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of <h1>Court Orders Refund of Service Tax Due to Lack of Liability</h1> <h3>M/s. Natraj and Venkat Associates Versus Assistant Commissioner, Service Tax</h3> M/s. Natraj and Venkat Associates Versus Assistant Commissioner, Service Tax - 2010 (17) S.T.R. 3 (Mad.) , [2010] 26 STT 232 (MAD.) , 2010 (249) E.L.T. ... Issues:1. Claim for refund of service tax paid under a mistake of law on export of services.2. Rejection of claim on the ground of limitation.3. Disentitlement to claim refund due to collection of service tax from customers.Analysis:Issue 1: Claim for refund of service tax paid under a mistake of law on export of servicesThe petitioner sought a Mandamus to direct the respondent to refund service tax paid on export of services. The petitioner, a firm providing architectural services, received payment from a client in Sri Lanka and paid service tax. Subsequently, realizing that the services rendered did not attract service tax, the petitioner claimed a refund. The respondent rejected the claim as time-barred and not in the proper format. The petitioner appealed, arguing that the tax collected without legal authority should still allow for a refund.Issue 2: Rejection of claim on the ground of limitationThe rejection of the claim was primarily based on the period of limitation prescribed in Section 11B of the Central Excise Act, 1944. The relevant date for the commencement of the limitation period was the date of payment of duty, which was beyond the date of the refund claim. The petitioner relied on legal precedents to argue for a refund despite the limitation, emphasizing the power of the court to order refunds for payments made under a mistake of law.Issue 3: Disentitlement to claim refund due to collection of service tax from customersThe petitioner demonstrated that no service tax was collected from their customers, providing evidence through affidavits, email correspondence, and certificates of foreign inward remittance. The documents indicated that the petitioner did not attempt unjust enrichment by seeking a refund of service tax collected from customers. The court found that the petitioner was entitled to seek a refund, as there was no dispute that no service tax was payable, and what was paid was not service tax.In conclusion, the court allowed the writ petition, directing the respondent to refund the amount to the petitioner within a specified timeframe. The decision was based on the lack of service tax liability, the absence of tax collection from customers, and the legal principles governing refunds for payments made under a mistake of law.
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