Service tax refund allowed for excess payment when only 50% required under Section 11B limitation exemption

CESTAT NEW DELHI allowed the appeal regarding refund of excess service tax paid. The appellant had deposited 100% service tax when only 50% was required (as service recipient ONGC had already paid 50%), resulting in 150% total deposit instead of 100%. The department rejected the refund application citing limitation under Section 11B of Central Excise Act, 1944. CESTAT held that the relevant date for computing limitation was the HC order date (12.12.2017), not the tax payment date, making the refund application filed on 12.03.2018 within the prescribed time limit. The tribunal ruled that excess payment without legal authority and payment under protest exempted the case from Section 11B limitation. The department was directed to refund the excess amount with proportionate interest.

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Issues Involved:
1. Relevant date for computing the period of limitation under Section 11B of the Central Excise Act.
2. Whether the refund application is barred by limitation under the provisions of the Central Excise Act.
3. Whether the excess tax deposited by the appellant is without any authority of law.

Summary:

Issue 1 & 2: Relevant Date and Limitation
The Tribunal considered the "relevant date" for computing the period of limitation under Section 11B of the Central Excise Act. The appellant argued that the limitation period should be computed from the date of the High Court order (12.12.2017), making the refund application filed on 12.03.2018 within the prescribed time limit. The Tribunal agreed, stating that Clause (ec) of Explanation B to Section 11B, which refers to the date of any judgment, decree, order, or direction, is applicable. The Tribunal concluded that the refund application is not barred by limitation as the "relevant date" is the date of the High Court order.

Issue 3: Excess Tax Deposited Without Authority of Law
The Tribunal found that the appellant had deposited 100% service tax under a mistaken notion, although only 50% was required. The excess amount of 50% was collected without authority of law. The Tribunal referred to Article 265 of the Constitution of India, which states that no tax shall be levied or collected except by authority of law. The Tribunal cited several decisions, including those of the Supreme Court and various High Courts, supporting the principle that taxes collected without authority of law must be refunded. The Tribunal concluded that the excess amount paid by the appellant should be refunded, and the limitation under Section 11B does not apply to such cases.

Separate Judgment:
In Service Tax Appeal No. 51218 of 2022, the Tribunal addressed the issue of whether the limitation period should be computed from the date of the order or the date of receipt of the order. The Tribunal held that the "date of such order" means the date of the order itself, not the date of receipt. The Tribunal also reiterated that the limitation under Section 11B does not apply to refunds of amounts paid under a mistaken notion of law. Consequently, the refund application was allowed, and the Department was directed to pay the appellant the amount claimed along with proportionate interest.

Conclusion:
The Tribunal set aside the impugned orders rejecting the refund applications as time-barred and directed the Department to refund the excess amount along with proportionate interest. The appeals were allowed on the grounds that the relevant date for limitation is the date of the High Court order and that the excess tax was collected without authority of law.

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