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TMI Blog2025 (3) TMI 1322X X X X Extracts X X X X X X X X Extracts X X X X ..... construction (EPC)' of a fifteen storied building in the Bandra-Kurla Complex (BKC) and with payment of Rs. 100,00,00,000 received for work done before the piling and Rs. 144,00,00,000 as mobilization advance. Tax liability of Rs. 4,24,86,205 was discharged on the first of the amounts on 1st February 2013 and in relation to which running bills for Rs. 105,37,30,369 were raised on 31st March 2012 culminating in discharge of differential tax liability of Rs. 3,42,463 on 23rd March 2013. The 'mobilization advance' remaining after adjustment towards additional dues of Rs. 5,37,30,369 above, with interest thereon of Rs. 1,59,38,424 as on 5th August, 2013, was returned to the principal in accordance with deed of cancellation and settlement dated 25th September 2014. The tax of Rs. 7,19,51,563 paid on this amount, except Rs. 4,35,106 that had been rejected in dispute over the claim for refund, is the bone of contention in this appeal. 3. According to Learned Counsel for the appellant, Commissioner of GST and Central Excise (Appeals-II), Mumbai had negated the sanction solely by allowing the contention of the jurisdictional Commissioner of Service Tax that the decision of the Tribunal in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in re Madhavi Procon Pvt Ltd, holding that '4. Heard both sides and perused the case records. The issue involved in the present proceedings is as to whether amount of Rs. 19,11,331/- paid by the Respondent should be considered as payment of 'duty' or an amount paid as 'deposit'. From the facts available on records Service Tax was paid on the amount of advances received by the Respondent but ultimately no service could be provided as the said works contract got terminated. In the case of Addition Advertising v. UOI (supra) jurisdictional Gujarat High Court has, inter-alia, held that if no service is provided then there is no Service Tax. It means that once service is not rendered then no Service Tax is payable. Similarly Karnataka High Court in the case of CCE, Bangalore v. Motorola Private Limited (supra) held that any duty paid by mistake cannot be termed as 'duty'. Similar view has been taken in the other case laws relied upon by the Respondent. In view of the above, it has to be held that the amounts paid by the Respondent cannot be termed as payment of duty but has to be considered as a 'deposit' to which provisions of Section 11B of the Central Excise Act, 1944 will not be a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y was required to be made under the Excise Act or the Customs Act and under no other enactment. It was clearly held that judgment of Mafatlal Industries Ltd. (supra 1) is of no assistance in a case where tax is erroneously paid as a mistake of law.' He contended that Tribunal holding, in Larsen & Toubro Ltd v. Commissioner of Service Tax, Delhi [2013 (32) STR 410 (Tri. - Del.)], that '14. On principle and in the light of the observations of the Delhi High Court in Puri (P.C.), we are of the considered view that wherever pursuant to a conflict opinion in a decision by a Division Bench, the conflict is referred to a Third Member of this Tribunal for resolution, the resultant judgment must be considered the judgment of a Full Bench, as if it were a judgment of a Larger Bench (three ld. Member) sitting en banc.' lent the decision of the Tribunal in re Credible Engineering Construction Projects Ltd force of ruling by Larger Bench. 7. Learned Authorised Representative submitted that the liability to be taxed on 'mobilization advance' could not be disputed as Point of Taxation Rules, 2011 specifically fastened tax liability on date of receipt and that the payment having been made wit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Act, 1994, incorporate 'to be provided' and is not restricted to 'provided' or 'rendered'. Therefore, it can be construed that Point of Taxation Rules, 2011, though envisaging tax liability on consideration received an advance, cannot be perceived as the original expression of legislative intent as any comprehensive statutory instrument is bound to encompass the existing provisions; this is particularly so, as, till the notification of the said Rules, tax was levied on 'receipt' basis and not on 'accrual' basis. The recognition of this principle did not derogate from the inclusion of 'advance' payments in the grouping of 'receipts' that were always liable to tax. We are not convinced by the arguments, put forth on behalf of Revenue, that the amendment to Rule 6(1) of Service Tax Rules, 1994 or the incorporation effected in Section 67 of Finance Act, 1994 were intended to tax all payments at the time of receipt. From a plain reading of the newly inserted Explanation in the Service Tax Rules, 1994, it would appear that intent was to ensure the distribution of the said advances to the month, quarter or such other period to which the rendering of service could be attributed. The Expl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f contracted amount for the entirety of the work. The 'mobilization advance' is adjusted against the final payment due and is not linked to the work but as a pledge of the contract between the appellant and principal. It is also subject to furnishing of prescribed 'bank guarantee'; there is no connection with the performance of the contract. It is not in dispute that the 'mobilization advance', carrying interest, is granted to enable the contractor to prepare for undertaking the contracted work. The subsequent adjustment with the final payment due does not suffice to construe this as an advance payment for the work to be done merely because the recipient and payee happened to be the provider of service. The payment of 'mobilisation advance' is but a separate financial transaction within the contract for providing of service and, within the limits laid down by the Hon'ble Supreme Court in re Intercontinental Consultants and Technocrats Ltd., is not permitted to be included in the 'gross amount' envisaged in Section 67 of Finance Act, 1994. We may also like to emphasise here that the issue of 'mobilisation advance', especially in the examination of its nature, has not been considered ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ise Act, 1944 was approved by the Hon'ble High Court of Telangana in disposing off appeal of Revenue in re Credible Engineering Construction Projects Ltd. The decision of the Tribunal in re Benzy Tours & Travels Pvt Ltd, and relied upon by the first appellate authority, though holding that period of limitation prescribed in section 11B of Central Excise Act, 1944 would apply even to refund of service tax paid by mistake of law, was, in re Oil India Limited, held by the Tribunal to be inconsistent with the decision of the jurisdictional High Court in Parijat Constructions v. Commissioner of Central Excise, Nashik [2018 (9) GSTL 8 (Bom)]. In re Parijat Constructions, the decision of the Hon'ble High Court in Hindustan Cocoa Products v. Union of India [1994 (74) ELT 525 (Bom.)] and in Commissioner Central Excise, Nagpur v. M/s. SGR Infratech Ltd [central excise appeal no. 26 of 2014 dated 28th October 2015] were relied upon besides drawing support from the decision of the Hon'ble Supreme Court in Collector of Central Excise, Chandigarh v. Doaba Co-Operative Sugar Mills [1988 (37) ELT 478 (SC)] acknowledging exception to general prescription of confines of section 11B of Ce ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . A similar view has been taken by the Hon'ble High Court of Judicature at Bombay in the matter of Parijat Construction v. Commissioner Excise, Nashik, reported in 2018 (359) ELT 113 (Bom.) by holding that limitation prescribed under Section 11B of Central Excise Act, 1944 not applicable to refund claims for Service Tax paid under mistake of law. The relevant paragraphs of the said decision are reproduced as under:- "5. We are of the view that the issue as to whether limitation prescribed under Section 11B of the said Act applies to a refund claimed in respect of service tax paid under a mistake of law is no longer res integra. The two decisions of the Division Bench of this Court in Hindustan Cocoa (supra) and Commissioner of Central Excise, Nagpur v. M/s. SGR Infratech Ltd. (supra) are squarely applicable to the facts of the present case. 6. Both decisions have held the limitation prescribed under section 11B of the said Act to be not applicable to refund claims for service tax paid under a mistake of law. The decision of the Supreme Court in the case of Collector of C.E., Chandigarh v. Doaba Co-Operative Sugar Mills (supra) relied upon by the Appellate Tribunal has in ap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r of Javed Akhtar v. CGST, Mumbai West; [2021] 132 taxmann.com 166 (Mumbai - CESTAT) in Service Tax Appeal No. 85611 of 2019, vide order dated 9-11-2021 has held that retention of any amount by the department which was paid by the appellant therein without any liability or in excess of the liability violates Article 265 of the Constitution of India." 11. This consistent view of the Tribunal flows from the nature of tax liability intended to be levied under Finance Act, 1994 and the manner in which section 11B of Central Excise Act, 1944 has been made applicable thus 'Section 83. Application of certain provisions of Act 1 of 1944.- The provisions of the following sections of the Central Excise Act, 1944, as in force from time to time, shall apply, so far as may be, in relation to service tax as they apply in relation to a duty of excise :- sub-section (2A) of section 5A, sub-section(2) of section 9A, 9AA, 9B, 9C, 9D, 9E, 11B, 11BB, 11C, 12, 12A, 12B, 12C, 12D, 12E, 14, 15, 15A, 15B, 31, 32, 32A to 32P, 33A, 35EE, 34A, 35F, 35FF, to 35O (both inclusive), 35Q, 35R, 36, 36A, 36B, 37A, 37B, 37C, 37D, 38A and 40.' 12. In disputes over refund of duties of central excise, it has been c ..... X X X X Extracts X X X X X X X X Extracts X X X X
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