2024 (10) TMI 222 - AT - Service Tax

Refund claims of service tax paid under the Reverse Charge Mechanism (RCM) - time limitation u/s 11B of the Central Excise Act, as applicable to Service Tax - service tax was allegedly paid twice due to a misconception or mistake of law - whether in the given factual matrix, the time limit applicable for claiming refund as per the statutory provisions under Service Tax would be applicable or otherwise, in the event where the Service Tax has been paid under misconception or mistake of law? HELD THAT - There was a very categorical provision, which required paying Service Tax under RCM basis in a particular situation. The Appellant felt that they were falling within the ambit of the said provision and therefore, liable to pay under RCM basis. Therefore, this was not mistake of law. In fact, it was mistake of fact as they were informed about the payment of 100% tax liability later on and it was not an interpretation issue or mistake of law that they ended up paying under RCM basis. From the facts, it appears that they had, at that point of time, rightly interpreted their liability and discharged the same under RCM basis. Therefore, it is not a case of payment under mistake of law rather it is a case of a double payment of tax due to some communication gap or for that matter, due to reconciliation of accounts at a later date between service provider and the Appellant. Be the case as it may, the fact remains that the refund of any nature has to be within the four walls of statutory provisions governing the grant of refund, which may arise on account of various situations including mistake of law or mistake of fact. The question is under what circumstances the limitation would not be applicable while considering the claim filed by the claimant before the statutory authority, who is a creature of statute and has to examine the claim within the provisions of the statute itself. The statute has clearly provided for limitation within which a claim can be filed and the authority in power to consider and grant such refund has to consider the claim within the provisions of statute itself and has no power to allow any refunds outside the statutory provisions governing limitation. It is settled position that the authorities created by the statute are the creatures of the statute and have to operate within the purview of the said statute under which they have been created. Therefore, the Original Authorities have rightly held that these claims are hit by time limit and therefore, liable to be rejected. There would be applicability of time limit prescribed under the Service Tax and since, admittedly, both the claims have been filed beyond the expiry of time limit, the rejection of the refund claims on this ground does not suffer from any infirmity. Therefore, there is no ground to interfere with the Orders passed by the Commissioner (Appeals) in both the Appeals and the Appeals filed by the Appellant are liable to be rejected. Appeals dismissed.

Summary

Issues Involved:

1. Whether the refund claims for service tax paid under the Reverse Charge Mechanism (RCM) are time-barred under Section 11B of the Central Excise Act, as applicable to Service Tax.
2. Whether the refund claims are admissible on merits, given that the service tax was allegedly paid twice due to a misconception or mistake of law.

Issue-wise Detailed Analysis:

1. Time-Barred Refund Claims:

The primary issue in both appeals was whether the refund claims filed by the appellant were time-barred as per the statutory provisions under Section 11B of the Central Excise Act, 1944, applicable to Service Tax. The appellant argued that the time limit for claiming a refund should not apply since the tax was paid twice under a misconception of law. However, the Original Authority and the Commissioner (Appeals) concluded that the refund claims were filed beyond the statutory period of one year, rendering them inadmissible due to being time-barred. The Commissioner (Appeals) relied on various judgments, including those of the Hon'ble Supreme Court, which emphasized the statutory restriction on the time limit for filing refund claims. The Tribunal upheld this view, noting that statutory authorities must operate within the confines of the statute, and the limitation period prescribed under the statute must be adhered to, regardless of whether the payment was made under a mistake of law or fact.

2. Admissibility on Merits:

Regarding the merits of the refund claims, the appellant contended that they paid service tax twice due to a misconception that their service provider was an Association of Persons (AOP) and not a Private Limited Company. This led them to discharge 50% of the service tax liability under RCM, which they later realized was unnecessary as the service provider had already paid 100% of the service tax on a forward charge basis. However, the Original Authority found no sufficient evidence to support the appellant's claim that the service provider had fully discharged the service tax liability on a forward charge basis. Consequently, the refund claims were rejected on merits as well. The Tribunal noted that the appellant failed to provide substantive grounds or additional evidence to challenge this finding effectively. Therefore, the rejection of the refund claims on merits was upheld.

Conclusion:

The Tribunal dismissed the appeals, affirming the decisions of the lower authorities. It held that the refund claims were rightly rejected as time-barred under Section 11B of the Central Excise Act, and on merits, due to insufficient evidence of double payment. The Tribunal emphasized that statutory provisions concerning refund claims, including the limitation period, must be strictly adhered to, even in cases involving payments made under a mistake of law or fact.