2023 (12) TMI 1216 - AT - Service Tax

Refund of the amount paid during investigation but not appropriated by the department after conclusion of such investigation - Refund barred by limitation under the provisions of Section 11B of the Central Excise Act, 1944 or not - HELD THAT - The refund claim filed by the Appellant cannot be rejected on the ground of limitation as what was paid by the appellant was not tax as envisaged under the Finance Act, 1994. Thus, the amount paid by the Appellant would not take the character of tax but is simply an amount paid under a mistake of law. The provisions of Section 11B ibid would, therefore, not be applicable to an application seeking refund thereof. Moreover, since the retention of the amount in issue by the department is without authority of law, the question of applying the limitation prescribed under Section 11B ibid would not arise. For a service to be taxable, it is necessary that the service has to be rendered by one person to another and without a perceived service money contribution cannot be held to be a consideration which is liable to tax. The authority concerned is duty bound to refund such amount as retention of such amount would be in violation of Article 265 of the Constitution of India which mandates that no tax shall be levied or collected except by authority of law. Since Service Tax received by the concerned authority is not backed by any authority of law, in view of the provisions of Article 265 of the Constitution of India, the authority concerned has no right to retain the same. The judgment of MAFATLAL INDUSTRIES LTD. VERSUS UNION OF INDIA 1996 (12) TMI 50 - SUPREME COURT has been considered and interpreted by several judgments including the Karnataka High Court in COMMISSIONER OF CENTRAL EXCISE (APPEALS), BANGALORE VERSUS KVR CONSTRUCTION 2012 (7) TMI 22 - KARNATAKA HIGH COURT , by this Tribunal in the case of M/S. ASL BUILDERS PRIVATE LIMITED VERSUS COMMISSIONER OF CENTRAL GST CX, JAMSHEDPUR 2020 (1) TMI 431 - CESTAT KOLKATA . The said judgments have concluded that statutory limitation periods are not applicable to amounts paid under mistake of law. Thus, it is concluded that the statutory limitation period prescribed under Section 11B is not applicable to the refund claimed by the Appellant since the amount paid by the Appellant is not a tax. The present appeal is allowed.

Summary

Issues Involved:
1. Refund of the amount paid during investigation.
2. Whether the refund is barred by limitation under Section 11B of the Central Excise Act, 1944.
3. Appropriateness of the refund claim form.

Summary:

Refund of the Amount Paid During Investigation:
The Appellant issued a tax invoice and paid service tax, which was later canceled as no services were provided. Following an investigation by the Anti Evasion wing, which concluded in July 2019, the Appellant filed a refund claim on 29.11.2019 for the amount paid against the canceled invoice. The department issued a Show Cause Notice proposing rejection of the refund claim on the grounds of limitation and incorrect form usage.

Whether the Refund is Barred by Limitation Under Section 11B of the Central Excise Act, 1944:
The adjudicating authority rejected the refund claim citing time-bar under Section 11B. The Appellant contended that the amount paid was not a tax but a mere deposit, and thus, Section 11B was not applicable. The Tribunal found that the amount paid by the Appellant did not take the character of tax since no service was provided, and hence, Section 11B's limitation did not apply. The Tribunal emphasized that retaining the amount without authority of law would violate Article 265 of the Constitution of India.

Appropriateness of the Refund Claim Form:
The Appellant argued that non-filing of the claim in the prescribed form was a curable defect. The Tribunal agreed, stating that the refund claim could not be rejected on this ground since the amount in question was not a tax but a deposit.

Legal Precedents and Judgments:
The Tribunal referenced several judgments, including those from the Hon'ble Karnataka High Court in CCE Bangalore vs. KVR Constructions and the Hon'ble Supreme Court, which supported the view that amounts paid under a mistaken notion are not subject to the limitation periods prescribed under Section 11B. The Tribunal also cited judgments from various High Courts affirming that refunds of amounts paid under mistake of law would not be barred by statutory limitation periods.

Conclusion:
The Tribunal concluded that the statutory limitation period under Section 11B was not applicable to the Appellant's refund claim since the amount paid was not a tax. The appeal was allowed with consequential relief as per law. The case laws cited by the departmental representative were distinguished on the basis that they involved appropriation of tax, which was not the case here as the service tax invoice was canceled. The order was pronounced in the open court on 22.12.2023.