Whether time limit of section 11B applicable for refund of service tax paid erroneously without authority of law?

PJ/CASE LAW/2014-15/2317

Case:-SGR INFRATECH LTD Vs COMMISSIONER OF CENTRAL EXCISE, NAGPUR

Citation:-2014-TIOL-1702-CESTAT-MUM

Brief facts:-Brief facts of the case are that the appellant had entered into a contract with the Nagpur Municipal Corporation for maintenance of street light in the Nagpur City. The activity undertaken by the appellant was of maintenance and repairs of immovable property like street light, electric installation etc. As the activity of maintenance and repairs of goods were made taxable on 01.07.2003. The appellant was under the impression that they are required to pay service tax, they kept paying the service tax till 15.06.2005. Later-on, when they realized that as the street lights are immovable property and they are not required to pay service tax, they filed a refund claim of the service tax erroneously paid by them which was not payable at all. The refund claim was rejected as time barred as prescribed under Section 11B of the Central Excise Act, 1944. Aggrieved by the said order, the appellant is before the tribunal.

Appellant’s contentions:- The learned Counsel appearing on behalf of the appellant submits that in this case provisions of Section 11B of the Central Excise Act, 1944 are not applicable as during the impugned period the appellant was not required to pay the service tax at all. Therefore, whatever service tax paid by them is without the authority of law. In that case, provisions of Section 11B of the Central Excise Act, 1944 are not applicable. To support this contention, he placed reliance on the decision of CCE Bangalore Vs. KVR Construction - 2012 (26) STR 195 (Kar.)=2010-TIOL-89-HC-KAR-STand Hind Agro Industries Ltd. v. CC- 2008 (221) ELT 336 (Del) = 2007-TIOL-811-HC-DEL-CUS.

Respondent’s contentions:-The learned A.R. appearing for the Revenue opposes the contentions of the learned Counsel and supported the impugned order. He submits that all the refund claims are covered by the provisions of Section 11B of the Central Excise Act, 1944 as held by the Hon'ble Apex Court in the case of Assistant Collector Of Cus. V. Anam Electrical Manufacturing Co- 1997 (90) ELT 260 (S.C.) = 2002-TIOL-650-SC-CUS. He further submits that as per the decision of the Hon'ble Apex Court in the case of Miles India Ltd. vs. ASST. Collector of Customs - 1987 (30) ELT 641 (S.C.) = 2002-TIOL-501-SC-CUS, all refund claims are to be filed within the statutory period of limitation. He further submits that even if in this case, it is to be held that the refund claim has to be entertained, that is beyond the jurisdiction of this Tribunal and that can be dealt with only by the Hon'ble High Courts and the Apex Court. Therefore, he prays that the appeal be dismissed.

Reasoning of judgment:-In this case, the first issue to be decided is whether the claim for refund of the service tax filed by the appellant was within the authority of law or not. This fact has not been disputed by the lower authorities and held that the service tax was not payable by the appellant during the impugned period. Therefore, the appellant is entitled for refund of whatever service tax paid by them. In the impugned order, it is held that the service tax paid by the appellant is not payable at the relevant time as there was no levy of service tax on the activity of the appellant. The case law relied upon by the learned A.R. in the case of Anam Electrical Manufacturing Co. (supra) has been dealt with by the Hon'ble High Court of Delhi in the case of Hind Agro Industries Ltd. - 2008 (221) ELT 336 (Del.)wherein the High Court has observed as under:-

"13. It is clear that in Mafatlal Industries the Hon'ble Supreme Court had only talked of refund of duty payable within the meaning of either the Central Excises and Salt Act, 1944 ('Excise Act') or the Customs Act, 1962, as the case may be. In other words when the Hon'ble Supreme Court said that all claims for refund ought to be filed only in accordance with the Customs Act or Excise Act, it obviously did not include payment made under some enactment, which for some reason, had erroneously been made to the Customs authorities. Nowhere did Mafatlal Industries talk of a situation where the refund of a cess paid under the Cess Act, 1985 albeit erroneously, was required to be made under the Excise Act or the Customs Act and under no other enactment. Consequently, the observation in para 4 of the judgment of the Hon'ble Supreme Court in Anam Electrical Manufacturing Co. has also to be understood in the same manner. Para 4 of the said judgment it has been explained that the rules pertaining to refund would not apply where refund is sought of a 'duty levied and recovered under an unconstitutional provision.' It was explained that the period of limitation in such cases would be in terms of the law laid down in Mafatlal Industries. It is obvious that when the Hon'ble Supreme Court talked of 'duty levied and recovered under an unconstitutional provision' the reference was not to a duty of customs or excise. Therefore, to rely upon either Mafatlal Industries or Anam Electrical Manufacturing Co. to deny the claim of the Appellants in this case is entirely misconceived."

The tribunal has considered the decision of the Hon'ble High Court of Delhi in the case of Hind Agro Industries Ltd. (supra) and arrived at adecision that where the service tax has been paid without any authority of law, in that case provisions of Section 11B of the Central ExciseAct, 1944 are not applicable. Therefore, The Hon’ble Court held that in this case the provisions of Section 11B of the Central Excise Act, 1944 are notapplicable as the appellant has paid the service tax which was not payable during the relevant time. Further arguments advanced by thelearned A.R. that this Tribunal has not authority to sanction the refund claim, they find that as per Section 35B of the Central Excise Act, 1944, ifany person aggrieved by the order of the Commissioner (Appeals) can filed an appeal before this Tribunal. Obviously, the appellant beforethem is aggrieved by the order of the Commissioner (Appeals), therefore, the appeal is maintainable. They do not find any merit in the argumentadvanced by the learned A.R. In the nutshell the appeal is allowed. The adjudicating authority is directed to implement this order withinthirty days of its communication.

Decision:-Appeal allowed.

Comment:-The analogy of the case is that service tax is not payable by the appellant as there is no levy of service tax on the activity done by the appellant. Hence appellant is liable to claim the refund of the service tax paid. In this case, the provisions of Section 11B of the Central Excise Act, 1944 are notapplicable as the appellant has paid the service tax which was not payable during the relevant time. Accordingly, the amount claimed as refund is not service tax and so the time limit of section 11B is not applicable.

Prepared by:- Monika Tak

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PJ/CASE LAW/2014-15/2317

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