2023 (8) TMI 702 - AT - Service Tax

Refund claim of amount paid under mistake of law - applicability of time limitation as provided under section 11B of Central Excise Act - HELD THAT - It cannot be agreed that in case of mistake of law refund claim could be allowed beyond the period of limitation provided by the section 11B of Central Excise Act, 1944. A nine judge bench Hon ble Supreme Court has in case of MAFATLAL INDUSTRIES LTD. VERSUS UNION OF INDIA 1996 (12) TMI 50 - SUPREME COURT held that the theory of mistake of law and the consequent period of limitation of three years from the date of discovery of such mistake of law cannot be invoked by an assessee taking advantage of the decision in another assessee s case. All claims for refund ought to be, and ought to have been, filed only under and in accordance with Rule 11/Section 11B and under no other provision and in no other forum. Thus, there are no merits in the arguments advanced by the appellant or on his behalf by his counsel. Even if for a moment the argument advanced is accepted then also has to be shown that the amount claimed as refund was paid under mistake of law. Nothing has been produced in respect of payment of this amount as tax with the exchequer and if paid that tax was paid under mistake of law. Even no objection certificate from the builder who might have paid this tax in the exchequer has been produced - If the service tax paid in respect of first unit allocated has been adjusted against the tax due in respect of the second unit then where can be a question about refund to the appellant. No evidence to the contrary has been produced by the appellant. It is also noticed that it is a dispute between the appellant and the builder, two contracting parties. This dispute has to be resolved between two parties to the contract and no refund can be made treating the disputed amount as tax which was never paid to the exchequer. Thus, the appellant even after dismissal of this appeal should be allowed opportunity if he can at any time produce the documents claiming this amount is admissible in refund to him for the reason that this tax was paid under mistake of law - appeal dismissed.

Issues Involved:
1. Refund Claim of Service Tax
2. Limitation Period for Refund Claim
3. Evidence of Service Tax Payment to Government Exchequer
4. Adjustment of Service Tax by Builder

Summary:

1. Refund Claim of Service Tax:
The appellant filed a refund claim seeking Rs. 1,59,339/-, asserting it was service tax paid to the builder, M/s Jaypee Infratech Ltd., for a flat booked under an under-construction project. The initial unit was reallocated, and the amount paid was adjusted against the new unit, leaving a balance claimed as service tax.

2. Limitation Period for Refund Claim:
The refund claim was primarily rejected on the ground of limitation, as it was filed after more than one year from the date of payment of service tax. The appellant argued that refunds paid under a mistake of law are not subject to the limitation period under Section 11B of the Central Excise Act, 1944. However, the Tribunal held that even in cases of a mistake of law, the refund claim must comply with the limitation period provided by Section 11B. The Tribunal referenced the Supreme Court's decision in Mafatlal Industries, which emphasized that all refund claims must be made in accordance with Section 11B, and the limitation period cannot be extended.

3. Evidence of Service Tax Payment to Government Exchequer:
The adjudicating authority found no documentary proof that M/s Jaypee Infratech Ltd. had deposited the claimed service tax amount with the government exchequer. The Tribunal reiterated that without proper evidence of payment to the exchequer, the refund claim is not admissible. The appellant failed to provide necessary documents or a no-objection certificate from the builder confirming the tax payment.

4. Adjustment of Service Tax by Builder:
The service tax paid for the first unit was adjusted against the tax due for the second unit allocated to the appellant. The Tribunal concluded that since the tax was adjusted and not separately paid to the exchequer, no refund from the department arises. The dispute between the appellant and the builder, being a contractual matter, does not warrant a refund claim treated as tax paid to the exchequer.

Conclusion:
The appeal was dismissed due to lack of evidence of service tax payment to the government and the claim being time-barred. However, the appellant was granted liberty to file a rectification application if they could later produce documents proving the tax was paid under a mistake of law.

Operative Part of the Order:
The appeal is dismissed. (Pronounced in open court)

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