Refund limitation does not bar service tax paid on an exempt service where payment was made under a mistake of law.

Service tax paid on an exempt works contract service was treated as paid under a mistake of law, so the refund claim was not barred by limitation under Section 11B of the Central Excise Act, 1944. Following binding precedent, the limitation period applicable to refund claims did not defeat restitution where tax was paid on a non-taxable or exempt activity. The prior view applying Section 11B to reject the claim was held inapplicable on these facts, and the refund rejection was set aside with consequential relief.

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Issues: Whether the refund claim for service tax paid on an exempt activity was barred by limitation under Section 11B of the Central Excise Act, 1944.

Analysis: The refund related to service tax paid on works contract activity that was stated to be exempt under the relevant notification. The only ground for rejection was limitation. Following binding precedent, the applicable principle is that where service tax has been paid under a mistake of law on a non-taxable or exempt service, the limitation prescribed under Section 11B does not bar the refund claim. The issue was treated as no longer res integra and the prior view applying Section 11B was held inapplicable on these facts.

Conclusion: The refund claim was not barred by limitation and the impugned order was unsustainable; the finding is in favour of the assessee.

Final Conclusion: The appeal succeeded and the rejection of refund was set aside, with consequential relief.

Ratio Decidendi: Limitation under Section 11B of the Central Excise Act, 1944 does not apply to a refund claim for service tax paid under a mistake of law on an exempt service.

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