2023 (1) TMI 149 - AT - Service Tax

Refund of service tax - liability to pay service tax was on SBI Life Insurance who had indeed paid the service tax - rejection on the ground of time limitation - Section 11B of CEA - HELD THAT - It is not disputed that the service tax has been paid by the appellant in the capacity of service provider as well as by the service recipient, namely, SBI Life Insurance. The appellant has paid the service tax during the period 2011 to 2014 and claimed the refund in the year 2018. The claim has been rejected on the ground of limitation invoking section 11B. The defence of the appellant is that any tax paid under mistake of law, the limitation under Section 11B does not apply. The decision of hon ble High Court of Gujarat in the case of AJNI INTERIORS VERSUS UNION OF INDIA AND 1 OTHER (S) 2019 (9) TMI 529 - GUJARAT HIGH COURT where it was held that Once it is held that the payments made by the petitioner were in the nature of excise duty and were not deposits, the provisions of Section 11B of the Act would be attracted; and having regard to the fact that the amounts in question had not been deposited under protest, the petitioner would be liable to file the claim within the prescribed period of limitation and in the manner prescribed by the statute, viz. in the prescribed format. It is an admitted position that the petitioner has not filed the refund claim within the prescribed period of limitation and hence, the Tribunal was wholly justified in rejecting the claim as being time barred. Appeal dismissed.

Summary

Issues:
1. Liability to pay service tax on commission received from SBI Life Insurance.
2. Rejection of refund claim by lower authorities on the ground of limitation.
3. Applicability of limitation under Section 11B in case of tax paid under mistake of law.

Analysis:

Issue 1:
The appeal involved the question of liability to pay service tax on the commission received from SBI Life Insurance. The appellant, a bank registered under Banking & Financial Services, acted as an agent for SBI Life Insurance and received a commission on sales. The appellant paid the service tax on the commission, believing the liability was on SBI Life Insurance. The appellant filed a refund claim as the actual liability to pay service tax was on the insurance company. The Tribunal noted that both the appellant and SBI Life Insurance had paid the service tax during 2011-2014. The key argument was whether the limitation under Section 11B applied in this case.

Issue 2:
The lower authorities rejected the refund claim on the ground of limitation under Section 11B. The appellant argued that the service tax was paid under a mistake of law, and hence, the limitation should not apply. The appellant relied on the decision of the Hon'ble High Court of Karnataka in a similar case. However, the Tribunal pointed out that the Karnataka High Court's decision did not consider the Supreme Court's decision in the case of Mafatlal Industries Limited. The Tribunal highlighted that the Gujarat High Court in the case of AJNI INTERIORS had approved the applicability of Section 11B limitation, emphasizing that payments made involuntarily without protest did not qualify as deposits.

Issue 3:
The Tribunal examined the applicability of Section 11B in cases of tax paid under a mistake of law. The appellant's argument that the limitation should not apply in such instances was countered by referencing the Gujarat High Court's decision in AJNI INTERIORS, which was upheld by the apex court. The Tribunal concluded that the limitation under Section 11B was indeed applicable in cases like the present one. Therefore, the appeal was dismissed based on the precedents set by the higher courts regarding the limitation period for refund claims in tax matters.