Revenue appeal on service tax refund claim time limit dismissed, mistake of law exemption upheld

The appeal by Revenue against the rejection of a refund claim for service tax paid by mistake was dismissed. The dispute centered on the time limitation for filing the refund claim under Section 11B of the Central Excise Act. The first appellate authority ruled in favor of the respondent, citing previous judgments that exempted service tax paid under a mistake of law from the limitation period. As the appellant was not liable for service tax under the relevant notifications, the refund was granted, and the decision was upheld without interference.

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Issues:
Refund claim rejection based on limitation for service tax paid by mistake.

Analysis:
The appeal was filed by Revenue against the rejection of a refund claim by the respondent regarding service tax paid by mistake. The issue revolved around the time limitation for filing the refund claim under Section 11B of the Central Excise Act, 1944. The adjudicating authority had rejected the claim based on limitation, but the first appellate authority overturned this decision citing decisions from higher judicial forums.

The Revenue argued that the refund claim arose from the appellant's voluntary payment of service tax under works contract service related to shifting of cables and widening of public roads, which were exempted under Notification No. 12/2002-ST. The claim was filed beyond one year from the date of payment, as per Section 11B provisions, and needed to be adhered to.

On the other hand, the respondent contended that previous judgments by the Hon'ble High Court of Bombay established that when service tax is paid under a mistake of law, the limitation under Section 11B does not apply. The first appellate authority found that the appellant was not liable for service tax under the mentioned notifications and had paid it by mistake. The respondent's eligibility for the benefit of the notifications was undisputed.

Given that the respondent was not required to pay any service tax under the notifications, the judgments of the Hon'ble High Court of Bombay were deemed applicable. The first appellate authority's decision to grant the refund was upheld as correct, with no reason found to interfere with the reasoned order. Consequently, the appeal was rejected, and the cross-objection filed by the respondent in support of the impugned order was disposed of accordingly.

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