Retrospective exemption turns service tax into revenue deposit, so timely-dispatched refund claims cannot be denied on limitation.

Refund claims sent by speed post were treated as filed within the statutory period where the dispatch was shown to be timely and the refusal of delivery was supported by the surrounding record. The note also states that services covered by a retrospective exemption under notification no. 9/2016-ST and section 102 of the Finance Act, 2016 meant the earlier service tax payment assumed the character of a revenue deposit rather than a valid levy. On that basis, refund could not be denied on limitation, and continued retention of the tax was inconsistent with Article 265. The assessee was stated to be entitled to refund with consequential interest.

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Issues: Whether the refund claim filed by speed post was within limitation under section 102(3) of the Finance Act, 2016, and whether the tax paid on the retrospectively exempted services was refundable as a revenue deposit.

Analysis: The record showed dispatch of the refund applications by speed post within the prescribed period and their return with the endorsement refusing delivery. The subsequent circumstances, including the departmental shifting of office, supported the conclusion that the applications had been sent in time. On the substantive entitlement, the services were covered by the retrospective exemption introduced by notification no. 9/2016-ST and section 102(1) and (2), with the result that the service tax earlier deposited could not be treated as a valid levy and assumed the character of revenue deposit. In such a situation, the claim could not be defeated on limitation, and the retention of tax by the department was inconsistent with article 265 of the Constitution of India.

Conclusion: The refund claim was held to be within limitation, and the rejection of refund was unsustainable.

Final Conclusion: The assessee was held entitled to refund with consequential interest, and the impugned order was set aside.

Ratio Decidendi: Where tax is paid on services later covered by retrospective exemption, the amount assumes the character of revenue deposit and refund cannot be denied on the basis of limitation when the claim was dispatched within the statutory period.

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