2022 (5) TMI 908 - AT - Service Tax

Refund of service tax paid - payment of tax due to mistake in facts or of law - period of limitation - whether the amount of Rs.4,78,222/- as was deposited by the appellant on 14.3.2016 was the amount of duty/tax? - HELD THAT - Apparently and admittedly the said amount was deposited under the wrong impression of appellant being the liable to Service Tax for providing the construction service to M P Police Housing Corpn. Ltd. There is no denial to the fact that these services were exempted from the tax liability till March 2015 under Notification No. 06/2015 dated 1.3.2015. There is also no denial to the fact that the exemption was removed only for the period of one year i.e. from March 2015 to March 2016. From the notification No. 06/2015 vide Notification No. 9/2016 dated 1.3.2016, the retrospective exemption for the construction services provided under contract prior to 1.3.2015 was announced. There is no denial to the fact that service in question were rendered by the appellant in favour of the contract with M P Police Housing Corpn. Ltd. dated 30.6.2014 i.e. the contract was prior to 1.3.2015. Hence, irrespective the construction was raised during the year 2015-16, the exemption to the liability as introduced vide Notification No. 9/2016 is very much applicable to the impugned service. This perusal makes it abundantly clear that the appellant was not liable to pay Service Tax for rendering the services in question. Consequently, it is held that the amount of Rs.4,78,222/- was not the amount of Service Tax. It was merely a deposit being made by the appellant in view of the ongoing confusion about the liability. The law with respect to the deposits being made by the assessee due to mistake either of the fact or of law is no more res integra to the effect that section 11B of Central Excise Act is not applicable to such deposits. Time bar of said section cannot be invoked while refunding the amount of deposit. Appeal allowed - decided in favor of appellant.

Summary

Issues Involved:
1. Whether the amount of Rs. 4,78,222/- deposited by the appellant was a duty/tax.
2. Applicability of Section 11B of the Central Excise Act for the refund claim.
3. Time bar under Section 11B of the Central Excise Act.
4. Legal precedents and applicability of the doctrine of deposits made under mistake.

Issue-wise Detailed Analysis:

1. Whether the amount of Rs. 4,78,222/- deposited by the appellant was a duty/tax:
The appellant deposited Rs. 4,78,222/- under the impression that they were liable to pay Service Tax for providing construction services to M P Police Housing Corporation Ltd. However, the services were exempted from Service Tax liability until March 2015, and the exemption was reaffirmed from March 1, 2016. The Tribunal concluded that the amount was not a Service Tax but merely a deposit made due to confusion about the liability. Therefore, the amount was not considered a duty/tax.

2. Applicability of Section 11B of the Central Excise Act for the refund claim:
The Tribunal analyzed Section 11B, which pertains to the refund of duty/tax. Since the amount deposited by the appellant was not considered a duty/tax but a deposit made under a mistaken belief, Section 11B was deemed inapplicable. The Tribunal emphasized that the law regarding deposits made due to a mistake is settled, and Section 11B does not apply to such deposits.

3. Time bar under Section 11B of the Central Excise Act:
The Tribunal noted that the refund claim was rejected by invoking the time bar under Section 11B. However, since the amount in question was not a duty/tax, the time bar provision of Section 11B could not be invoked. The Tribunal relied on the legal principle that time bar does not apply to refunds of deposits made under mistake.

4. Legal precedents and applicability of the doctrine of deposits made under mistake:
The Tribunal referred to several legal precedents to support its decision. It cited the case of M/s. Parle Agro Pvt Ltd., where it was held that Section 11B does not apply to revenue deposits. Additionally, the Tribunal referenced the decision of the Bangalore Bench in CCE, Nasik vs. Motor Industries Ltd., which established that deposits made under protest or due to mistake should be refunded without invoking the time bar under Section 11B. The Tribunal also mentioned the Supreme Court's ruling in Mafatlal Industries Ltd. v. UOI, which stated that duty deposits made during an investigation are considered deposits made under protest.

Conclusion:
Based on the detailed analysis, the Tribunal concluded that the order rejecting the refund claim was incorrect. The amount deposited by the appellant was not a duty/tax, and Section 11B of the Central Excise Act was inapplicable. Consequently, the time bar provision could not be invoked. The Tribunal set aside the order under challenge and allowed the appeal, thereby granting the refund of Rs. 4,78,222/- to the appellant.