Mistake of law refund claims are not barred by Section 11B limitation when service tax was wrongly paid.

Service tax paid under a mistake of law was held refundable because the limitation in Section 11B of the Central Excise Act, 1944 does not apply to such claims. The Bombay High Court treated the issue as settled by earlier Division Bench authority, and held that the Revenue's reliance on Supreme Court precedent was misplaced because that authority recognised an exception for payments made under mistake of law. The refund claim was therefore allowed and the order rejecting it on limitation was set aside.

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Issues: Whether the limitation prescribed under Section 11B of the Central Excise Act, 1944 applies to a refund claim of service tax paid under a mistake of law.

Analysis: The Court held that the question was no longer res integra and that the earlier Division Bench decisions squarely governed the controversy. Those decisions had concluded that the limitation under Section 11B does not apply where service tax was paid under a mistake of law. The Court also noted that the Supreme Court authority relied upon by the Revenue carved out an exception for payments made under mistake of law, and therefore could not support rejection of the refund claim on limitation.

Conclusion: Section 11B was held inapplicable to the refund claim, and the assessee was entitled to refund of the amount paid under mistake of law.

Final Conclusion: The refund claim was allowed and the impugned order rejecting the claim on limitation was set aside.

Ratio Decidendi: Limitation under Section 11B of the Central Excise Act, 1944 does not bar refund of service tax paid under a mistake of law.

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