2022 (11) TMI 1226 - AT - Service Tax

Refund of amount paid erroneously - time limitation - service recipient of service by way of construction erection commissioning or installation of original works pertaining to Port - rejection on the ground that the same was time barred under Section 11B of the Central Excise Act in as much as the claim had been filed beyond one year from the date of invoices - HELD THAT - The relevant provision contained in Rule 11B of Central Excise Act. A bare reading of sub-clause (e) would clearly reveal that in case of a person other than the manufacturer the date of purchase of goods would be the relevant date to determine the period of limitation. However in the instant case Appellant had not purchased any goods but availed services and it had borne the incidence of tax. Hence for the purpose of determination of limitation the relevant date for the Appellant would fall within the definition of sub-clause (f) of Section 11(5)(B) of the Central Excise Act for which the date of payment is material. Appellant is entitled to get refund against all those tax paid erroneously whose challans were showing the date of payment within one year from the date of filing of refund application on dated 27.06.2017. However having regard to the fact that some errors concerning payment detail is noticeable from the Order-in-Original refund amount is required to be recalculated. Appeal allowed in part.

Summary

Issues:
Rejection of refund claim in part due to erroneous payment of service tax exempted for port services, application of limitation period under Section 11B of the Central Excise Act for refund claims, interpretation of relevant dates for determining limitation period, entitlement of appellant to refund for tax paid erroneously.

Analysis:
The case involved the rejection of a refund claim by the Appellant for the payment of service tax erroneously made as a service recipient for port services exempted from tax. The Appellant had paid the tax through a service provider and sought a refund upon realizing the exemption status. The Commissioner (Appeals) rejected the refund claim as time-barred for the period before 01.03.2016 but allowed for verification and potential refund for the subsequent period. The Appellant appealed to the CESTAT challenging the rejection of the refund claim up to 29.02.2016 and participated in establishing the claim for the subsequent period. The Order-in-Original sanctioned a partial refund but rejected a portion as time-barred under Section 11B of the Central Excise Act.

During the appeal hearing, the Appellant argued that the limitation period should not apply to amounts paid under a mistake of law, citing relevant case laws. The Appellant contended that the relevant date for determining the limitation period should be the date of payment of duty, not the date of purchase of goods. The Appellant emphasized that services are intangible and continuous, making the purchase date irrelevant. The Respondent supported the Commissioner's order, asserting that the Appellant should be treated as any other person for limitation purposes, and highlighted discrepancies in payment details for specific invoices.

The Member (Judicial) analyzed the relevant provisions of Section 11B of the Central Excise Act and concluded that the date of payment, not the purchase of goods, should determine the limitation period for the Appellant, who availed services and bore the tax burden. The Member held that the Appellant was entitled to a refund for taxes paid erroneously within one year from the refund application date, subject to recalculating the refund amount due to payment discrepancies. The appeal was allowed in part, setting aside the Commissioner's order and remanding the case for verification and recalculation of the refund amount within a specified timeframe.

In the final order, the Appellant was granted a refund for service taxes paid between specific dates, with directions for verification and recalculating the refund amount, to be completed within a set timeframe. The Respondent-Department was directed to refund the recalculated amount within two months following the completion of the process.