2021 (4) TMI 1167 - HC - Service Tax

Service tax refund claim denied due to time-bar under Central Excise Act. Petitioner can join another refund petition for review.

M/s. M.G.M. International Exports Ltd. Versus The Assistant Commissioner of Service Tax, Chennai

The Court dismissed the writ petition seeking a refund of service tax paid under a mistake of law, as the claim was time-barred under Section 11B of the ... Refund of Service Tax - service tax on the petitioner for utilizing the storage facility - period between September 1999 to March 2000 - Section 35(a) of the Central Excise Act, 1944 as made applicable to Appeals against orders of the Tribunal under Section 83 of the Finance Act, 1994 - HELD THAT:- The Hon’ble Supreme Court in UOI Vs. Mafatlal India Ltd., [1996 (12) TMI 50 - SUPREME COURT], while dealing with refund of tax, classified refunds into two categories. The first one on account of unconstitutional levy and second one on account of illegal levy - Explaining the second category of refund, the Court also held that where a duty of tax has been collected under a particular order which has become final, the refund of that duty cannot be claimed unless the order (whether it is an order of assessment, adjudication or any other order under which the duty is paid) is set aside according to law. So long as that order stands, the duty cannot be recovered back nor can any claim for its refund be entertained. The theory of mistake of law and the consequent period of limitation of three years from the date of discovery of such mistake of law cannot be invoked by an assessee taking advantage of the decision in another assessee’s case. All claims for refund ought to be, and ought to have been, filed only under and in accordance with Rule 11/Section 11B and under no other provision and in no other forum. An assessee must succeed or fail in his own proceedings and the finality of the proceedings in his own case cannot be ignored and refund ordered in his favour just because in another assessee’s case, a similar point is decided in favour of the manufacturer/assessee. The refund of tax if any borne by the petitioner had to be made only within a period of limitation prescribed under Section 11B of the Central Excise Act, 1944 notwithstanding the fact that the petitioner became aware of the wrong payment of tax only after the Central Board of Excise and Customs issued clarification bearing reference Order No. 2/1/2002-ST dated 24.4.2002. Thus, the period prescribed under section 11B of the Central Excise Act, 1944 had expired long before the above were clarification was issued. Petition dismissed. Issues Involved:1. Refund of service tax paid by mistake of law.2. Applicability of Section 11B of the Central Excise Act, 1944.3. Jurisdiction and maintainability of the writ petition.4. Legal precedents and interpretations of refund claims.Detailed Analysis:1. Refund of Service Tax Paid by Mistake of Law:The petitioner sought a writ of mandamus to direct the respondent to refund Rs. 1,10,999/- with interest, which was paid as service tax under a mistake of law. The petitioner was charged service tax by M/s.IMC Limited for storage services. The Central Board of Excise and Customs clarified on 24.04.2002 that such services were not liable to service tax under the category of 'clearing and forwarding agents.' Consequently, M/s.IMC Limited filed a refund claim on 23.07.2002, and the petitioner filed a refund claim on 27.06.2005 for the period between September 1999 to March 2000.2. Applicability of Section 11B of the Central Excise Act, 1944:The refund claim was rejected by the Original Authority on 02.03.2007, citing that it was time-barred under Section 11B of the Central Excise Act, 1944, as applied to service tax refunds by Section 83 of the Finance Act, 1994. This decision was upheld by the Commissioner of Central Excise (Appeals) and the Customs Excise and Service Tax Appellate Tribunal (CESTAT).3. Jurisdiction and Maintainability of the Writ Petition:The respondent argued that the writ petition should be dismissed or that the petitioner should pursue the remedy before the Hon'ble Division Bench by way of a CMA under Section 35(a) of the Central Excise Act, 1944. It was contended that no writ petition is maintainable against an order of the Tribunal, as held in Metal Weld Electrodes Vs. CESTAT, Chennai.4. Legal Precedents and Interpretations of Refund Claims:The Supreme Court in UOI Vs. Mafatlal India Ltd. classified refunds into unconstitutional and illegal levies. Refunds for illegal levies must be claimed under the Act's provisions, specifically Rule 11 and Section 11B. The Court emphasized that no refund could be claimed unless the order under which the duty was paid is set aside. The petitioner cannot invoke the theory of mistake of law based on another assessee's case.Conclusion:The amount collected by IMC Ltd. was contrary to law as clarified by the Central Board of Excise and Customs. However, any refund claim had to be filed within the period prescribed under Section 11B of the Central Excise Act, 1944. The Supreme Court in Commissioner Vs. Allied Photographics India (P) Ltd. held that a distributor who bore the incidence of tax must comply with Section 11B for a refund claim.The Court dismissed the writ petition, granting the petitioner liberty to join any writ petition filed by IMC Ltd. If the Court finds that IMC Ltd.'s refund claim was timely, the petitioner's entitlement to a refund may be reconsidered. The writ petition was dismissed with no costs.