Refund limitation does not bar recovery of excess service tax paid by mistake; refund with interest was allowed.

Amounts paid as service tax without legal basis, including payments made by mistake or where no tax was actually due, were treated as deposits rather than tax liabilities. On that basis, the one-year limitation under Section 11B of the Central Excise Act, 1944, applied through Section 83 of the Finance Act, 1994, was held inapplicable to refund claims for such excess payments. Retention of money not payable as tax was found to be without authority of law, and the refund was allowed with interest. The order rejecting refund was set aside in favour of the assessee.

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Issues: Whether the one-year limitation prescribed under Section 11B of the Central Excise Act, 1944 applies to a claim for refund of service tax paid in excess (including amounts paid by mistake) and whether such excess payment is recoverable despite the expiry of the statutory limitation period.

Analysis: The Tribunal examined the interplay between Section 11B of the Central Excise Act, 1944 (applied to service tax by Section 83 of the Finance Act, 1994), Article 265 of the Constitution of India, and Rule 3 of the Point of Taxation Rules, 2011. It noted that where an amount has been paid without legal basis (i.e., not payable as tax because no taxable event existed or payment was made under mistake), such amount functions as a deposit and is not service tax leviable in law. The Tribunal relied on coordinate and higher judicial precedents addressing refund claims for amounts paid erroneously and held that the time limit in Section 11B does not apply to payments that were not due as tax. The Tribunal further observed that retention of an amount not payable as tax would be without authority of law and that the department cannot withhold such amounts; interest is payable as per law.

Conclusion: The limitation under Section 11B of the Central Excise Act, 1944 does not apply to refund claims for service tax amounts paid in excess or paid by mistake; the excess payments are recoverable. The impugned order rejecting the refund is set aside and the refund with interest is allowed in favour of the appellant.

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