2019 (12) TMI 941 - AT - Service Tax

Tribunal Upholds Service Tax Limitation Period, Emphasizes Legal Compliance

The Tribunal rejected the appellant's appeal seeking a refund of service tax paid beyond the limitation period under Section 11B of the Central Excise ... Refund of service tax - time limitation - whether provisions of Section 11B of Central Excise Act, 1944, would apply to the refund of service tax claimed beyond the normal period of limitation, prescribed under the said section? - HELD THAT:- In terms of the provisions of Section 11B, any refund, arising to an assessee, has to be filed within the period of limitation provided under the said section. The said section, nowhere makes any distinction between the refund of tax/duties having been filed under a mistaken belief or otherwise. Every refund arises to the assessee only and only when the same is not payable. As such any duty or tax, which was not payable, but was paid by an assessee, is required to be refunded to the assessee. If such refund are allowed without considering limitation, the provisions of section 11B would become futile and otiose and nothing would remain in section 11B regarding limitation to be applied to such refund claims. It is well settled law that any interpretation which leads to rendering any provisions of law as futile has to be avoided. Hon'ble Supreme Court in the case of PORCELAIN ELECTRICAL MFG. CO. VERSUS COLLECTOR OF C. EX., NEW DELHI [1994 (11) TMI 145 - SUPREME COURT] has clearly held by the Hon'ble Supreme Court that the excise authorities working under the Act are bound by the provisions of the Act and cannot exercise jurisdiction which the Hon'ble High Court exercised in terms of their writ jurisdiction. In the absence of any dispute to the fact that the refund claim stands made after a period of one year do not sustain - appeal dismissed - decided against appellant. Issues:1. Whether the provisions of Section 11B of the Central Excise Act, 1944, apply to the refund of service tax claimed beyond the normal period of limitation.Analysis:The judgment revolves around the issue of whether the provisions of Section 11B of the Central Excise Act, 1944, are applicable to a refund claim of service tax made beyond the normal period of limitation. The appellant, engaged in the manufacture of chemical fertilizers, received goods transport agent (GTA) services for the movement of fertilizers and paid service tax on such services on a reverse charge basis. Subsequently, they realized that the service tax on the transportation of fertilizers was exempted under a specific notification. Consequently, they filed a refund claim for the service tax paid during a certain period. The authorities partially sanctioned the refund within the limitation period but rejected the balance as time-barred. The core contention was whether the refund claim, made beyond one year, should be allowed due to the mistake of law in paying the service tax.The appellant argued that since the service tax was paid under a mistake of law, the period of limitation should not apply, and the refund should be granted as the exchequer has no right to retain tax not due to them. They relied on various High Court decisions supporting this position. However, the Tribunal emphasized that while High Courts have broad jurisdiction under writ petitions, the Tribunal is bound by the provisions of the Act and must operate within its legal framework. Section 11B mandates that any refund to an assessee must be filed within the stipulated limitation period, without distinguishing between refunds due to a mistake of law or other reasons. The Tribunal highlighted that allowing refunds without considering the limitation period would render Section 11B ineffective and devoid of meaning, contrary to established legal principles.The Tribunal cited a Supreme Court case where it was clarified that excise authorities must adhere to the statutory provisions and cannot exercise the jurisdiction of High Courts under writ jurisdiction. Applying the Supreme Court's ruling, the Tribunal found no merit in the appeal as the refund claim was filed after the expiration of the one-year limitation period. Therefore, the Tribunal rejected the appeal, emphasizing the importance of adhering to statutory limitations and avoiding interpretations that would undermine the efficacy of legal provisions.