2025 (1) TMI 350 - AT - Service Tax

Refund claim - payment made by the appellant under protest is applicable to subsequent payments for the same issue - applicability of limitation period under Section 11B of the Central Excise Act, 1944 - interest on the refund amount under Section 11BB of the Central Excise Act, 1944. Refund claim - payment made by the appellant under protest is applicable to subsequent payments for the same issue - HELD THAT - The issue as to whether Service Tax is payable or not on Construction of Residential Complex service was under litigation for quite some time, right from its inception. In the present case, there is nothing to indicate that the Appellants were paying the Service Tax in the normal course. When the enquiries were made, they made two payments of Rs.17,28,454/- on 30.03.2006 and Rs.8,05,266/- on 05.07.2006, filing their under protest letter dated 28.03.2006. Both the payments have been made after this protest letter. No doubt the letter dated 28.03.2006, specifically mentions the payment of Rs.17,28,454 as being done under protest . But the fact remains that the subsequent payment was made only on 05.07.2006 - Filing such a letter clarifies that they are not subscribing to the view of the Revenue that Service Tax is payable. Such letter would have to taken as the one which pertains to all the payments made subsequently, unless the Revenue comes out any evidence to the contrary to the effect that subsequent payment has been made voluntary and is not made under protest. Such evidence is not forthcoming in the Revenue s case here. In the case of M/S NIPHAD SSK LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE, NASHIK 2017 (1) TMI 1024 - CESTAT MUMBAI Tribunal has held that once the Under Protest letter is filed, it would be applicable for the future payments also. Applying the ratio of this case law, it is held that the Under Protest letter filed at the time of the first payment also holds good for the subsequent payments made. The first letter clearly shows the view of the appellant that they are not in agreement with the stand taken by the Revenue. The appellant cannot be denied the refund of the second amount of Rs.8,05,266/-. Grant of interest on the refund in terms of Section 11BB - HELD THAT - In the appellant s own case, in respect of already granted refund of Rs. Rs. 17,28,454, their appeal was before this Bench. Relying on the judgement of the Hon ble Supreme Court in the case of RANBAXY LABORATORIES LTD. VERSUS UNION OF INDIA AND ORS. 2011 (10) TMI 16 - SUPREME COURT , this Bench has held ' The appellant has filed the refund claim on 22.11.2007. Hence after considering the period of 3 month s for processing of this application, the interest would be payable from 22.02.2008 till the date on which the refund has been paid to them.' In the present case, the Revenue has not pointed out any factual difference from the above case. Therefore, the appellant would be eligible for interest from 3 months from the date of their refund claim letter till the refund is granted. Conclusion - The appellants are eligible for refund of Rs. 8,05,266/-. The appellant would be eligible for interest from 3 months from the date of refund claim till the refund is paid. The interest payable would be @12% per annum. Appeal allowed.

Summary

1. ISSUES PRESENTED and CONSIDERED

The core legal questions considered in this judgment are:

• Whether the payment made by the appellant under protest is applicable to subsequent payments for the same issue.
• Whether the refund claim for the amount paid without a specific protest letter is valid.
• Whether the limitation period under Section 11B of the Central Excise Act, 1944, applies to the refund claim.
• Whether the appellant is entitled to interest on the refund amount under Section 11BB of the Central Excise Act, 1944.

2. ISSUE-WISE DETAILED ANALYSIS

Issue 1: Applicability of the Protest Letter to Subsequent Payments

• Relevant Legal Framework and Precedents: The appellant relied on the precedent set in the case of Niphad SSK Ltd. V. CCE, Nashik, where it was held that once a protest letter is filed, it applies to all subsequent payments unless evidence suggests otherwise.
• Court's Interpretation and Reasoning: The court agreed with the appellant's argument that the initial protest letter should cover subsequent payments, as there was no evidence from the Revenue indicating that the second payment was made voluntarily.
• Key Evidence and Findings: The protest letter dated 28.03.2006 was found to be applicable to the payment made on 05.07.2006, as it expressed the appellant's disagreement with the tax liability.
• Application of Law to Facts: The court applied the principle that a protest letter covers subsequent payments, thereby entitling the appellant to a refund of the second payment.
• Treatment of Competing Arguments: The Revenue's argument that the absence of a specific protest letter for the second payment implied voluntary payment was not supported by evidence.
• Conclusions: The court concluded that the appellant's protest letter applied to both payments, and thus, the refund claim for the second payment was valid.

Issue 2: Validity of Refund Claim Without Specific Protest Letter

• Relevant Legal Framework and Precedents: The appellant cited cases such as Indian Cement Ltd. V. Collector of Central Excise, which established that payments made during investigations are deemed under protest.
• Court's Interpretation and Reasoning: The court held that the absence of a specific protest letter does not negate the protest nature of the payment if the matter is under investigation.
• Key Evidence and Findings: The payment was made during an investigation, supporting the appellant's claim that it was under protest.
• Application of Law to Facts: The court applied the principle that payments during investigations are inherently under protest, validating the refund claim.
• Treatment of Competing Arguments: The Revenue's insistence on a specific protest letter was dismissed as unnecessary given the investigation context.
• Conclusions: The court concluded that the refund claim was valid even without a specific protest letter for the second payment.

Issue 3: Applicability of Section 11B Limitation Period

• Relevant Legal Framework and Precedents: The appellant argued that Section 11B does not apply as the amount paid was not a tax but a deposit.
• Court's Interpretation and Reasoning: The court agreed that Section 11B's limitation period does not apply to amounts not collected as tax.
• Key Evidence and Findings: The court found that the amount was paid as a deposit during an investigation, not as a tax.
• Application of Law to Facts: The court applied the principle that deposits are not subject to Section 11B's limitation.
• Treatment of Competing Arguments: The Revenue's argument for applying Section 11B was rejected based on the nature of the payment.
• Conclusions: The court concluded that the limitation period under Section 11B did not apply.

Issue 4: Entitlement to Interest on Refund

• Relevant Legal Framework and Precedents: The appellant cited the case of Ranbaxy Laboratories Ltd. Vs. UOI, which supports interest on delayed refunds.
• Court's Interpretation and Reasoning: The court held that the appellant is entitled to interest on the refund from three months after the refund claim date.
• Key Evidence and Findings: The refund claim was filed on 22.11.2007, and interest is applicable from 22.02.2008.
• Application of Law to Facts: The court applied the law to grant interest at 12% per annum on the refund.
• Treatment of Competing Arguments: The Revenue did not provide sufficient grounds to deny interest.
• Conclusions: The court concluded that the appellant is entitled to interest on the refund amount.

3. SIGNIFICANT HOLDINGS

• Preserve Verbatim Quotes of Crucial Legal Reasoning: "The letter filed towards 'under protest', is to be taken as the assessee's view. Filing such a letter clarifies that they are not subscribing to the view of the Revenue that Service Tax is payable."
• Core Principles Established: A protest letter applies to subsequent payments; payments made during investigations are deemed under protest; Section 11B's limitation does not apply to deposits; interest is due on delayed refunds.
• Final Determinations on Each Issue:
  
  • The appellant is eligible for a refund of Rs. 8,05,266/-.
  • The appellant is entitled to interest from three months after the refund claim date at 12% per annum.
  • The refund and interest are to be paid within eight weeks from the order's communication.