2023 (9) TMI 928 - AT - Service Tax

Refund claim - rejection on the ground of limitation and unjust enrichment - reverse charge mechanism - HELD THAT - The Hon ble Karnataka High Court in the case of COMMISSIONER OF CENTRAL EXCISE (APPEALS) BANGALORE VERSUS KVR CONSTRUCTION 2012 (7) TMI 22 - KARNATAKA HIGH COURT have held that no limitation is applicable for refund of tax paid under mistake. Further the Larger Bench of this Tribunal has held that under such facts and circumstances where tax is paid by mistake no limitation is applicable. Further it is found that admittedly it is the appellant who has borne the tax. Admittedly the appellant have paid the part of tax by challan and part of the tax has been deducted by the Rajasthan Housing Board from their bills and deposited under RCM. Accordingly the appellant is entitled to the refund under dispute. The Commissioner (Appeals) have erred in travelling beyond the scope of show cause notice by observing that RHB may have availed the cenvat credit and further observing that the appellant have not challenged self-assessment at any point of time and further it is found that the where the tax is paid under mistake and the same has been accepted by the Revenue there is no question of filing appeal against such self-assessment. Moreover the Revenue have entertained the claim of appellant and adjudicated the same on merits. The Adjudicating Authority is directed to disburse the refund within a period of 45 days from the date of receipt of copy of this order along with interest as per rules - appeal allowed.

Summary

Issues Involved:
- Whether the refund claim by the appellant has been rightly rejected on the ground of limitation and unjust enrichment.

The appellant had constructed residential houses for EWS and LIG societies and deposited service tax by mistake. The appellant claimed refund on the grounds that the construction was exempted and they had borne the tax incidence. The lower authorities rejected the refund on limitation and unjust enrichment, not on merits. The appellant filed a refund claim after realizing the mistake, but it was rejected by the Assistant Commissioner and upheld by the Commissioner (Appeals).

The appellant argued that they had borne the tax incidence as per the work orders and that the service tax paid was a mistake. They cited relevant case laws and rulings to support their claim that they were entitled to the refund. The appellant's position was that they had paid the tax through challans and RHB had deducted the tax under reverse charge mechanism, totaling the refund amount claimed.

Regarding the issue of limitation, the appellant relied on court rulings to argue that no limitation applies for claiming a refund of tax paid under mistake. They cited cases where it was held that the amount paid under mistake takes the form of a revenue deposit and does not partake the character of tax, thus not being subject to limitation. The appellant also referred to a Tribunal ruling where it was held that the limitation prescribed under the Act would not be applicable if the amount was paid under a mistaken notion.

The Tribunal found that the appellant had borne the tax incidence and was entitled to the refund under dispute. The Commissioner (Appeals) was criticized for going beyond the scope of the show cause notice and making observations not relevant to the case. The Tribunal allowed the appeal, set aside the impugned order, and directed the Adjudicating Authority to disburse the refund within 45 days along with interest as per rules.