2022 (6) TMI 377 - AT - Central Excise

Refund of Service tax paid on reverse charge mechanism which was otherwise not payable - Period of limitation - applicability of Section 11B of the Central Excise Act, 1944 or not - HELD THAT - There is no dispute that whether service tax was payable or not, the appellant have paid the amount as service tax only therefore, the refund of the same is governed by Section 11B, there is no other provision for refunding the said amount. It is further observed that, if on the pretext that since the amount of duty or service tax is not payable, Section 11B will not be applicable, any amount of refund arise only when it is not payable therefore, in any case Section 11B will not be applicable and become redundant which is not the intention of the legislators. Accordingly, since the appellant filed the refund claim after the stipulated time period of one year as provided under Section 11B, the same is time barred - appeal dismissed.

Summary

Issues involved:
1. Whether the refund claim of service tax paid on reverse charge mechanism, which was not otherwise payable, is governed by Section 11B.

Analysis:
The judgment by the Hon'ble Member (Judicial), Mr. Ramesh Nair of the Appellate Tribunal CESTAT Ahmedabad dealt with the issue of the applicability of Section 11B concerning a refund claim of service tax paid on reverse charge mechanism. The appellant had paid the service tax amount, which was contended to be not payable by mistake. The Revenue argued that since the appellant had paid the service tax amount, the refund claim falls under the purview of Section 11B of the Central Excise Act, 1944. The Revenue relied on judgments like BENZY TOURS & TRAVELS P. LTD. Vs CCE, MUMBAI-I- 2016 (43) STR 625 (Tri.-Mumbai) and PATEL CONSTRUCTION COMPANY Vs. CST, AHD.-2017 (50) SR 257 (Guj.) to support their stance.

Upon careful consideration of the submissions and records, it was found that the core issue was whether the limitation provided under Section 11B applied to the refund claim of service tax paid by the appellant. The appellant's argument was that since the service tax on reverse charge mechanism was not payable by them and was paid by mistake, it did not constitute a service tax payment. However, it was noted that regardless of whether the service tax was payable or not, the appellant had paid the amount as service tax. Therefore, the refund of the same was deemed to be governed by Section 11B, with no other provision available for refunding the amount.

The judgment highlighted that if the argument that Section 11B would not be applicable whenever the duty or service tax is not payable was accepted, it would render the provision redundant, contrary to legislative intent. The judgments cited by the Revenue supported their position, leading to the conclusion that since the appellant filed the refund claim after the stipulated one-year period under Section 11B, the claim was time-barred. Consequently, the impugned order was upheld, and the appeal was dismissed. The judgment was dictated and pronounced in the open court by Mr. Ramesh Nair.