2018 (4) TMI 910 - AT - Service Tax

Refund claim - time limitation - appellants paid the service tax and later realized that in view of exemption under Notification No. 13/2003-ST dated 20/06/2003 no tax is payable - whether the time limitation would be applicable to the case, as the said amount is not to be considered as a tax? - Difference of opinion - majority order. Held that - In view of the decision by majority as recorded, time limit prescribed under Section 11B of the Central Excise Act, 1944 will govern claim for refund of service tax - The appeal file is returned to referral bench for a final decision.

Summary

Issues Involved:
1. Applicability of the statutory time limit prescribed under Section 11B of the Central Excise Act, 1944 for refund claims of service tax paid under a mistaken belief.

Detailed Analysis:

Background:
The appellants filed two refund claims for service tax paid on a reverse charge basis for services received from foreign commission agents, taxable under business auxiliary service. They later realized that these services were exempt under Notification No. 13/2003-ST dated 20/06/2003, which exempted business auxiliary services provided by commission agents in relation to the sale or purchase of agricultural produce. The Original Authority rejected the refund claims on the ground of being barred by limitation, and the Commissioner (Appeals) confirmed this rejection. The matter was referred to a Larger Bench due to divergent views in previous Tribunal decisions.

Issue:
"Whether in respect of the claim for refund of illegal levy of Service Tax or of Service Tax collected without authority of law, the statutory time limit prescribed in terms of Section 11B of Central Excise Act 1944 will be applicable or not?"

Arguments by Appellant:
The appellant argued that the amount paid as service tax should be considered a deposit, not a tax, and should be refunded without the limitation period prescribed under Section 11B. They relied on the Tribunal's decision in Monnet International Ltd., which suggested that the time limit under Section 11B is not applicable in certain situations.

Arguments by Revenue:
The Revenue contended that the amount was paid as service tax and must be processed under the statutory provisions of Section 11B. They cited the Supreme Court decision in Mafatlal Industries Ltd., which held that claims for refund of any duty must be made in accordance with the statute, and no authority can act beyond these legal provisions.

Tribunal's Findings:
The Tribunal examined the Monnet International Ltd. case and noted that the situation differed because, in the present case, the services were liable to tax but were exempted by a notification. The amount paid was deposited under a proper service tax head and appropriated by the Government as service tax. The Tribunal held that Section 11B governs the refund of service tax, including the statutory time limit, and no authority can extend this time limit.

Majority Decision:
The Tribunal concluded that the claim for refund of service tax is governed by the provision of Section 11B for the period of limitation. The statutory time limit cannot be extended by any authority, as held by the Supreme Court in various decisions, including Mafatlal Industries Ltd. and XL Telecom Ltd.

Dissenting Opinion:
One member, Ashok Jindal, disagreed, citing decisions by the Bombay High Court in Parijat Construction and SGR Infratech Ltd., which held that the time limit under Section 11B is not applicable to refund claims for service tax paid under a mistake of law. He argued that these High Court decisions are binding on the Tribunal and that the time limit prescribed under Section 11B should not apply to such refund claims.

Final Decision:
In view of the majority decision, the Tribunal held that the time limit prescribed under Section 11B of the Central Excise Act, 1944 will govern the claim for refund of service tax. The appeal file was returned to the referral bench for a final decision based on these findings.

Conclusion:
The Tribunal's majority decision emphasized that the statutory time limit under Section 11B applies to refund claims of service tax, and no authority, including the Tribunal, has the power to extend this time limit. The dissenting opinion highlighted differing High Court rulings that suggested otherwise, but the majority decision prevailed.