2017 (9) TMI 1492 - AT - Service Tax

Refund of service tax paid, which was not required to be paid - rejection on the ground of time limitation - Held that - Since it is undisputed that appellant is not required to discharge the service tax liability under the reverse charge mechanism on these two services by virtue of N/N. 25/2012, cannot be equated as payment of duty/service tax liability, lest, it should be put through rigorous of provisions of Section 11B of the CEA, 1944 - provisions of Section 11B will not get attracted to payments made by the appellants - refund to be allowed - appeal allowed - decided in favor of appellant.

Summary

Issues:
Refund claim rejection on grounds of limitation under Section 11B of the Central Excise Act, 1944.

Analysis:
The appellant, a service tax registrant, availed services under various categories and discharged service tax liability under the reverse charge mechanism. The appellant filed refund claims after noting that they were not required to pay service tax, which were partially sanctioned by lower authorities. However, a portion of the claim was rejected based on limitation under Section 11B. The First Appellate Authority upheld the rejection. The appellant argued that as they were not liable to pay service tax, the amounts paid should be considered as a deposit and refunded, contending that limitations under Section 11B should not apply. The appellant cited legal precedents to support their argument.

The Departmental Representative maintained that the appellant, being a regular service tax payer, should have not paid under the reverse charge mechanism and if paid, refund claims should have been filed within the prescribed time limit under Section 11B. The Tribunal considered both sides' submissions and the records. It noted that the appellant was not required to discharge service tax liability under certain categories, as evidenced by the partial refund claims allowed. The Tribunal held that since the appellant was not obligated to pay service tax under the reverse charge mechanism, the provisions of Section 11B should not apply to the payments made by the appellant. The Tribunal referenced a decision where it was established that when an amount not payable is paid, Section 11B does not apply.

In a similar case, the Tribunal found that the appellant had paid service tax under a misconception of law or in good faith, leading to a refund claim rejection based on Section 11B. The Tribunal ruled that it was not a case of refund of tax but a return of deposit, for which the limitation under Section 11B did not apply. Therefore, the Tribunal set aside the orders and directed the Commissioner to return the deposited amount. Consequently, the impugned order was set aside, and the appeal was allowed with any consequential relief.

In conclusion, the Tribunal ruled in favor of the appellant, holding that the limitation under Section 11B of the Central Excise Act, 1944, should not apply to the refund claims as the appellant was not required to pay service tax under the reverse charge mechanism. The Tribunal emphasized that when an amount not liable to be paid is paid, the provisions of Section 11B do not get attracted.