts are put into consideration, in strict sense, it cannot be said that there is a delay in filing the refund claim. It is an excess payment made by the appellant. Needless to say that the department cannot retain any amount which is not collected / paid under authority of law. The jurisdictional High Court in the case of M/S. 3E INFOTECH VERSUS CUSTOMS, EXCISE SERVICE TAX APPELLATE TRIBUNAL, COMMISSIONER OF CENTRAL EXCISE (APPEALS-I) 2018 (7) TMI 276 - MADRAS HIGH COURT has categorically held that section 11B cannot be applied when the tax has been paid under mistake and when not required to be paid. The rejection of refund claim as time-barred in terms of section 11B of Central Excise Act, 1944 r/w section 83 of the Finance Act, 1994 cannot sustain - Appeal allowed - decided in favor of appellant.

Summary

Issues:
Rejection of refund claim on the ground of limitation under section 11B of Central Excise Act, 1944.

Analysis:
The appellant, engaged in providing services, filed ST-3 returns for April-June 2017 with a delay, showing a service tax liability of ?78,37,359. They utilized CENVAT credit but made an excess payment of ?3,05,175. The refund claim for the excess amount was rejected by the original authority and Commissioner (Appeals) citing section 11B's one-year limitation period. The appellant contended that the excess payment was made by mistake, not covered under section 11B. They cited relevant case laws to support their argument that refund claims due to mistaken payments cannot be time-barred under section 11B.

The Tribunal considered the facts that the excess payment was discovered only after filing returns in October 2018, and the refund claim was filed in November 2018. The department calculated the one-year period from the cash payment dates in 2017, but the Tribunal noted that the relevant date for limitation computation should be the date of filing the ST-3 returns. Various decisions were referenced where the relevant date was determined as the date of invoice or payment for refund claims on input services. In this case, the excess payment was realized only upon filing returns, justifying the timely refund claim.

Citing the jurisdictional High Court's ruling in the 3E Infotech case, the Tribunal emphasized that section 11B does not apply when tax is paid under a mistake of law. Similar views from other High Courts and Tribunals were also considered. The Tribunal concluded that the rejection of the refund claim based on section 11B's limitation was unsustainable. Following the precedents and legal principles, the Tribunal set aside the impugned order, allowing the appeal and directing the refund of the excess payment to the appellant.

In summary, the Tribunal held that the rejection of the refund claim as time-barred under section 11B of the Central Excise Act, 1944 was not valid in cases where the tax was paid under a mistake of law. The appellant's excess payment, discovered after filing returns, justified the refund claim, and the Tribunal allowed the appeal, ordering the refund of the excess amount.