Appeal dismissed: No service tax liability for respondent. Refund granted.

The Department's appeal was dismissed, affirming that the respondent was not liable to pay service tax under the reverse charge mechanism. The respondent, M/s Afflatun International, was entitled to a refund without the limitation constraints of section 11-B of the Excise Act. The Commissioner (Appeals) found that the respondent was not required to pay service tax and that the activities undertaken did not attract service tax. The principles of unjust enrichment were deemed not applicable, and the Tribunal held that the limitation period under section 11-B does not bar refunds for amounts paid under a mistaken notion.

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Issues Involved:
1. Applicability of Service Tax under the reverse charge mechanism.
2. Principles of unjust enrichment.
3. Limitation under section 11-B of the Central Excise Act for claiming a refund.

Summary:

1. Applicability of Service Tax under the reverse charge mechanism:
The respondent, M/s Afflatun International, claimed a refund of Rs. 1,55,13,061/- for service tax paid under the reverse charge mechanism for "manpower recruitment or supply agency" services. The Commissioner (Appeals) held that the respondent was not required to pay service tax under the reverse charge mechanism as it was not a "body corporate" under section 65(68) of the Finance Act, 1994 and the relevant Notification dated June 20, 2012. The Commissioner (Appeals) also found that the activities undertaken by the contractor amounted to the manufacture of goods, thus service tax was not leviable.

2. Principles of unjust enrichment:
The Commissioner (Appeals) relied on a Chartered Accountant's certificate and the balance sheet to conclude that the principles of unjust enrichment would not apply, thereby entitling the respondent to a refund. This finding was not disputed by the Department.

3. Limitation under section 11-B of the Central Excise Act for claiming a refund:
The issue was whether the limitation period under section 11-B of the Excise Act would apply to the refund claim. The Tribunal referred to several precedents, including the Karnataka High Court in Commissioner of Central Excise (Appeals), Bangalore vs KVR Construction, and the Supreme Court's dismissal of the Department's Special Leave Petition against this judgment. It was held that section 11-B does not apply to amounts paid by mistake. Similar views were upheld by the Madras High Court, Bombay High Court, Kerala High Court, and Jharkhand High Court in various cases, establishing that refunds for amounts paid under a mistaken notion are not barred by the limitation period under section 11-B.

Conclusion:
The appeal filed by the Department was dismissed, affirming that the respondent was not liable to pay service tax under the reverse charge mechanism and was entitled to a refund without the limitation constraints of section 11-B of the Excise Act.

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