2014 (4) TMI 507 - HC - Service Tax

Tribunal's Decision Upheld: Time-Barred Refund Application Dismissed Under Central Excise Act

M/s Andrew Telecom (I) Pvt. Ltd. Versus Commissioner of Customs & Central Excise, Goa

The High Court upheld the Tribunal's decision, ruling that the refund application was time-barred under Section 11B of the Central Excise Act, 1944. The ... Denial of refund claim - Refund of service tax paid under the mistake of law - Appellants paid the service tax on the value of foreign agency commission which they realized - Refund claim filed on the basis of circular of February, 1999 issued by the Central Board of Excise and Customs - assessee paid tax under bona fide belief that such services are covered under Business Auxiliary Services - Held that:- Decision in the case of KVR Construction [012 (7) TMI 22 - KARNATAKA HIGH COURT] distinguished - The last paragraph or some sentences therein cannot be read in isolation. - the Division Bench in upholding the learned Single Judge's observations relied upon the principle that when the amount is deposited with the Department and it does not constitute any demand or payment in accordance with law, then, same deserves to be refunded and while granting and awarding such claim a technical plea of limitation cannot be raised. If the matter was outside the purview of Section 11B, then, the rule of limitation prescribed therein could not have been applied. This judgment is, therefore, clearly distinguishable on facts. The undisputed position is that the amount was paid by the Appellant as service tax. That tax was not imposable or leviable on export of services was a clarification made by the Department and relying on that clarification, the refund of duty or service tax was claimed. This was squarely a case falling within the provisions of the Central Excise Act, 1944 and therefore, the rule of limitation under Section 11B was applied. - That was applied when the application for refund was made invoking Section 11B of the Central Excise Act, 1944. We have no manner of doubt that when this was the provision invoked, same applies with full force including the rule of limitation prescribed therein. - No substantial question of law arises - Decided against assessee. Issues Involved:1. Applicability of Section 11B of the Central Excise Act, 1944 to Export Services.2. Justification of the Tribunal in rejecting the refund of service tax on the ground of limitation under Section 11B.3. Tribunal's reliance on the Supreme Court judgment in Mafatlal Industries Ltd. v. Union of India.4. Consideration of CBEC Circular dated 24.02.2009 and relevant judgments by the Tribunal.Detailed Analysis:Issue 1: Applicability of Section 11B of the Central Excise Act, 1944 to Export ServicesThe Tribunal held that the Assistant Commissioner was correct in rejecting the refund application by applying the bar contained in subsection (1) of Section 11B of the Central Excise Act, 1944. This section mandates that any person claiming a refund must make an application before the expiry of one year from the relevant date. The application for refund in this case was filed beyond this period, making it time-barred.Issue 2: Justification of the Tribunal in rejecting the refund of service tax on the ground of limitation under Section 11BThe Tribunal's rejection of the refund claim was based on the statutory limitation period prescribed under Section 11B. The Tribunal noted that the service tax payments were made during the period 2006-2007 and 2007-2008, with the last payment made on 01.12.2007. Since the refund claim was submitted on 28.04.2010, it was clearly beyond the one-year limitation period. The Tribunal emphasized that the application of the rule of limitation is essential to uphold a larger public interest and provide finality to proceedings.Issue 3: Tribunal's reliance on the Supreme Court judgment in Mafatlal Industries Ltd. v. Union of IndiaThe Tribunal referred to the Supreme Court judgment in Mafatlal Industries to support its reasoning. The Supreme Court in Mafatlal Industries held that claims for refund of duty paid and recovered illegally must be decided in accordance with the Rule of Law, including the provisions of Section 11B. The Tribunal concluded that even if a refund is claimed via a writ petition under Articles 226 or 32 of the Constitution, the statutory provisions like Section 11B must still be adhered to.Issue 4: Consideration of CBEC Circular dated 24.02.2009 and relevant judgments by the TribunalThe Commissioner (Appeals) had allowed the refund by considering the CBEC Circular dated 24.02.2009, which clarified that the appellant's activity amounted to export of services, and thus, no service tax was payable. The Commissioner (Appeals) also relied on various judgments, including those from the Madras High Court and the Supreme Court, which held that the time bar under Section 11B does not apply to amounts collected erroneously. However, the Tribunal reversed this decision, emphasizing that the refund application was time-barred under Section 11B, and such statutory provisions cannot be overridden by circulars or judicial interpretations in the context of the facts of this case.Conclusion:The High Court upheld the Tribunal's decision, agreeing that the refund application was time-barred under Section 11B of the Central Excise Act, 1944. The Court found no substantial question of law in the appeal and dismissed it, emphasizing the importance of adhering to statutory limitations to ensure finality and repose in legal proceedings. The judgments cited by the appellant were distinguished based on their specific facts and contexts, and the Court reiterated that even constitutional remedies cannot override statutory prescriptions.