Time limit for claim of Refunds, Service Tax

[vasudevan unnikrishnan]

The refund procedures are made applicable from Central Excise Act,1944 as per sec 83 of Finance Act,1994.

Section 11B envisages different situations and different Relevant Date for filing of Refund claims.

In certain cases,the tax would have been paid during April or any such month wrongly on amount which is not taxable.

The mistake is noticed much after filing ST3 return and finalising the self assessment.in Oct.It could be even after April next year while finalising the Annual Accounts by the Auditor.In such a case as per section 11B,(f), the claim is to be filed within One year from the Date of Payment of Tax.and not the date of filing ST3 return after self assessment.

When demand can be raised with date of filing return as relevant date,what is the rationale in following date of payment for claiming Refund?.In all fairness,the relevant date should be the same as filing of return/self assessment as adopted for issue of SCN for demand for short payment/non payment in terms of section 73(1).

Expert views are solicited.

Posts / Replies

[MARIAPPAN GOVINDARAJAN]

In such cases we may revoke the writ jurisdiction for getting refund.

[CA Surender Gupta]

I do fully agree with the views expressed in the query. All knows that normal period of limitation for raising demand was one year from the relevant date. Correspondingly, the period for claiming refund was also one year.

Now, the legislatures have increased the normal period of limitation for raising demand from 1 year to 2.5 years whereas the period for allowing refund kept same as one year as earlier.

Therefore following the principle of parity, the legislature must consider to bring the refund period at par with demand period.

On the other hand, we may find number of cases, wherein it was held that once no service tax was due or payable but paid wrongly, it would amount to mere deposit of an amount and not tax and, therefore, the period of limitation would not be applicable. However, contrary views are also there. Hence, facts and circumstances of the case are highly relevant for this purpose.

[Rajagopalan Ranganathan]

Sir,

Explanation (B) of Section 11 B of Central Excise Act, 1944 defines "relevant date' as

"relevant date" means,-

(a) in the case of goods exported out of India where a refund of excise duty paid is available in respect of the goods themselves or, as the case may be, the excisable materials used in the manufacture of such goods,-

(i) if the goods are exported by sea or air, the date on which the ship or the aircraft in which such goods are loaded, leaves India, or

(ii) if the goods are exported by land, the date on which such goods pass the frontier, or

(iii) if the goods are exported by post, the date of despatch of goods by the Post Office concerned to a place outside India;

(b) in the case of goods returned for being remade, refined, reconditioned, or subjected to any other similar process, in any factory, the date of entry into the factory for the purposes aforesaid;

(c) in the case of goods to which banderols are required to be affixed if removed for home consumption but not so required when exported outside India, if returned to a factory after having been removed from such factory for export out of India, the date of entry into the factory;

(d) in a case where a manufacturer is required to pay a sum, for a certain period, on the basis of the rate fixed by the Central Government by notification in the Official Gazette in full discharge of his liability for the duty leviable on his production of certain goods, if after the manufacturer has made the payment on the basis of such rate for any period but before the expiry of that period such rate is reduced, the date of such reduction;

(e) in the case of a person, other than the manufacturer, the date of purchase of the goods by such person;

(ea) in the case of goods which are exempt from payment of duty by a special order issued under sub-section (2) of section 5A, the date of issue of such order;

(eb) in case where duty of excise is paid provisionally under this Act or the rules made thereunder, the date of adjustment of duty after the final assessment thereof;

¹[(ec) in case where the duty becomes refundable as a consequence of judgment, decree, order or direction of appellate authority, Appellate Tribunal or any court, the date of such judgment, decree, order or direction ;]

(f) in any other case, the date of payment of duty.

It is nowhere stated under the above provision that relevant date for calculating the period of one year is from date filing of prescribed return.

It is only under Explanation 1 (b) (1) of Section 11A of Central Excise Act it is provided that relevant date for demanding duty of excise has not been levied or paid or has been short-levied or short-paid, and no periodical return as required by the provisions of this Act has been filed, the last date on which such return is required to be filed under this Act and the rules made thereunder.

Therefore for refund of excise duty /paid /service tax paid the refund claim is to be filed within one year from date of payment of duty/tax.

[YAGAY AND SUN]

We understand that Writ Petition would not work in this matter as Section 11B is the relevant provision in this regard. Nicely explained by Rajagopalan Sir.

[vasudevan unnikrishnan]

Thanks dear experts for valued views.

As stated by all, the discremination in timelimit for demand and refund has to be agitated in the High court by writ only.

Any how ,let us hope the GST provisions may take care of this anomaly.

Thanks again.