2023 (7) TMI 259 - AT - Service Tax

Refund of service tax - Period of limitation - Relevant Date - Refund application filed after the favorable decision of Appellate Authority - Applicability of Section 11B read with Section 35F - HELD THAT - The amount in question i.e. of Rs.12,00,290/- alongwith interest of Rs.35,342/- was deposited by the appellant on 09.08.2015, at the stage of investigation itself towards the partial discharge of the liability pointed out by the audit team. Hon ble Apex Court in MAFATLAL INDUSTRIES LTD. VERSUS UNION OF INDIA 1996 (12) TMI 50 - SUPREME COURT has held that the amount paid pending investigation is nothing but the amount paid under protest - the ground of rejecting this amount is that the same cannot be an amount covered under section 35F of Central Excise Act. Hence, section 11 B of the Act shall be applicable for refund of this amount. This section provides a period of limitation and the refund claim is beyond the said period of limitation. The amount of pre-deposit being an amount under section 35 F that the refund thereof under section 35 FF has been ordered by the adjudicating authorities below. However, the amount of Rs.12,00,290/- with interest is not an amount of pre-deposit - No doubt, Hon ble Apex Court in the case of Mafatlal Industries has held that no claim of refund of any duty shall be entertained except in accordance with the provisions of the statute and every claim of excise duty can be made only under and in accordance with section 11 B in the forms provided by the Act. But present is observed to not to be the case of refund of the duty. The Department cannot retain the same and the amount has to be refunded alongwith the interest to the assessee. It is further observed that even if seen through the prism of section 11B of Central Excise Act the period of one year mentioned therein has to reckon from the relevant date. Explanation B in Clause (5) of Section 11B of the Act defines Relevant Date. Sub-clause (ec) thereof clarifies that where the duty becomes refundable as a consequence of judgement decree order or direction of appellate authority Appellate Tribunal or any Court, the date of such judgement decree, order or direction shall be the relevant date. In the present case the refund claim was filed pursuant to the order passed by the Commissioner (Appeals) dated 18.01.2021. The claim was filed on 25.01.2021 i.e. within less than a week of the aforesaid order. The refund of Rs. 12,00,290/- with interest of Rs.35,342 has wrongly been rejected. Department is held liable to refund the said amount also alongwith the interest - the Department is directed to grant interest on the said amount at the rate of 12% from the date of deposit till the date of payment. Appeal allowed.

Summary

Issues:
The issues involved in the judgment are the rejection of a refund claim by the Department and the applicability of Section 11B of the Central Excise Act regarding the refund of a deposited amount.

Rejection of Refund Claim:
The appellant, registered for work contract services, had not paid service tax as a sub-contractor, believing the services were exempted. After depositing part of the tax liability, three Show Cause Notices were issued for demanding service tax. The Original Adjudicating Authority confirmed the proposals of the Notices, but the Commissioner (Appeals) allowed the appeals. The appellant then filed a refund claim, which was rejected as time-barred by the Department, leading to the appeal.

Applicability of Section 11B:
The appellant argued that the amount deposited pending investigation was paid under protest and should be considered a revenue deposit, not duty. The Department contended that the refund claim was beyond the limitation period under Section 11B. The Tribunal referenced previous decisions and held that the amount was a revenue deposit, not duty, and should be refunded with interest. The refund claim was filed within a reasonable time after the order from the Commissioner (Appeals), and the Department was directed to refund the amount with interest.

Conclusion:
The Tribunal set aside the impugned Order, allowing the appeal and directing the Department to refund the deposited amount with interest at the rate of 12% from the date of deposit till payment. The decision was pronounced in open court on 05.07.2023.