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TMI Blog2019 (8) TMI 387X X X X Extracts X X X X X X X X Extracts X X X X ..... MBAY HIGH COURT] have held that recipient of service in India is not liable to pay service tax under reverse charge mechanism before 18.04.2006. The refund claim of erroneous payment of service tax will not fall outside the purview of the central excise statute. Since, the disputed amount of service tax was paid by the respondent and collected by the authorities under the Act by placing wrong interpretation of the statutory provisions, such collection or levy will be termed as illegal levy - In such case, the refund claim arises under the provisions of the Central Excise Act, 1944 made applicable to service tax matters inasmuch as such situation in contemplated by and provided in the said Act. Thus, the provisions of Section 11B ibid squarely apply to the case in hand for necessary compliance by the respondent. Since, the refund application was not filed within the stipulated time frame of one year from the relevant date, the original authority had correctly rejected such claim application. Appeal allowed - decided in favor of appellant-Revenue. - Service Tax Misc. Application (Stay) No. 92538 of 2017 in Service Tax Appeal No. 86536 of 2017 - A/86342/2019 - Dated:- 5-8-2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mbay High Court in the case of Indian National Ship Owners Association, which was subsequently confirmed by the Hon'ble Supreme Court in the judgment dated 14.12.2009, holding that effective date of payment of service tax by the service recipient on foreign remittances should be from 18.04.2006, the respondent had filed the refund application in the prescribed format on 09.08.2010 before the jurisdictional service tax authorities, claiming refund of above amount of service tax along with interest paid by it. The department initiated show cause proceedings against the respondent, seeking for rejection of the refund application, which was culminated into the adjudication order dated 04.08.2011. In the said order, the original authority had confirmed the proposals made in the show cause notice, holding that the refund claim was time barred and that the respondents had already availed Cenvat credit of the service tax amount paid by it. On appeal, the learned Commissioner (Appeals) vide the impugned order dated 16.03.2017 has allowed the appeal filed by the respondent, holding that the period of limitation under Section 11B of the Central Excise Act, 1944 would not be applicable. Ho ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ctor of Customs-1987 (30) E.L.T. 641 (S.C.) (ii) Collector of C.E., Chandigarh Vs. Doaba Co-operative Sugar Mills-1988 (37) E.L.T. 478 (S.C.) (iii) Assistant Collr. of Cus. Vs. Anam Electrical Manufacturing Co.-1997 (90) E.L.T. 260 (S.C.) (iv) Mafatlal Industries Ltd. Vs. Union of India-1997 (89) E.L.T. 247 (S.C.) (v) Assistant Commr. Of S.T., Chennai Vs. Nataraj and Venkat Associates-2015 (40) S.T.R. 31 (Mad.) 4. On the other hand, Shri D.B. Shroff, the learned Senior Advocate appearing for the respondent submitted that in the capacity of recipient of taxable service, the respondent was not liable to pay service tax under reverse charge mechanism prior to 18.04.2006 and since the amount of service tax was wrongly paid pursuant to the direction of the department, the amount so deposited into the Government exchequer should be refunded to the respondent inasmuch as such erroneous payment has no legal sanction for retention and that on claiming of refund of such amount, the statutory authorities should not be adamant on limitation aspect and should allow the refund application. Accordingly, the learned se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... -taxable territory and received by any person located in the taxable territory, the recipient of such service shall be considered as the person, liable for paying the service tax. Consequent upon amendment of the provisions of Rule 2 ibid, there was confusion with regard to payment of service tax by the recipient of service. The department initiated proceedings for recovery of service tax from the service receivers. In the present case, as per the direction of the department and also to avoid any interest liability and future litigation, the respondent had also paid service tax along with interest on the foreign remittances made by it for import of the services. The constitutional validity of the provisions of Rule 2 ibid, fixing the liability for payment of service tax on the recipient of service was challenged by Indian National Shipowners Association in the Hon ble Bombay High Court by way of filing the writ petition. The said petition was disposed of vide judgment dated 11.12.2008 by the Hon ble Court [2009 (13) STR 235 (Bom.)], holding that rules cannot be made to make service recipient liable for payment of tax, when the Finance Act, 1994 has considered the service provider f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... classic case of Mafatlal Industries Ltd. (supra). The issues considered by the Hon'ble Apex Court, relevant for resolving the present dispute are itemized as under: a. Statute levying tax or duty in transgressing the powers and limitations enshrined in the Constitution of India shall be declared as 'unconstitutional levy' and in such eventuality, the refund claim cannot be governed by the provisions of such statute. The claim under such situation is maintainable by virtue of declaration contained in Article 265 of the Constitution of India read with Section 72 of the Contract Act and the limitation period would be calculated as per the provisions of Section 17 of the Limitation Act, 1963. b. Duty or tax paid by the assessee or collected by the authorities under the Act by mis-construction or wrong interpretation of the statutory provisions, then such type of cases will be termed as illegal levy and claim of refund in such cases will be governed under the provisions of the Act. 10. In the present case, the disputed amount of service tax was paid by the respondent for the period from 01.01.2004 to 18.04.2006 under Rule ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... entertained by the original authority under the statutory provisions. Since, the statute clearly mandates that the refund claim has to be lodged within a period of one year from the relevant date, such prescribed time frame has to be strictly adhered to by the authorities functioning under the statute. In this context, the Hon ble Supreme Court in the case of Doaba Co-operative Sugar Mills (supra), have held that in making claims for refund before the departmental authority, an assessee is bound within the four corners of the statute and the period of limitation prescribed there under must be adhered to and that the authorities functioning under the statute cannot place different interpretations and are bound to follow the provision of the statute alone. Further, in the case of Anam Electrical Manufacturing Co. (supra), it has also been held by the Hon ble Supreme Court that statutory time limit not extendable by any authority or court in case of claim filed for refund of duty illegally levied under the statute. Yet, in the case of Miles India Ltd. (supra), it has also been ruled by the Hon ble Supreme Court that the Customs authorities acting under the Act are justified in disall ..... X X X X Extracts X X X X X X X X Extracts X X X X
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