2024 (1) TMI 890 - AT - Service Tax

Refund of the excess service tax paid - rejected on the ground of limitation under Section 11B of the Central Excise Act 1944 - relevant date for computing time limitation - excess tax deposited by the appellant is without any authority of law or not. What would be the relevant date in the present case for computing the period of limitation in terms of Section 11B of the Central Excise Act? - Whether the instant refund application is barred by limitation under the provisions of the Central Excise Act? - HELD THAT - In the present case if the department had not contested the writ petition taking a preliminary objection about the proper remedy of filing an application for refund the High Court would have considered the prayer in the writ petition on merits and in the event the same being decided in favour of the appellant he would have been entitle to claim refund of the duty. It is relevant to refer to the decision of the Karnataka High Court in COMMISSIONER OF CENTRAL EXCISE (APPEALS) BANGALORE VERSUS KVR CONSTRUCTION 2012 (7) TMI 22 - KARNATAKA HIGH COURT where the Department had objected to the maintainability of the writ petition against the rejection of the refund applications as there was alternate remedy of filing an appeal under the statute the High Court held that writ petition could not be rejected on the ground of alternative remedy. So the relevant date in this case would be the date of the order of the High Court i.e.12.12.2017 and not from the date of payment of tax as claimed by the revenue under Clause(f). The application for refund was filed by the appellant on 12.03.2018 i.e. within three months from the date of the order of the High Court and the same being before the expiry of one year as per Section 11B(1) of the Act has to be treated being filed within the prescribed time limit. Thus the refund application is not barred by limitation as in the peculiar facts of the present case the relevant date would be the date of the High Court order i.e., 12.12.2017. Whether the excess tax deposited by the appellant is without any authority of law? - HELD THAT - The service recipient ONGC had made 50% of service tax and consequently the appellant was required to pay the balance 50% only but under mistake that as per the prevailing law their liability is 100% they made the full deposit of 100% thereby making the total deposit of 150% instead of 100%. Thus the department had received excess amount of 50% i.e. Rs 10, 27, 30, 532/- for which they had no authority to retain. The issue that any amount paid over and above the actual duty liability should be considered as deposit which has to be refunded and in such cases limitation prescribed under Section 11B of the Act would not be applicable has been considered in series of decisions by the various High Courts and also by the Tribunal. In the case of M/S CREDIBLE ENGINEERING CONSTRUCTION PROJECTS LTD. VERSUS COMMISSIONER OF CENTRAL TAX HYDERABAD GST 022 (9) TMI 844 - CESTAT HYDERABAD where there was a difference of opinion between the two members regarding the application of limitation under Section 11B for the purpose of refund the matter was referred to the Third Member who opined that if an amount is paid under a mistaken notion as it was not required to be paid towards any duty or tax the limitation prescribed under Section 11B of the Act would not be applicable. The refund application by the appellant cannot be rejected on the ground of delay. There is one more aspect which is to be considered that amount of Rs.10, 80, 68, 227/- was deposited by the appellant under protest . Therefore in terms of the 2ndproviso to Section 11B limitation of one year shall not apply and in that view the refund application cannot be rejected on the ground of limitation being beyond the period of one year. The impugned order rejecting the refund application as time barred is liable to be set aside and the Department is directed to refund the amount as claimed by the appellant in the refund application alongwith proportionate interest. Appeal allowed.

Summary

Issues Involved:
1. Relevant date for computing the period of limitation under Section 11B of the Central Excise Act.
2. Whether the refund application is barred by limitation under the provisions of the Central Excise Act.
3. Whether the excess tax deposited by the appellant is without any authority of law.

Summary:

Issue 1 & 2: Relevant Date and Limitation
The Tribunal considered the "relevant date" for computing the period of limitation under Section 11B of the Central Excise Act. The appellant argued that the limitation period should be computed from the date of the High Court order (12.12.2017), making the refund application filed on 12.03.2018 within the prescribed time limit. The Tribunal agreed, stating that Clause (ec) of Explanation B to Section 11B, which refers to the date of any judgment, decree, order, or direction, is applicable. The Tribunal concluded that the refund application is not barred by limitation as the "relevant date" is the date of the High Court order.

Issue 3: Excess Tax Deposited Without Authority of Law
The Tribunal found that the appellant had deposited 100% service tax under a mistaken notion, although only 50% was required. The excess amount of 50% was collected without authority of law. The Tribunal referred to Article 265 of the Constitution of India, which states that no tax shall be levied or collected except by authority of law. The Tribunal cited several decisions, including those of the Supreme Court and various High Courts, supporting the principle that taxes collected without authority of law must be refunded. The Tribunal concluded that the excess amount paid by the appellant should be refunded, and the limitation under Section 11B does not apply to such cases.

Separate Judgment:
In Service Tax Appeal No. 51218 of 2022, the Tribunal addressed the issue of whether the limitation period should be computed from the date of the order or the date of receipt of the order. The Tribunal held that the "date of such order" means the date of the order itself, not the date of receipt. The Tribunal also reiterated that the limitation under Section 11B does not apply to refunds of amounts paid under a mistaken notion of law. Consequently, the refund application was allowed, and the Department was directed to pay the appellant the amount claimed along with proportionate interest.

Conclusion:
The Tribunal set aside the impugned orders rejecting the refund applications as time-barred and directed the Department to refund the excess amount along with proportionate interest. The appeals were allowed on the grounds that the relevant date for limitation is the date of the High Court order and that the excess tax was collected without authority of law.