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TMI Blog2013 (10) TMI 1162X X X X Extracts X X X X X X X X Extracts X X X X ..... 1944, requiring the service recipient to pay service tax, was not within the authority of law as provided in Section 65 (105) and section 66 of the Finance Act, 1994 which imposed levy only on the service provider. The court upheld the argument of the M/s. Indian National Ship Owners Association vide order dated 11-02-2008 [2009 (13) S.T.R. 235 (Bom.)]. The Union of India filed appeal against the said decision of the Hon. Bombay High Court and the Hon. Apex Court dismissed the appeal filed by Union of India vide order dt. 14.12.2009 [2010 (17) S.T.R. J57 (S.C.)]. 4. After the Hon. Apex Court pronounced its decision in the case of Indian National Ship Owners Association (supra), the respondent filed a refund claim on 5.5.2010 claiming refund of service tax amount of Rs.22,79,812/- paid by them on services received by them during the period 01-04-05 to 17-04-05. The said refund claim was rejected by the adjudicating authority on the ground that it was filed much after one year from the dates of payment of tax and hence time-barred under section 11B of the Central Excise Act, 1994 which is made applicable for the purpose of refund of service tax vide section 83 of the Finance Act, 19 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e respondent had not agitated about such payments and the decisions of the Bombay High Court and the Apex Court based on which now refund is being claimed was not a case in which respondent was a party and consequently the respondent cannot claim the benefit of the litigation pursued by another party much after the time limit prescribed under the Finance Act,1994 for getting any refund of taxes already paid. It is also argued that the courts have not ruled neither that provisions of Finance Act 1994 or Rule 2 (1) (d) (iv) to be un constitutional. The Courts have only held that the Rule was 'without authority of law'. So it is argued that going by the majority view in the case of Mafatlal Industries Ltd. the order of Commissioner (Appeals) is bad in law and hence the same may be set aside. 7. Opposing the prayer of Revenue, Ld. Advocate for the respondent submits that the amount in question was collected without authority of law as is clear from the decision of the Hon. Apex Court in Indian National Ship Owners Association (Supra) and Revenue cannot retain any amount collected without authority of law in view of Article 265 of Constitution of India. According to him, in this case, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... revenue has not raised this ground in proceedings before lower authorities. 11. I have considered arguments on both sides. The law relating to refund of taxes has been a matter on which conflicting decisions of courts are available. The law relating to such refund of Customs and Excise duties has undergone considerable change through enacted law like Central Excises and Customs Law (Amendment) Act, 1991 [Act 40 of 1991] and through judicial pronouncements. Since the decision of the Apex Court in the case of Mafatlal Industries Ltd, comprehensively examined 'significant questions concerning the refund of Excise and Customs duties collected contrary to law - in all its shades' as stated in the first paragraph of the order, the earlier decisions of the Courts in the matter stands overruled and a new law was laid down in this decision by a nine member Bench. So I do not consider it necessary to discuss decisions prior to this decision. When conflicting decisions are cited it is only proper that decision is taken on the basis of the Apex Court and that of the largest bench and the Apex Court and the most recent judgement of the Apex Court. Once I adopt these criteria, I am bound by th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rdingly overruled herewith. [para 70 of the order] 12. The Court had also considered the matter of levies which were declared to be unconstitutional. Part of Para 68 and 69 of the majority order is reproduced below: 68. In the face of the express provision which expressly declares that no claim for refund of any duty shall be entertained except in accordance with the said provision, it is not permissible to resort to Section 72 of the Contract Act to do precisely that which is expressly prohibited by the said provisions. In other words, it is not permissible to claim refund by invoking Section 72 as a separate and independent remedy when such a course is expressly barred by the provisions in the Act, viz., Rule 11 and Section 11B. For this reason, a suit for refund would also not lie. Taking any other view would amount to nullifying the provisions in Rule 11/Section 11B, which, it needs no emphasis, cannot be done. It, therefore, follows that any and every claim fore fund of excise duty can be made only under and in accordance with Rule 11 or Section 11B, as the case may be, in the forums provided by the Act. No suit ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... should really be made to the persons who have actually borne its burden - that would be economic justice. Conferring an unwarranted and unmerited monetary benefit upon an individual is the very anti-thesis of the concept of economic justice and the principles underlying Articles 38 and 39. Now, the right to refund arising as a result of declaration of unconstitutionality of a provision of the enactment can also be looked at as a statutory right of restitution. It can be said in such a case that the tax paid has been paid under a mistake of law which mistake of law was discovered by the manufacturer/assessee on the declaration of invalidity of the provision by the court. Section 72 of the Contract Act may be attracted to such a case and a claim for refund of tax on this score can be maintained with reference to Section 72. This too, however, does not mean that the taxes paid under an unconstitutional provision of law are automatically refundable under Section 72. Section 72 contains a rule of equity and once it is a rule of equity, it necessarily follows that equitable considerations are relevant in applying the said rule - an aspect which we shall deal with a little later. Thus, w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion prescribed under the Limitation Act. Such assessee should prove the necessary ingredients to enable him to claim the benefit under Section 72 of the Contract Act read with Section 17 of the Limitation Act. [Dulabhai's case (supra) - Para 32 - Clauses (4) and (5)]. 138.?It should be borne in mind, that in all the three categories of cases, the assessee should prove the fundamental factor that he has not 'passed on' the tax to the consumer or third party and that he suffered a loss or injury. This aspect should not be lost sight of, in whatever manner, the proceeding is initiated - suit, Article 226, etc. 14. The view of Justice Ahemedi as recorded in paras 104 and 105 of the order is to the effect that claim by one person based on decision of a Court given in respect of another litigant can accrue only if the earlier assessment or order in respect of person claiming refund is specifically recalled and annulled in accordance with law and no automatic refund will follow. 15. As regards the decision in the case of Nataraj and Venkat Associations relied upon by the Advocate for respondent it is to be noted that this decision is by a Court exercising writ jurisdiction. The decisio ..... 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