2022 (5) TMI 143 - HC - Service Tax

Refund claim - time limitation - claim was delayed by a period of 4 days - Constitutional Validity of clause 3(g) of Notification No. 41/2012-ST dated 29.6.2012 along with Explanation thereto - ultra-vires Section 83 of the Finance Act read with Section 11B of the Excise Act or not - period of limitation for the purpose of filing refund application under the Finance Act in case of export of goods through air or sea - HELD THAT - The refund application is to be filed within one year from the relevant date and the expression relevant date in the context of export by sea or air is defined as the date on which the ship or the aircraft in which the goods are loaded leaves India. It is to be further noted that as per clause (A) of the Explanation, refund includes rebate. Explanation to clause 3(g) of the Notification states that the date of export shall be the date on which the proper officer of the Customs makes an order permitting the clearance and loading of the goods for exportation under Section 51 of the Customs Act. Hence, as per the Notification, the refund claim is to be filed within one year from passing of the order permitting the clearance and loading of the goods for exportation under Section 51 of the Customs Act. Such prescription of limitation is in direct conflict with the statutory provision, i.e. Section 11B of the Excise Act, which provides for limitation to commence from the date when the ship leaves India. Since the acknowledgment of the refund application was given on 18.2.2014, i.e. within one year from the date when the ship left India, i.e. on 20.2.2013, such refund application being within the period of limitation as stipulated under Section 11B of the Excise Act could not have been rejected as being barred by limitation. In any case, once it is held that the impugned clause 3(g) and the Explanation thereto of the Notification No.41/2012-ST dated 29.6.2012 is ultra vires Section 83 of the Finance Act read with Section 11B of the Excise Act, the impugned orders rejecting the refund on the ground of limitation cannot be sustained. The impugned clause 3(g) of the Notification No.41/2012-ST dated 29.6.2012 along with the Explanation is declared as being ultra vires Section 83 of the Finance Act read with Section 11B of the Excise Act - Application disposed off.

Issues Involved:
1. Validity of clause 3(g) of Notification No. 41/2012-ST dated 29.6.2012.
2. Determination of the period of limitation for filing a refund application under the Finance Act.
3. Rejection of the refund application as time-barred.
4. Entitlement to refund and interest on the refund amount.

Issue-wise Detailed Analysis:

1. Validity of Clause 3(g) of Notification No. 41/2012-ST dated 29.6.2012:
The writ-applicants challenged clause 3(g) of Notification No. 41/2012-ST dated 29.6.2012, arguing that it is ultra-vires Section 83 of the Finance Act read with Section 11B of the Excise Act. They contended that Section 83 of the Finance Act borrows provisions from the Excise Act, including Section 11B, which stipulates that the refund application must be filed within one year from the 'relevant date.' For exports by sea or air, the 'relevant date' is defined as the date on which the ship or aircraft leaves India. The impugned clause 3(g) contradicts this by stating that the refund application must be filed within one year from the 'let export' order under Section 51 of the Customs Act. The court held that the statutory provision under Section 11B prevails over the delegated legislation, declaring clause 3(g) and its Explanation as ultra vires.

2. Determination of the Period of Limitation for Filing a Refund Application:
The court analyzed Section 11B of the Excise Act, which specifies that the refund application must be filed within one year from the 'relevant date,' defined as the date when the ship or aircraft leaves India. In this case, the goods were loaded on the ship on 19.2.2013, and the ship left India on 20.2.2013. Therefore, the limitation period for filing the refund application would be one year from 20.2.2013. The refund application, acknowledged on 18.2.2014, was within this statutory period.

3. Rejection of the Refund Application as Time-barred:
The respondents rejected the refund application, claiming it was filed after the expiry of one year from the 'let export' order date (15.2.2013) and thus time-barred as per clause 3(g) of the Notification. The court found this reasoning flawed, as the statutory provision under Section 11B of the Excise Act provides a different 'relevant date' for exports by sea or air. The court emphasized that the period of limitation stipulated by the statutory provision prevails over the delegated legislation.

4. Entitlement to Refund and Interest on the Refund Amount:
The court noted that the writ-applicants' entitlement to the refund on merits was undisputed. Given that the refund application was within the statutory period of limitation, the rejection on the ground of being time-barred was invalid. The court directed the respondents to grant the refund amount of Rs. 42,47,429 along with a simple interest at the rate of 6% per annum, to be paid within four weeks from the date of receipt of the court's order. The interest was to be calculated from the date of the refund application until the actual payment.

Conclusion:
The court declared clause 3(g) of Notification No. 41/2012-ST dated 29.6.2012 and its Explanation as ultra vires Section 83 of the Finance Act read with Section 11B of the Excise Act. It held that the period of limitation for filing a refund application in the case of export of goods through air or sea commences from the date on which the vessel or aircraft leaves the country. The impugned orders rejecting the refund were quashed, and the respondents were directed to grant the refund with interest.

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