Refund claims from unlawful service tax collections cannot be defeated by limitation when the underlying levy is ultra vires.

Refund of service tax collected from members' clubs was treated as not barred by Section 11B limitation where the levy itself had already been held ultra vires and confirmed by the Supreme Court. The text states that tax collected without authority of law, or under mistake of law, cannot be denied merely for delay when the underlying levy is impermissible. The rejection of the refund claim for the relevant years was therefore unsustainable, and the application was required to be reconsidered on merits, including the claim for interest.

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Issues: Whether the refund claim for the financial years 2009-10 to 2012-13 could be rejected as time barred under Section 11B of the Central Excise Act, 1944 after the levy of service tax on members' clubs had been declared ultra vires, and whether the rejected claim required reconsideration on merits.

Analysis: The levy of service tax on services purportedly provided by incorporated clubs to their members had already been held ultra vires and that view stood confirmed by the Supreme Court. Once the collection itself was without authority of law, the refund claim could not be defeated merely by applying the limitation prescribed under Section 11B. A refund claim arising from tax collected without lawful authority and under mistake of law cannot be denied on the ground of delay when the levy itself has been declared impermissible. The rejection of the claim for the relevant years on limitation was therefore unsustainable, and the application had to be examined afresh on merits, including the question of interest.

Conclusion: The rejection of the refund claim for FYs 2009-10 to 2012-13 as time barred was quashed, and the matter was remanded to the respondents for on merits in accordance with law, including interest.

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