Appeal Dismissed: Mistaken Tax Payment Not Bound by Limitation u/s 11B, Refund Validated.

The appeal under Section 35G of the Central Excise Act, 1944, challenging the refund of service tax paid under a Works Contract, was dismissed. The HC upheld the Tribunal's decision, affirming that the limitation under Section 11B does not apply when tax is paid by mistake of law. The Court referenced prior decisions from various High Courts, including the Delhi and Karnataka HCs, which established that such limitations are inapplicable in cases of mistaken tax payments. Consequently, no substantial question of law was deemed unanswered, and the respondent's refund claim was validated.

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Issues involved:
The appeal under Section 35G of the Central Excise Act, 1944 challenges the order allowing the respondent's claim for refund of service tax paid under a Works Contract, contending it was a mistake of law. The main issue revolves around the applicability of Section 11B of the Act, 1944 regarding limitation for refund in cases where tax is paid voluntarily but not actually payable as service tax.

Summary:

Issue 1: Claim for refund of service tax paid under Works Contract:
The respondent worked under a Works Contract from 30.09.2012 to 30.06.2014 and paid service tax. A claim for refund of Rs. 1,60,81,347/- was filed on 10.02.2017, stating that the tax was paid as a mistake of law. The claim was initially dismissed by the Assistant Commissioner of Customs, Central Excise & Service Tax, Hyderabad, leading to subsequent appeals.

Issue 2: Applicability of Section 11B of the Act, 1944 for refund in case of mistaken tax payment:
The Tribunal considered the question of limitation under Section 11B of the Act, 1944 for refund of tax paid as a mistake of law. The Third Member opined that the limitation does not apply in such cases, leading to the decision that Section 11B cannot be invoked when tax is paid as a mistake of law.

Judgment:
The appellant raised a substantial question of law regarding the applicability of Section 11B in cases of voluntary tax payment. Referring to relevant judgments, including Mafatlal Industries Ltd. v Union of India, it was argued that the Tribunal erred in its decision. However, the Court found that the issue has been settled by previous decisions of various High Courts, including the Delhi High Court and Karnataka High Court, which held that limitation does not apply when tax is paid as a mistake of law. Therefore, the appeal was dismissed, and no substantial question of law remained to be answered.

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