Whether refund will be allowed on service tax paid by mistake when refund is beyond the statutory period of limitation.

PJ/CASE LAW/2015-16/2961

Case:- ASSISTANT COMMR. OF S.T., CHENNAI VersusNATARAJ AND VENKAT ASSOCIATES

Citation:- 2015 (40) S.T.R. 31 (Mad.)

Brief facts:- Aggrieved by the order of the learned single Judge dated 20-10-2009 passed in W.P. No. 15357 of 2009 [2010 (249)E.L.T.337 (Mad.)] wherein and by which the writ petition filed seeking for direction to the authorities for refund of the Service Tax, was allowed, the Department has come forward with the present appeal.
The respondent firm, which is rendering architectural services, paid a sum of Rs. 8,67,800/- on 4-7-2005 towards Service Tax for the service rendered for the construction of building in Sri Lanka. Subsequently, it made a claim for refund on 20-9-2006 for which a show cause notice dated 5-10-2006 was issued followed by Order-in-Original dated 23-5-2007 rejecting the claim as time barred and also on the ground that the claim was not in proper format. The appeal filed before the Commissioner of Central Excise (Appeals) was also rejected by order dated 21-11-2008. Hence, the respondent filed Writ Petition seeking for direction to the authorities to refund the amount of Rs. 8,67,800/- along with interest.
The learned single Judge, on consideration of the materials available on record and after hearing the rival submissions, while holding that the claim made for refund was beyond the period of limitation, allowed the writ petition directing the authorities to make refund of the amount payable to the writ petitioner within a period of eight weeks from the date of receipt of a copy of the order. Aggrieved by the said order, the present writ appeal has been preferred by the Department.

Appellant’s contention:- Learned Counsel representing the Department would submit that even if the tax was collected without the authority of law, claim for refund cannot be entertained beyond the period specified in Section 11B of the Central Excise Act, 1944. He would further submit that the respondent has not satisfactorily explained the delay in filing the refund application on its part. It is his further submission that the respondent has chosen to approach this Court without exhausting the alternate remedy available by way of filing an appeal before the CESTAT. According to him, the order of the learned Judge needs to be interfered with.

Respondent’s contention:-The only point urged by the learned Senior Counsel appearing for the respondent is that the amount paid is not a payment of Service Tax but it is a deposit from the assessee and hence, the same would have to be refunded irrespective of the bar of limitation provided under Section 11B of the Act.

Reasoning of judgment:-Heard the learned Counsel representing the Department and the learned Senior Counsel appearing for the respondent and perused the records.
The fact remains that the respondent-assessee filed the refund claim for the Service Tax paid in respect of service provided to M/s. HSBC Electronic Data processing Lanka Pvt. Ltd. on the grounds that the said service is to be considered as export of service.
Admittedly, the date of payment was 4-7-2005 and claim for refund was made on 20-9-2006. It is also not disputed that for claiming rebate of Service Tax paid on taxable service exported, the conditions, limitations and procedures prescribed under Notification No. 11/2005-S.T. dated 19-4-2005 should be followed.
From the materials available on record, it is seen that the amounts were credited to the Revenue under the Head of Account “0044-Service Tax” through TR-6 challans, which are purported for payment of Service Tax only and as such, the claim of the respondent that the payment was only deposit and not Service Tax, cannot be sustained. Further, a tax, be it, direct or indirect, is intended for immediate expenditure for the common good of the state and it would be unjust to require its repayment after it has been in whole or in part expended, which would often be the case in most payment of such sort. Therefore, it is impracticable for the authorities to refund applications that are filed beyond time even it is paid under a mistake of law. Therefore, the authorities have rightly rejected the claim of the respondent and this aspect has not been taken note of by the learned single Judge.
Moreover, even the learned single Judge, immediately after narrating the facts, in paragraph 7 of the order has clearly pointed out with regard to the delay and the same is extracted below :-
“Unfortunately, the date of payment, in this case, was admittedly 4-7-2005. The date on which a claim for refund was made, was 20-9-2006, which was obviously beyond the period of limitation. Therefore, at the outset, the rejection of the claim appears to be in tune with the statutory provisions.”
In view of the above, in the facts and circumstances of the case, they are of the considered opinion that respondent is not entitled for refund of the claim and the order of the learned Single Judge needs to be interfered with. Accordingly, the writ Appeal stands allowed and the order of the learned Single Judge is set aside. No costs. Consequently, connected Miscellaneous Petition is closed.

Decision:- Appeal allowed.

Comment:-The analogy of the case is that Architectural services, provided for construction of building in Sri Lanka. This is export of service. In this regard assessee has files refund claim. Refund claim filed by the assessee is beyond period of limitation. Said amount paid by assessee is under Head of Account “0044-Service Tax” through TR-6 challan meant for payment of service tax. Contention of assessee is to be a deposit, not sustainable. Refund claims filed beyond statutory period of limitation, not tenable even if tax is paid under a mistake of law. Refund is not admissible.

Prepared by:- Monika Tak

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PJ/CASE LAW/2015-16/2961

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