2022 (4) TMI 366 - AT - Service Tax

Time Limitation - Works Contract Service - services of execution of works contract involving composite contract, for supply of materials as well as electrical wiring and other works - principles of unjust enrichment - extended period of limitation - HELD THAT - It is found from the impugned order of the First Appellate Authority that the appellant was not liable to pay service tax on works contract up to 01/06/2007 and hence, the collection of the tax/duty amounts to the one without the authority of law, which takes away the case of the appellant from the mischief of limitation prescribed under Section 11B of the Central Excise Act, 1944. The jurisdictional Hon ble High Court of Karnataka in the case of Way2Wealth Brokers Pvt. Ltd. Vs. CCT, Bengaluru 2021 (10) TMI 488 - KARNATAKA HIGH COURT had an occasion to consider the claim of refund of the tax paid when there was no mandate to pay service tax. The denial of refund only on the ground of limitation in the case in hand cannot be sustained and hence, the same is set aside - Appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Eligibility for refund claim based on classification of services under works contract.
2. Time bar limitation for refund claim under Section 11B of the Central Excise Act, 1944.

Analysis:
1. The appellant, an electrical contractor, registered under 'erection, commissioning, and installation,' sought a refund of service tax paid before the introduction of service tax on works contract from 01/06/2007. The First Appellate Authority acknowledged that the appellant's services fell under works contract, making them eligible for a refund based on non-collection of service tax from clients and no passing on of tax incidence. The Revenue accepted this factual finding without challenge. However, the refund claim was rejected on grounds of time bar by the First Appellate Authority.

2. The Appellate Tribunal observed that since the appellant was not liable to pay service tax on works contract before 01/06/2007, the tax collection was without legal authority, exempting the case from the limitation prescribed under Section 11B of the Central Excise Act, 1944. Referring to a Karnataka High Court judgment, the Tribunal emphasized that mistaken payments not falling under duty do not attract Section 11B. The Tribunal highlighted that technical lapses in considering evidence should not be a basis for rejecting refund claims. Relying on precedents, the Tribunal held that the limitation period did not apply in the appellant's case, allowing the appeal and setting aside the denial of refund solely on limitation grounds. The decision granted the appellant consequential benefits as per law.

In conclusion, the Appellate Tribunal ruled in favor of the appellant, allowing the refund claim based on the correct classification of services under works contract and overriding the time bar limitation under Section 11B. The judgment emphasized that mistaken payments not constituting duty do not fall under the limitation provision, ensuring that the appellant received the refund rightfully due to them.