TaxTMI 
TaxTMI 
TaxTMI 
2020 (1) TMI 324
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....d with the Service Tax Department under the categories of "General Insurance Services‟ and "Re-insurance Services‟. The Appellant has been providing insurance services under the Rashtriya Swasthya Bima Yojana [Yojana] to the State Nodal Agency, Uttar Pradesh. 3. A Notification dated 01 March, 2011 was issued exempting taxable service specified under section 65(105)(d) of the Act provided by an insurer carrying on General Insurance Business to any person for providing insurance under the Yojana from the whole of the service tax leviable thereon under section 66 of the Act. Thus, though the service rendered by the Appellant under the said Yojana was exempted from payment of service tax, the Appellant paid service tax between March, 2011 and November, 2011. The Appellant, therefore, claimed refund by filing an application on 23 December, 2013. 4. A show cause notice dated 26 February, 2014 was, however, issued to the Appellant proposing to reject the said refund claim on the ground that it was filed beyond the prescribed time limit of one year contemplated under section 11B of the Excise Act. The Appellant filed a reply to the aforesaid show cause notice and conten....
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....on that it was not made before the expiry of one year from the relevant date. It would, therefore, be appropriate to reproduce section 11-B of the Excise Act, which is as follows : "Section 11B - Claim for refund of duty and interest, if any, paid on such duty - (1) Any person claiming refund of any duty of excise and interest, if any, paid on such duty may make an application for refund of such duty and interest, if any, paid on such duty to the Assistant Commissioner of Central Excise or Deputy Commissioner of Central Excise before the expiry of one year from the relevant date in such form and manner as may be prescribed and the application shall be accompanied by such documentary or other evidence (including the documents referred to in section 12A) as the applicant may furnish to establish that the amount of duty of excise and interest, if any, paid on such duty in relation to which such refund is claimed was collected from, or paid by, him and the incidence of such duty and interest, if any, paid on such duty had not been passed on by him to any other person : Provided that where an application for refund has been made before the commencement of the Central Excises and C....
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....ation and the observations are as follows : "The instant case does not pertain to any levies being found to be unconstitutional for violation of any of the constitutional limitation. Therefore is not covered by the relief available under "Mistake of Law" often quoted by the appellant. The levy of service tax has not been challenged at all. It is only the benefit of exemption notification which is being sought at a late stage. The service tax being valid non utilization of exemption cannot be termed as invalid or ultra vires. The instant claim has not arisen out of any tax or law governing tax being held as an unconstitutional levy. However, the facts of the instant case evince that, the appellant by an oversight paid Tax on an exempted output service provided by them for which they had an ample time of one year from the date of issuance of exemption notification for filing of the refund claim or adjust the same against other output service. The appellant thus failed to avail the available remedies as provided under the relevant provisions as discussed above." [emphasis supplied] 15. The decisions relied upon by learned Counsel for the Appellant and the learned Authorized....
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....ying the refund of part payment did not arise and that the general principal of limitation will be applicable from the date of discovery of mistaken payment in the present case. So the refund claim is made within the stipulated period of the limitation. 6. ......Relying upon the said judgment, it is submitted (by the Revenue) that the refund claim before a departmental authority is to be made within the four corners of the statute and the period of limitation prescribed in the Central Excise Act and the Rules framed thereunder. 7. This court is of the opinion that the CESTAT clearly fell into error. ...............In the present case, levy never applied - a fact conceded by no less than the authority of CBEC..........Consequently, the appeal has to succeed and is therefore allowed. The appellant shall be entitled to refund of entire amount with proportionate interest." [emphasis supplied] 18. In Commissioner of Central Excise (Appeals), Bangalore vs KVR Construction[2012 (26) STR 195 (Kr.)], service tax was paid by the assessee under a mistaken notion that it was liable to pay, though it was not liable to pay by virtue of a Circular dated 17 September, 2004 and, accordingl....
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....of amount, would not authorize the department to regularise such payment. When once the department had no authority to demand service tax from the respondent because of its circular dated 17-9-2004, the payment made by the respondent company would not partake the character of "service tax" liable to be paid by them. Therefore, mere payment made by the respondent will neither validate the nature of payment nor the nature of transaction. In other words, mere payment of amount would not make it a "service tax" payable by them. When once there is lack of authority to demand "service tax" from the respondent company, the department lacks authority to levy and collect such amount. Therefore, it would go beyond their purview to collect such amount. When once there is lack of authority to collect such service tax by the appellant, it would not give them the authority to retain the amount paid by the petitioner, which was initially not payable by them. Therefore, mere nomenclature will not be an embargo on the right of the petitioner to demand refund of payment made by them under mistaken notion. xxxxxx xxxxxx xxxxxx 23. Now we are faced with a similar situation where the claim of the r....
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....me Court in the case of Collector of C.E., Chandigarh v. Doaba Co-Operative Sugar Mills (supra) relied upon by the Appellate Tribunal has in applying Section 11B, limitation made an exception in case of refund claims where the payment of duty was under a mistake of law. We are of the view that the impugned order is erroneous in that it applies the limitation prescribed under Section 11B of the Act to the present case were admittedly appellant had paid a Service Tax on Commercial or Industrial Construction Service even though such service is not leviable to service tax. We are of the view that the decisions relied upon by the Appellate Tribunal do not support the case of the respondent in rejecting the refund claim on the ground that it was barred by limitation. We are, therefore, of the view that the impugned order is unsustainable." [emphasis supplied] 22. The Kerala High Court in Geojit BNP Paribas Financial Services Ltd. vs CCE, Cus & ST, Kochi[2015 (39) STR 706 (Ker.)] also held that when levy is not in accordance with the provisions of the Act, such payment cannot be taken as payment made relatable to section 11-B of the Excise Act and, therefore, refund has to be allowed. ....
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.... is never under the Central Excise Tax nor under the service tax when there is no liability to make the payment of the amount and under the mistake of facts or under mistake of law or under both if any amount is deposited by the assessee, the same cannot be retained by the Union of India under the one or other pretext when a service provider is not liable to make payment of the service tax and if any payment is made, it cannot be covered under Section 11B of the Central Excise Act to be read with Section 83 of the Finance Act, 1994." 24. Learned Authorised Representative of the Department has, however, placed reliance upon decision of a Larger Bench of the Tribunal in Veer Overseas Ltd. that was decided on 27 March, 2018. In this case, claims for refund were rejected by the authority on the ground that they were barred by limitation under section 11-B of the Excise Act. The issue before the Larger Bench was as to whether in respect of a claim for refund of illegal levy of service tax or service tax collected without authority of law, the statutory limit prescribed in section 11-B of the Excise Act would be applicable. Two Learned Members of the Bench, after referring to the provis....
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....Apex Court further observed that the only exception is where the provision of the Act whereunder the duty has been levied is found to be unconstitutional for violation of any of the constitutional limitations. This is a situation not contemplated by the Act. We note in the present case there is no such situation of the provision of any tax levy, in so far as the present dispute is concerned, held to be unconstitutional. As already held that the appellant is liable to pay service tax on reverse charge basis but for the exemption which was not availed by them................." [emphasis supplied] 25. The third Member, however, after placing reliance on the decision of the Bombay High Court in Parijat Construction, allowed the refund claim holding that the time limit prescribed under section 11-B of the Excise Act would not be applicable since that was not rendered in a Writ Petition but in an Central Excise Appeal and the observations are as follows : "15.............As the Hon‟ble High Court of Bombay has entertained the refund claim in Central Excise Appeals but not exercising writ jurisdiction power granted to the Hon‟ble High Court under Constitution of India and ....
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....dras High Court issued directions to the authorities for refund of the service tax that was disallowed by the Department. It is against this order that that an Appeal was filed before the Division Bench. The Division Bench held that it would be impracticable for the authorities to allow refund applications that are filed beyond time, even if it is paid under a mistake of law. 30. As noticed above, the Madras High Court subsequently, in the decision rendered on 28 June, 2018 in M/s 3E Infotech, held that when service tax is paid mistakenly, a claim for refund cannot be barred by limitation under section 11-B of the Excise Act. 31. In any view of the matter, the Delhi High Court in M/s National Institute of Public Finance & Policy clearly held that if service tax was not leviable, but it was paid by mistake, the amount had to be refunded. The Kerala High Court also pointed out that the distinguishing feature for attracting the provisions under section 11B is that the levy should have the colour of validity when it was paid and only consequent upon interpretation of law or adjudication, the levy is liable to be ordered as refund. When payment was effected, if it has no colour of le....