2017 (6) TMI 1110 - HC - Service Tax

Jurisdiction - power of tax authorities to collect tax from recipient of service - Whether the Tribunal was correct in allowing the appeal of the revenue after holding that the amount of refund claimed by the appellant herein was collected without the authority of law but such collection was not unconstitutional by an improper consideration? - Held that - the tax Authorities had acted beyond their jurisdiction. The tax Authority, being creature of statute, had no jurisdiction to collect tax from the recipient of service, prior to the date of amendment of the Statute, which, admittedly, was brought about on 18.04.2006 - however, the levy could be construed without authority of law but not unconstitutional - decided in favor of Revenue. Whether the Tribunal was correct in traversing beyond the scope of appeal filed by the revenue, which only contested the application of the period of limitation under the Limitation Act as against the one provided under Section 11B of the Central Excise Act made applicable to the provisions of the Finance Act, 1994? - Held that -, the Tribunal, in the instant case, was exercising powers, as a creature of the statute and therefore, could not have granted any relief to the Appellant/ Assessee, having regard to the nature of its jurisdiction. Appeal dismissed - decided against appellant.

Issues involved:
1. Interpretation of provisions related to service tax refund claims under Section 11B of the Central Excise Act, 1944.
2. Jurisdiction of authorities in collecting service tax from the recipient of service.
3. Correctness of the Tribunal's decision in allowing the appeal of the revenue regarding the refund claim.
4. Applicability of judgments from other High Courts to the current case.

Issue 1: Interpretation of provisions related to service tax refund claims under Section 11B of the Central Excise Act, 1944:

The case involved a situation where the Appellant/Assessee mistakenly paid service tax for a period before a relevant amendment came into effect. The Appellant filed a refund claim under Section 11B of the Central Excise Act, 1944. The Adjudicating Authority dismissed the claim as beyond limitation, but the Commissioner (Appeals) ruled in favor of the Appellant, stating that since the tax was inadvertently remitted, it was not effectively a tax under the Statute. The Tribunal, however, allowed the appeal by the revenue, emphasizing that the levy was without the authority of law but not unconstitutional. The High Court agreed with the Tribunal's conclusion, stating that the Appellant should have filed a suit or writ petition instead of a refund claim under Section 11B.

Issue 2: Jurisdiction of authorities in collecting service tax from the recipient of service:

The High Court noted that the tax authorities had acted beyond their jurisdiction by collecting tax from the recipient of service before the relevant statutory amendment. The Appellant could have sought remedy through a suit or writ petition within the limitation period but chose to file the refund claim under Section 11B. The Court emphasized that the tax authorities had no jurisdiction to collect tax from the recipient before the statutory amendment on 18.04.2006, which inserted Section 66A into the Finance Act, 1994.

Issue 3: Correctness of the Tribunal's decision in allowing the appeal of the revenue regarding the refund claim:

The Tribunal allowed the appeal by the revenue, highlighting that the levy was without the authority of law but not unconstitutional. The High Court agreed with the Tribunal's decision, stating that the Appellant should have pursued a different legal recourse, such as a suit or writ petition, instead of a refund claim under Section 11B. The Court found no grounds for interference with the Tribunal's conclusion, indicating that the Tribunal reached the correct decision based on the circumstances of the case.

Issue 4: Applicability of judgments from other High Courts to the current case:

The High Court addressed the reference to a judgment from the Gujarat High Court but concluded that it would not apply to the current case. The Tribunal's jurisdiction, being a creature of the statute, limited its ability to grant relief to the Appellant. Therefore, the High Court answered the question related to the Gujarat High Court judgment against the Assessee and in favor of the Revenue. The Court reiterated that the Appellant could explore other legal remedies available to seek relief.

In conclusion, the High Court dismissed the appeal, emphasizing that while no relief could be granted in the present jurisdiction, the Appellant could pursue alternative legal avenues to seek relief. The Court highlighted the importance of the correct legal recourse in such matters and suggested that the concerned Court would consider the relief claimed by the Assessee after hearing both sides and assessing the legal position.

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