2014 (5) TMI 179 - HC - Service Tax

Refund of the Service Tax - Bar of limitation - Held that - From the materials available on record, it is seen that the amounts were credited to the Revenue under the Head of Account. 0044 - Service Tax through TR-6 challans, which are purported for payment of Service Tax only and as such, the claim of the respondent that the payment was only deposit and not Service Tax, cannot be sustained. Further, a tax, be it., direct or indirect, is intended for immediate expenditure for the common good of the state and it would be unjust to require its repayment after it has been in whole or in part expended, which would often be the case in most payments of such sort. Therefore, it is impracticable for the authorities to refund applications that are filed beyond time even it is paid under a mistake of law. Therefore, the authorities have rightly rejected the claim of the respondent and this aspect has not been taken note of by the learned single Judge. - respondent. is not entitled for refund of the claim and the order of the learned single Judge needs to be interfered with - Decided in favour of Revenue.

Summary

Issues:
1. Refund of Service Tax
2. Time limitation for refund claim
3. Nature of payment - Service Tax or deposit
4. Jurisdiction to entertain refund claim beyond limitation

Analysis:

Issue 1: Refund of Service Tax
The respondent firm, providing architectural services, paid Service Tax for services rendered in Sri Lanka. A claim for refund was made but was rejected as time-barred and not in proper format. The respondent filed a writ petition seeking a refund of the amount paid, which was allowed by the single Judge. The Department appealed against this decision.

Issue 2: Time limitation for refund claim
The Department argued that a claim for refund cannot be entertained beyond the period specified in Section 11B of the Central Excise Act, 1944. The respondent's delay in filing the refund application and failure to exhaust the remedy of filing an appeal before CESTAT were highlighted as reasons for interference with the single Judge's order.

Issue 3: Nature of payment - Service Tax or deposit
The respondent contended that the amount paid was a deposit, not Service Tax, and should be refunded regardless of the limitation under Section 11B. However, records showed that the amounts were credited under "Service Tax," indicating the payment was intended for immediate expenditure for the common good of the state.

Issue 4: Jurisdiction to entertain refund claim beyond limitation
The Court noted that the claim for refund was made beyond the statutory period of limitation, as acknowledged by the single Judge. It was deemed impracticable for authorities to entertain refund applications filed beyond the specified time, even if the payment was made under a mistake of law. The order of the single Judge was set aside, emphasizing that the respondent was not entitled to the refund claim based on the circumstances and legal provisions.

In conclusion, the Court allowed the Writ Appeal, setting aside the single Judge's order and denying the refund claim. No costs were awarded, and the connected Miscellaneous Petition was closed.