2021 (12) TMI 430 - AT - Service Tax

Refund of service tax paid - applicability of time limitation - Section 11B of the Central Excise Act, 1944 read with Section 83 of the Finance Act, 1994 - HELD THAT - The service tax has been paid twice by the appellant for the very same taxable value. Though the department agrees that the earlier payment made by challan dated 05.01.2015 on the service tax registration number of the Tirupur Commissionerate is incorrect, they have neither adjusted the amount nor refunded the amount. Instead, vide letter dated 23.09.2016, the appellant has been directed to make the payment once again. The department has directed to pay the tax again as their inhouse formalities does not allow adjustment of tax wrongly paid towards one Commissionerate to another. The appellant has again paid service tax mentioning the service tax registration of Ahmedabad Commissionerate on 26.09.2016. It is clear that the department has collected service tax twice from the appellant. This is not permissible under law. The rejection of refund on the ground of limitation cannot be justified - Appeal allowed - decided in favor of appellant.

Summary

Issues:
Refund of service tax paid twice by mistake, Time-barred refund claim under Section 11B of the Central Excise Act, 1944 read with Section 83 of the Finance Act, 1994.

Analysis:
The appellant requested cancellation of Centralized Service Tax Registration in Tirupur and obtained a new registration in Ahmedabad. Due to an error, they paid service tax under the old registration number. The department directed them to pay again, rejecting the adjustment request. The appellant filed a refund claim, which was rejected as time-barred. The appellant argued that the department shouldn't retain the excess amount paid by mistake.

The appellant cited legal precedents where refund claims for payments made by mistake were allowed, emphasizing that the department had collected service tax twice from them. The department contended that the time limit under Section 11B applied, as the appellant had discharged the service tax liability, albeit with an error in registration number.

The Tribunal noted that the appellant had indeed paid service tax twice for the same taxable value. Referring to legal judgments, including the Hon'ble High Court of Madras, it held that a claim for refund due to a mistake in payment cannot be barred by limitation. The Tribunal emphasized that retaining the excess amount collected by the department would be against the law.

In conclusion, the Tribunal set aside the rejection of the refund claim based on limitation. The appeal was allowed, with any consequential relief to be provided as per the law. The judgment highlighted the importance of not barring refund claims for payments made in error, ensuring compliance with legal principles and constitutional provisions.

(Pronounced in open Court on 10.12.2021)