2019 (5) TMI 515 - AT - Service Tax

Refund of service tax paid wrongly - time limitation - section 11B as made applicable to service tax by Section 83 of the Finance Act, 1994 - HELD THAT - The contractor has already paid the service tax and the appellant was not liable to pay service tax under reverse charge mechanism but has wrongly paid so. Under these circumstances, the payment of the amount as representing service tax is beyond the scope of Finance Act 1994 and therefore no provisions of the Acts including Section 11B and the period of limitation therein or the jurisdiction of the Officers to sanction refund claim applies to the present case. The appeal is rejected as a refund claim under Section 11B of Central Excise Act,1944 read with Section 83 of the Finance Act, 1994 is not maintainable for any amount paid beyond the scope of the Finance Act, 1994 itself.

Summary

Issues:
1. Applicability of limitation under section 11B for a refund claim filed after the due date.

Analysis:

Issue 1: Applicability of limitation under section 11B for a refund claim filed after the due date

The appellant, engaged in exploration of mineral oil and natural gas, availed services from M/s B.J. Services. The appellant paid service tax under reverse charge mechanism, realizing later that it was done erroneously. The appellant filed a refund claim under section 11B of the Finance Act, 1994, beyond the one-year limitation period. The lower authority and the first appellate authority rejected the claim as time-barred. The appellant argued that the refund should not be rejected based on limitation as the tax was paid under a mistake of law. The Department contended that officers have no jurisdiction to sanction refunds for amounts paid beyond the scope of the law. The Tribunal noted that the refund jurisdiction of officers emanates from specific statutory provisions. The Tribunal referenced the case of Mafatlal Industries Limited, where the Supreme Court clarified that in cases where the levy was not under relevant Acts, officers lack jurisdiction to sanction refunds. The Tribunal held that the appellant, not liable to pay service tax under reverse charge, paid erroneously, and the amount was beyond the scope of the Finance Act, 1994. Therefore, the provisions of Section 11B and the limitation period did not apply. The Tribunal upheld the impugned order, rejecting the appeal on the grounds that the refund claim was not maintainable under Section 11B for an amount paid beyond the scope of the Finance Act, 1994. The appellant was advised to pursue alternative remedies as per the law.

In conclusion, the Tribunal ruled that the refund claim filed beyond the limitation period under section 11B was not maintainable due to the payment being beyond the scope of the Finance Act, 1994. The judgment emphasized the jurisdictional limitations of officers in sanctioning refunds for amounts paid outside the purview of relevant Acts, citing the case of Mafatlal Industries Limited. The appellant was directed to seek alternative legal remedies as per the law for the recovery of the erroneously paid amount.