Refund of excess service tax paid by mistake is not barred by limitation and need not be pursued in civil court.

Refund of service tax paid in excess by mistake was treated as maintainable despite expiry of the refund limitation period, because binding precedent recognised that mistaken tax payment does not become irrecoverable merely on limitation grounds. The analysis also rejected the argument that the assessee must sue in civil court, holding that the statutory refund mechanism remained the proper and exclusive route for recovery of excess tax paid under the taxing statute. Since the department had accepted the payment under that framework, it could not deny refund on the basis that the machinery for restitution was unavailable. The refund rejection was therefore unsustainable.

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Issues: Whether the refund claim for service tax paid in excess could be rejected as time-barred under the refund limitation provision, and whether such a claim for tax paid by mistake had to be pursued only as a civil dispute.

Analysis: The refund was sought for excess service tax paid, and the dispute before the lower authorities was confined to limitation. Binding precedent was applied to hold that where service tax is paid by mistake, a refund claim is not barred merely because the limitation period under the refund provision has expired. The reasoning also rejected the contention that the assessee must be driven to a civil court, since the statutory framework governing refund was treated as the relevant and exclusive route for such claims. The Court further noted that the department had accepted the payment under the same taxing statute, and therefore could not deny refund on the footing that the statutory machinery was unavailable for recovery of excess payment.

Conclusion: The refund claim was not barred by limitation and the rejection of refund was unsustainable; the issue was decided in favour of the assessee.

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