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2024 (6) TMI 505 - AT - Service TaxRefund of service tax - challenge to self-assessment for refund claims - principles of unjust enrichment - HELD THAT - The law on the refund claims have been settled by the Supreme Court in ITC LIMITED VERSUS COMMISSIONER OF CENTRAL EXCISE, KOLKATA -IV 2019 (9) TMI 802 - SUPREME COURT that refund can be sanctioned only in pursuance of the assessment made and not de hors the assessment. The principle was laid down in the case of PRIYA BLUE INDUSTRIES LTD. VERSUS COMMISSIONER OF CUSTOMS (PREVENTIVE) 2004 (9) TMI 105 - SUPREME COURT under the provisions of the Customs Act and thereafter, in the case of COLLECTOR OF CENTRAL EXCISE, KANPUR VERSUS FLOCK (INDIA) PVT. LTD. 2000 (8) TMI 88 - SUPREME COURT a case under Central Excise Act. Later, in the case of ITC Limited, the issue considered was whether the refund could be sanctioned without challenging the self assessment and it was conclusively held that all assessments, including self assessments are appealable and therefore, unless the same is modified, no refund could be sanctioned so as to alter the assessment on the principle that refund proceedings are in the nature of execution proceedings and they cannot be used to determine the liabilities of the parties. The appellant paid the service tax voluntarily and in the absence of any challenge the assessment became final. Following the law that refund can be allowed on the basis of the assessment made and assessment cannot be altered in the refund proceedings as they are merely in the nature of execution proceedings, the present refund claim by the appellant is not maintainable without challenging the assessment. The present refund proceedings, which have been filed on the basis of the decision in the case where appellant was not a party and in the absence of any challenge to the assessment, on which he paid the service tax are liable to be rejected. There are no reason to go into the issue of applicability of Section 11 B of the Excise Act - appeal dismissed.
Issues Involved:
1. Limitation period for refund applications. 2. Applicability of the Supreme Court's decision in Calcutta Club Limited. 3. Principle of unjust enrichment. 4. Requirement to challenge self-assessment for refund claims. 5. Applicability of the ITC Ltd. decision to service tax refunds. Summary: 1. Limitation Period for Refund Applications: The appellant filed 11 refund applications of service tax based on the Supreme Court's decision in State of West Bengal Vs. Calcutta Club Limited, which held that clubs were not required to pay VAT and Service Tax on the principle of mutuality. The Department issued show cause notices stating that the refund applications were barred by time u/s 11B of the Central Excise Act, as the service tax was paid lastly on 06.07.2017 for the period 2017-18. The Adjudicating Authority and the Commissioner (Appeals) rejected the refund on the ground of limitation. 2. Applicability of the Supreme Court's Decision in Calcutta Club Limited: The appellant argued that the service tax was deposited under a mistake of law and that the limitation period should start from the date the mistake was discovered. They relied on the Delhi High Court's decision in National Institute of Public Finance & Policy Vs. Commissioner of Service Tax, which held that the one-year limitation period in Section 11B does not apply where the tax was paid erroneously on non-taxable activity. However, the Tribunal held that the appellant's refund claim is not maintainable without challenging the assessment, as per the Supreme Court's decision in ITC Ltd. 3. Principle of Unjust Enrichment: The Department argued that the appellant had collected the service tax from its members, thereby passing the incidence of such tax to another person. The Tribunal did not specifically address this issue, as the refund claim was dismissed on other grounds. 4. Requirement to Challenge Self-Assessment for Refund Claims: The Tribunal emphasized that refund claims are in the nature of execution proceedings and cannot be used to alter the assessment. The Supreme Court in ITC Ltd. held that refund can be sanctioned only in pursuance of the assessment made and not de hors the assessment. The Tribunal followed this principle, stating that the appellant's refund claim is not maintainable without challenging the self-assessment. 5. Applicability of the ITC Ltd. Decision to Service Tax Refunds: The Tribunal noted that there were conflicting views on whether the ITC Ltd. decision applies to service tax refunds. However, the Delhi High Court in B.T. (India) Pvt. Limited clarified that the ITC Ltd. decision applies to service tax refunds, and refund claims must be decided as per the assessment made, including self-assessment. The Tribunal followed this interpretation and dismissed the appellant's refund claim. Conclusion: The Tribunal dismissed the appeal, holding that the refund claim is not maintainable without challenging the assessment, as per the Supreme Court's decision in ITC Ltd. and the Delhi High Court's decision in B.T. (India) Pvt. Limited. The Tribunal did not find it necessary to address the issue of the applicability of Section 11B of the Excise Act or the appellant's contention that they had paid the tax under mistake.
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