Refund claim denied: Mistake of law in service tax payment beyond statutory period.

The Tribunal upheld the rejection of a refund claim for service tax paid under a mistake of law, amounting to &8377; 5,17,749/-, as it was filed beyond the one-year statutory period under Section 11B of the Central Excise Act, 1944. Despite arguments citing exceptions for refund claims arising from a mistake of law, the Tribunal relied on the precedent set by the Supreme Court in the Mafatlal Industries case, emphasizing that refunds are impermissible if filed beyond the prescribed limit in Section 11B. The appeal was dismissed, confirming the rejection of the refund claim by the Commissioner of CGST & Central Excise.

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Issues:
Refund claim rejection based on exceeding statutory time limit under Section 11B of the Central Excise Act, 1944 for service tax paid under a mistake of law.

Analysis:
The appeal centered around a refund claim amounting to &8377; 5,17,749/- for service tax erroneously paid for the period from April, 2012 to June, 2014, which was rejected due to being filed beyond the one-year statutory period as per Section 11B of the Central Excise Act, 1944. The appellant had initially paid the service tax but later realized it was not leviable, leading to a refund to the tenant and a subsequent refund claim that was rejected. The appellant argued that the limitation under Section 11B should not apply to refund claims for service tax paid under a mistake of law, citing relevant judgments. The respondent-department, however, relied on a decision by the Larger Bench of CESTAT, Chandigarh, emphasizing that the time limit under Section 11B governs all refund claims.

During the hearing, the appellant's counsel referenced specific judgments to support the contention that the limitation under Section 11B should not be applicable to refund claims arising from a mistake of law. On the other hand, the respondent-department argued that the decision by the Larger Bench of CESTAT established the applicability of the time limit under Section 11B to all refund claims. The Tribunal considered the arguments from both sides along with relevant legal provisions and precedents.

The Tribunal examined the applicability of Section 11B of the Central Excise Act, 1944 to service tax matters, emphasizing the rule of refund as established in the leading case of Mafatlal Industries. Citing a significant observation from a nine-member Bench of the Supreme Court in the Mafatlal Industries case, it was highlighted that, except in cases of unconstitutionality of a levy provision, no refund is permissible if filed beyond the prescribed limit in Section 11B. The Tribunal, therefore, upheld the rejection of the refund claim based on the statutory time limit, as per the binding precedent set by the Supreme Court's judgment in the Mafatlal Industries case.

In the final order, the Tribunal dismissed the appeal and confirmed the decision of the Commissioner of CGST & Central Excise, Raigad Commissionerate to reject the refund claim, as it was filed after the statutory period specified under Section 11B of the Central Excise Act, 1944. The order was pronounced in court on 03.04.2019.

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