Whether limitation applicable for refund of service tax paid by mistake?

PJ/Case Law /2016-17/3426

Case-JUBILANT ENTERPRISES P. LTD. VERSUS COMMISSIONER OF C. EX., MUMBAI-I
Citation- 2014 (35) S.T.R. 430 (Tri. - Mumbai)
Brief Facts:-The appellant is in appeal against the impugned order wherein the refund claim has been rejected by the lower authorities holding that same is barred by limitation.
The brief facts of the case are that the appellant rented their premises to CESTAT, Mumbai and during the period June 2007 to July 2008, they paid service tax on the rent received under the category of renting of immovable property service. However, the CESTAT Mumbai did not pay the service tax to the appellant on the premise that they are seeking clarification from C.B.E. & C. whether they are liable to pay service tax during this period or not. After clarification from the C.B.E. & C. that CESTAT is not required to pay service tax during the impugned period, the appellant claimed refund of the service tax paid during the impugned period on 26-12-2008. The refund claim which was within one year was sanctioned but rest of the refund claim was rejected as time-barred as per Section 11B of the Central Excise Act. Aggrieved from the said order, appellant appeared before the Tribunal.
Appellant’s Contention-The ld. counsel on behalf of the appellant submits that as per the clarification issued by the C.B.E. & C. that the appellant is not required to pay service tax, therefore the provisions of Section 11B of the Central Excise Act, 1944 are not applicable to the facts of this case. Therefore, their claim is not barred by limitation. To support this contention she relied on CCE v. Shankar Ramchandra Auctioneers - 2010 (19) S.T.R. 222 (T).
Respondent’s Contention-On the other hand, ld. AR relied on the decision of Mafatlal Inds. - 1997 (89) E.L.T. 247 (S.C.) wherein it was held that all the refund are governed by Section 11B of the Central Excise Act, 1944.
Reasoning Of Judgement-Heard both sides.
In this case, the appellant has paid service tax during the impugned period for which they are not required to pay service tax at all as clarified by C.B.E. & C. As the payment made by the appellant is not of service tax, therefore, as held by this Tribunal in the case of Shankar Ramchandra Auctioneers(supra) the provisions of Section 11B of the Central Excise Act are not applicable. Therefore, the refund claim filed by the appellant is not time-barred. The case law relied upon by the ld. AR in Mafatlal Inds. (supra) is not relevant to the facts of this case.
In these circumstances, the Tribunal held that the appellant are entitled for refund claim as filed in time and the provisions of Section 11B of the Central Excise Act, 1944 are not applicable to the facts of this case. Accordingly, impugned order was set aside. Appeal was allowed with consequential relief. The Adjudicating Authority was directed to implement the order within 30 days of the communication of the same.

Decision- Appeal allowed.
Comment- The gist of the case is thatthe time limit for filing refund claim prescribed under section 11B of the Central Excise Act, 1944 is not applicable for service tax which was paid by mistake. It was held that when the service tax was not required to be paid, the amount paid cannot be considered as service tax and the government cannot retain it without authority of law. Therefore, it was held that the refund claim was not time-barred in light of the decision given in the case of CCE v. Shankar Ramchandra Auctioneers - 2010 (19) S.T.R. 222 (T).
Prepared By - Praniti Lalwani

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PJ/Case Law /2016-17/3426

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