2023 (5) TMI 244 - AT - Service Tax

Refund of excess tax paid - rejection on the ground of time limitation - it is claimed that excess service tax was paid under mistake of law - whether in the facts of the case, the refund was hit by the time bar as prescribed under Section 11B of Central Excise Act as made applicable to service tax by Section 83 of Finance Act 1994 or otherwise - HELD THAT - It is an admitted fact that refund has been filed beyond the limitation prescribed under Section 11B as made applicable to service tax. Therefore, the only question is whether there is a provision under the Central Excise law or Finance Act to waive the limitation, within Section 11B, in case the payment of service tax has been made under mistake of law. In the instant case, the appellants were admittedly providing taxable services to M/s HPCL and were raising invoices and paying service tax also from time to time. However, during the period March 2015 to January 2016, M/s HPCL did not honour some of the invoices and appellants did not get any payment. It is also an admitted fact that the appellants, suo-moto, took credit of excess tax paid and since they could not use such credit, they preferred a refund application. What is therefore apparent is that the appellants were providing services, which were otherwise chargeable to service tax as per Finance Act 1994. Non receipt of payment on account of any commercial dispute cannot make such services as exempt services or an activity not amounting to service under the statutory provisions, on which no service tax can be levied or collected - There is also no denial that there was no mistake of law in the sense that the tax was leviable on the categories of services being provided by them and the fact that they have provided such services irrespective of whether they have received the payment or not for some reason. The only ground is that they had not completed the service and hence at that stage at which they paid service tax, they were not liable to pay but they paid. They are not disputing non provision of service nor they are disputing that such services were not attracting service tax. In the case of MAFATLAL INDUSTRIES LTD. VERSUS UNION OF INDIA 1996 (12) TMI 50 - SUPREME COURT , Hon ble Supreme Court has inter alia, observed and held that unless there is any refund becoming due on account of unconstitutionality of the statutory provisions or on account of mistake of law or if it is patently illegal levy , the refund to any amount paid as service tax or otherwise would required to be preferred in accordance with the provisions under Section 11B of the Central Excise Act. The constitutional validity under Section 11B was also upheld. Thus, only under specific circumstances like unconstitutionality, illegal levy, mistake of law etc., a person can take recourse to writ jurisdiction or Contracts Act etc., where the limitation under Section 11B would not be applicable - thus, the refund in this case would squarely be covered by Section 11B as made applicable by Section 83 of Finance Act and therefore if the refund was not filed within the time period prescribed from the relevant date, the refund itself becomes non maintenable irrespective of the merit of the case. The order of Commissioner of Central Tax(Appeals) is liable to be upheld on the grounds of limitation itself and appeal filed by the Appellant is liable to be dismissed. As regards other observations of the Original Authority, rejecting the refund claim, it is observed that the Original Authority has denied the claim on account of limitations under Section 11B itself, and in addition, has also made certain other observations like lack of jurisdiction, lack of merit, prone to unjust enrichment whereas Commissioner (Appeals) has rejected the appeals of the appellant, only on the ground of limitation under Section 11B. It is apparent that once the Original Authority as well as Appellate Authority has rejected the appeal on ground of limitation itself assuming the jurisdiction under the statute in Finance Act 1994, the other observations and grounds given in the Order-in-Original becomes superfluous and thus infructuous. Appeal dismissed.

Summary

Issues involved:
The issues involved in the judgment are whether the refund claim is time-barred, prone to unjust enrichment, lacks merits, and primarily beyond the scope of the Finance Act 1944.

Summary:

1. The Appellant provided maintenance and repair services to HPCL and paid service tax on invoices. HPCL disputed some invoices, leading the Appellant to reverse invoice income and claim a refund of excess service tax paid. The claim was rejected by the Original Authority and Commissioner (Appeals) on various grounds, including being time-barred and lacking merit.

2. The Appellant argued that the service tax was paid under a mistake of law and should not be subject to the limitation under Section 11B. They cited case laws to support their contention that tax paid under a mistake of law does not attract Section 11B limitations. The Department, however, relied on judgments emphasizing the need for refunds to be within the statutory provisions of the Central Excise Act/Finance Act.

3. The main issue was whether the refund claim was time-barred under Section 11B. The Appellant claimed the excess payment was due to a "mistake of law," citing a Board circular. However, it was noted that the services were provided, invoices issued, and payments received regularly, indicating completion of services and liability for service tax.

4. The judgment referred to the case of M/s Mafatlal Industries Ltd., where the Supreme Court held that refunds must be filed in accordance with statutory provisions unless there are specific circumstances like unconstitutionality or mistake of law. The Appellant's claim did not fall under these exceptions, making it subject to the limitations of Section 11B.

5. The Commissioner of Central Tax (Appeals) upheld the rejection of the refund claim based on limitations under Section 11B. The other grounds for rejection by the Original Authority were deemed superfluous once the limitation issue was decided. The appeal by the Appellant was ultimately dismissed.

6. The judgment highlighted that the Appellant's claim did not meet the criteria for exceptions to the limitations under Section 11B, as the services provided were subject to service tax, and the payments were made based on completed services. The Appellant's reliance on a mistake of law was not deemed sufficient to override the statutory limitations.

7. In conclusion, the appeal filed by the Appellant was dismissed by the CESTAT Hyderabad, upholding the decisions of the lower authorities based on the grounds of limitation under Section 11B.