2023 (11) TMI 615 - AT - Service Tax

Rejection of Refund Claim - Exemption from payment of Service Tax towards GTA expenses - transportation of food stuff - reverse charge mechanism - belated filing of the refund claim - Refund claim being hit by time bar in terms of Section 11B or not - violation of principles of unjust enrichment - HELD THAT - The co-ordinate Benches in various cases have held that refund claims filed on account of Service Tax paid by mistake, are not governed by the time limit specified under Section 11B - reliance can be placed in COMMISSIONER OF CENTRAL EXCISE (APPEALS), BANGALORE VERSUS KVR CONSTRUCTION 2012 (7) TMI 22 - KARNATAKA HIGH COURT and M/S. 3E INFOTECH VERSUS CUSTOMS, EXCISE SERVICE TAX APPELLATE TRIBUNAL, COMMISSIONER OF CENTRAL EXCISE (APPEALS-I) 2018 (7) TMI 276 - MADRAS HIGH COURT . Coming to the point raised by the Learned AR with regard to non-addressing of the unjust enrichment by the lower authorities, as observed in the previous paragraphs, the Adjudicating Authority has failed to address this issue. No further Appeal was filed by the Department before the Commissioner (Appeals). The Commissioner (Appeals) has upheld the order passed by the Adjudicating Authority. The Revenue has not filed any Appeal by their grievance, if any about non-addressing of the unjust enrichment issue. This being so, when the Department itself has not addressed this issue at lower stages nor agitated by way of proper Appeal, such submissions made during the Final Hearing cannot be entertained by the Tribunal at this juncture. Therefore, the objection with regard to Unjust Enrichment cannot be sustained. Even otherwise, in the cited decision of the Tribunal in the case of M/S CREDIBLE ENGINEERING CONSTRUCTION PROJECTS LTD. VERSUS COMMISSIONER OF CENTRAL TAX, HYDERABAD GST 2022 (9) TMI 844 - CESTAT HYDERABAD , it is held that Section 11B Provisions are not applicable which would also include the provisions of Unjust Enrichment under Section 11B also not being applicable in respect of such refund cases. Appeal allowed.

Summary

Issues:
1. Classification of biscuits as "Food Stuff" for exemption eligibility.
2. Time-barred status of the refund claim.

Classification of Biscuits:
The Appellant, a biscuit manufacturer, erroneously paid Service Tax on GTA services under the Reverse Charge Mechanism despite an exemption for transporting "food stuff." The Tribunal deliberated on whether biscuits qualify as "food stuff" for exemption. The Appellant argued based on precedents and Tribunal orders that biscuits are indeed classified as "food stuff." The Tribunal cited a case where edible biscuits were unequivocally considered food items, dismissing the Revenue's argument against their classification as "food stuff." Ultimately, the Tribunal concluded that the issue of biscuits being "food stuff" for exemption did not affect the rejection of the refund claim based on Section 11B time limitations.

Time-barred Refund Claim:
Regarding the time-barred refund claim, the Appellant contended that paying Service Tax by mistake exempts the claim from Section 11B provisions. Citing various case laws, the Appellant argued that when tax is erroneously paid, Section 11B does not apply. The Tribunal referred to cases where refund claims for mistakenly paid taxes were allowed despite time limitations. Notably, a CESTAT decision held that the time limit under Section 11B does not apply when an amount is paid under a mistaken notion and not required as duty/tax. The Tribunal, based on this precedent, ruled that Section 11B time limits did not apply to the Appellant's case, allowing the Appeal with consequential relief.

Final Decision:
The Tribunal found in favor of the Appellant, ruling that biscuits qualify as "food stuff" for exemption and that the time-barred refund claim was eligible for consideration due to the mistaken payment of Service Tax. The Tribunal emphasized that the rejection of the refund claim was solely based on Section 11B time limitations and not on the classification of biscuits. Consequently, the Appeal was allowed with consequential relief as per the law.