2023 (11) TMI 1078 - AT - Service Tax

Refund claim - time limitation - claim rejected on the ground of time bar holding that the refund claim has not been filed within one year as is required under section 11B of the erstwhile Central Excise Act - HELD THAT - The bare perusal makes it clear that Section 142(5) of CGST Act, 2017 provides that the refund claim of service tax paid under the existing law (Central Excise Act, 1944) in respect of services not provided shall be disposed of under the existing law and has to be paid in cash. It states that such refund is subject to provisions of sub-section (2) of section 11B of Central Excise Act, 1944 only. In the present case, refund has been rejected on the ground of being filed beyond the period of one year as stipulated in sub-section (1) of section 11B. The contract having been annulled on 9.8.2018, it cannot be expected of the appellant to file the refund claim within a period of one year from the date (6.6.2017) of payment of service tax. Further, section 142(5) expressly states that the limitation provided in sub-section (1) of section 11B is not applicable - Thus it is only in case of unjust enrichment to the appellant that he can be denied the refund of the amount which was available to him under existing/ erstwhile law. The appellant was eligible for Cenvat Credit of the amount paid in terms of Rule 6 (3) of the erstwhile statute had there been no cancellation of the contract for providing the service, the adjudicating authority below have held that the assessee in the present case has not been unjustly enriched. In the present case from the apparent admission for the fact that the agreement for providing service was got cancelled at the stage when no service was yet provided, there remains no scope for any service to be provided in future. Thus, there remains no occasion for any tax liability on the appellant and no authority with the Government to collect such an amount. In view thereof and in view of Article 265 of Constitution of India, the authority cannot retain the said amount. Thus, it is held that there was no reason with the adjudicating authority to invoke section 11 B and the amount was to be refunded notwithstanding anything contrary in the erstwhile law. As it is held that refund claim has wrongly been rejected, the order under challenge is therefore set aside - appeal allowed.

Summary

Issues Involved:
1. Jurisdiction of refund claim.
2. Timeliness under Section 11B of the Central Excise Act.
3. Admissibility of the refund claim.
4. Unjust enrichment.

Summary:

Jurisdiction of Refund Claim: The original adjudicating authority confirmed that the refund claim was filed with the correct jurisdictional authority.

Timeliness Under Section 11B of the Central Excise Act: The refund claim was rejected on the grounds of being filed beyond the one-year period stipulated in sub-section (1) of Section 11B of the Central Excise Act, 1944. The Commissioner (Appeals) upheld this finding. However, Section 142(5) of the CGST Act, 2017, under which the claim was filed, expressly states that the limitation provided in sub-section (1) of Section 11B is not applicable. Therefore, the Tribunal held that invoking Section 11B for rejecting the refund claim was incorrect.

Admissibility of the Refund Claim: The Tribunal noted that the appellant was eligible for a refund under Section 142(5) of the CGST Act, 2017, as the service was not provided due to the cancellation of the contract. The refund claim was admissible as there was no tax liability since no service was rendered.

Unjust Enrichment: The adjudicating authority found that there was no unjust enrichment involved in this case. The Tribunal agreed, stating that the appellant was not unjustly enriched and was entitled to the refund.

Conclusion: The Tribunal set aside the order under challenge, holding that the refund claim was wrongly rejected. The appeal was allowed with consequential relief.