2021 (10) TMI 335 - AT - Service Tax

Refund of service tax - double payment of service tax was made - refund rejected on the ground of time limitation - applicability of time limitation on tax paid under mistake of law - HELD THAT - The first claim for refund was prior to May 2017 for which the claim was filed on 18/05/2018 which the adjudicating has held as barred by limitation. In respect of the second claim which is relating to the period April 2017 to July 2017 for which the claim was filed on 18.05.2018 was also held to be barred by limitation. The 3rd claim is relating to April 2017, the refund for which was claimed on 18.05.2018, has also been rejected as hit by limitation. In respect of the last claim which is relating to the period July 2016 to April 2017, the claim which is filed on 18.05.2018 has also been held to be barred by limitation, and, these findings have been upheld by the Commissioner(Appeals) in the impugned order. Hon ble High Court of Judicature at Madras in the case of M/S. 3E INFOTECH VERSUS CUSTOMS, EXCISE SERVICE TAX APPELLATE TRIBUNAL, COMMISSIONER OF CENTRAL EXCISE (APPEALS-I) 2018 (7) TMI 276 - MADRAS HIGH COURT has considered an almost identical issue of refund under Section 11B ibid vis- -vis the time prescribed thereunder in respect of refund claims and after considering various decision of both the Hon ble Apex Court as well as other High Courts and it was held that when service tax is paid by mistake a claim for refund cannot be barred by limitation, merely because the period of limitation under Section 11B had expired. The refund claims rejected as time barred in these cases cannot be sustained - appeal allowed - decided in favor of appellant.

Summary

Issues: Refund claims rejected as time-barred under Section 11B of the Central Excise Act, 1944.

Analysis:
1. Refund Claims and Grounds: The appellant made four refund claims for different periods seeking refund of service tax amounts. The reasons for the claims included returning course fees along with service tax for discontinued students, double payment of service tax due to payment timing discrepancies, reversal of receipts due to non-realization of cheques, and credit notes issued for institutional consultancy services.

2. Show-Cause Notices and Orders: The Assistant Commissioner issued show-cause notices proposing to reject the refund claims based on the limitation of time under Section 11B. The appellant replied with detailed submissions and relied on various decisions. However, the Orders-in-Original sanctioned only partial refunds, citing limitation as the primary reason.

3. Appeals and Adjudication: The appellant appealed to the first appellate authority, who confirmed the denial of refunds. The appeals were then filed before the CESTAT Bangalore. During the hearing, both parties presented their arguments, and the decisions relied upon were considered.

4. Limitation Issue: The main dispute revolved around the limitation period under Section 11B. The Orders-in-Original rejected parts of the refund claims on the grounds of being time-barred. The appellant contended that the limitation period should be reckoned from the date of the cause of action, which the lower authorities did not address. Reference was made to a case where a claim for refund paid by mistake was not barred by limitation.

5. Judicial Precedent: The CESTAT Bangalore, following a precedent, held that when service tax is paid by mistake, a claim for refund cannot be barred by limitation, even if the prescribed period under Section 11B has expired. Upholding this principle, the CESTAT set aside the impugned order, allowing the appeals and granting consequential benefits as per the law.

In conclusion, the CESTAT Bangalore ruled in favor of the appellant, emphasizing that refund claims rejected as time-barred under Section 11B cannot be sustained. The judgment highlighted the importance of not barring refund claims paid by mistake, aligning with the legal principles outlined in the Constitution of India regarding the levy and collection of taxes.