AI Drafter 
TaxTMI 
TaxTMI 
TaxTMI 
2019 (8) TMI 1489
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....t but denied refund of Rs. 12,77,92,894/-. 2. The Appellant is engaged in sale of goods from outlets located at Customs Area, Terminal 3, IGI Airport, New Delhi. It entered into a License Agreement with Delhi International Airport Ltd., DIAL for licensing of duty free area to operate shops on payment of license fee, airport service charges, marketing fee and utility charges. 3. The Appellant filed three refund applications, each dated 31 January, 2018, under section 11B of the Central Excise Act, 1944, the Excise Act read with section 83 of the Finance Act, 1994, the Finance Act for periods commencing from October, 2016 up to June, 2017. It was stated in the refund Applications that DIAL charges Service Tax, Krishi Kalyan Cess and Swatch Bharat Cess on the services provided to the Appellant and the same was paid but a Division Bench of the Mumbai Tribunal in Commissioner of Service Tax-VII, Mumbai v/s M/s Flemingo Duty Free Shop Pvt. Ltd., 2018 (8) GSTL 181 (Tri-Mumbai) held that the duty free area qualifies as a non-taxable territory and so the Appellant could not have been subjected to the levy of Service Tax, Krishi Kalyan Cess or Swatch Bharat Cess. During the scrutiny of....
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....y basis and hence the period of limitation mentioned in section 11B ibid comes into picture. In the present case, all the refund claims have been filed on 31.01.2018 whereas the export of goods has taken place during 01.10.2016 to 30.06.2017. Since, the refund claims are required to be filed within one year from the date of export, the partial refund claim in respect of the exports taken place prior to 31.01.2017 is barred by limitation time. 9. Hence, the notice are hereby called upon a show cause to the Assistant Commissioner, Central Tax, Division, Vasant Kunj having office at Upper ground Floor, EIL Annexe building Bhikaji Cama Place, New Delhi-110066, within 7 days from the date of receipt of this notice as to why:- a. The partial refund claims in respect of invoices issued during 01.10.2016 to 30.01.2017 shall not be rejected as being barred by limitation of time as per section 11B of Central Excise Act, 1944. " (emphasis supplied) 5. The Appellant filed a reply dated 24 August, 2018 to the aforesaid show cause notice. The relevant portion of the reply is reproduced below:- "5. It is submitted at the outset that the basis of the present show c....
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....ce on the case of ITDC through Hotel Ashoka v. ACCT (2012) 3 SCC 204. In this case, the Hon‟ble Supreme Court at Para 26 held that when any transaction takes place outside the customs frontiers of India, the transaction would be said to have taken place outside India. The relevant extract is as under:- ------------------ 8. At this juncture, it may also be noted that the refund application dated 31.01.2018 was not filed under Notification No. 41/2012-ST due to export of goods but due to the fact that services provided by DIAL to the Noticee were provided in the duty free area and such services are not subject to the levy of service tax as held by the CESTAT, Mumbai in Flemingo (Supra) 9. In view of the above discussion, as service tax was not leviable on the services provided by DIAL to the Noticee, the entire claim is refundable to the Noticee without being barred by limitation. 10. Here, it may be noted that the amount claimed as refundable in the applications dated 31.01.2918 did not include the service tax amounting to Rs. 26,54,482/- paid in respect of utility charges. Hence, such amount ought to be added. Further, the refund applicati....
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....hment would not be applicable to the refund claims filed by the Appellant. 7. Feeling aggrieved by that part of the order of the Assistant Commissioner that denied refund claim of Rs. 12,77,92,894/-, the Appellant preferred an Appeal before the Commissioner contending that any amount collected without authority of law has to be refunded to the Appellant and, therefore, the limitation prescribed under section 11(B) of the Central Excise Act would not be applicable. 8. The Commissioner, by order dated 2 February, 2019, decided the appeal. The order of the Assistant Commissioner was set aside and the Appeal was disposed of in terms of the observations made in paragraphs 4(ii)and (iii). Paragraph 4 of the order of the Commissioner is, therefore, reproduced below:- "4 (i) I have carefully gone through the facts of the case and considered the grounds of appeal made by the appellant. Briefly stated, claims totaling to Rs. 40,62,18,793/-. The refund has filed on the basis that they have erroneously paid service tax in respect of the duty free shops located in the Airport area. They have claimed that duty free shops are located beyond the Customs frontiers. Hence, no Service ....
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...., the Adjudicating Authority is correct in holding that this judgment has a binding precedent to be followed, now the legal position has changed in view of passing of recent judgment by Hon'ble High Court of Madhya Pradesh in Vasu Clothing Vs UOI (2018) 100 Taxmann.com 451 (Madhya Pradesh). Deliberating upon the issue as to whether or not the duty free shops are located beyond the Taxable territory, the Hon'ble High Court has clearly held that such duty free shops are located within Taxable territory. The legal position on this issue has undergone a change. However, since this judgment was not available to the Adjudicating Authority at the time of passing of impugned order, the instant case needs to be remitted back to the Adjudicating Authority to examine the refund claim afresh also taking into account the judgment in Vasu Clothing (supra). He shall pass the order as per (para (ii) & (iii) above following the law of natural justice. In view of discussion, analysis and judgments cited above, the impugned order is quashed and the appeal is disposed of as per para 4 (ii) & (iii) above." (emphasis supplied) 9. It is this order of the Commissioner that has been assailed....
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....as been placed on the following decisions. (i) Alar Infrastructure Pvt. Ltd. v. Commissioner of Central Excise, Delhi-I 2015 (40) STR 1066 (Del. HC); (ii) Hind Agro Industries Ltd v. Commissioner of Customs 2008 (221) ELT 226 (Del.); (iii) National Institute of Public Finance and Policy v. Commissioner of Service Tax Order dated 23.08.2018 in SERTA 13/2018; and (iv) Commissioner of Central Excise (Appeals), Bangalore v. KVR Construction 2012 (26) STR 195 (Kar.). 12. Shri Sanjay Jain, learned Authorized Representative of the Department, however, supported the impugned order. It is his contention that the Commissioner was justified in placing reliance upon the decision of the Madhya Pradesh High Court in Vasu Clothing Pvt. Ltd. v/s Union of India 2019 (22) GSTL 163 (MP). Learned Authorized Representative, therefore, submitted that the issue about limitation was rightly not examined by the Commissioner since the matter was to be remanded to the adjudicating authority to first examine whether the supply by the Appellant qualifies as "export of goods". 13. We have considered the submissions advanced by the learned Senior Counsel for the Appellan....
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....d recovery of duty, penalty and interest and if there was no invocation of Rule 7 of the Valuation Rules, 1975 in the show causes notice, it would not be open to the Commissioner to invoke the said Rule. The same view was reiterated by the Supreme Court in Brindavan Beverages. 18. In Nestor Pharmaceuticals Ltd. a Division Bench of the Tribunal observed that the Commissioner (Appeals) cannot go beyond the scope of the show cause notice and that no matter can be decided on a ground other than the grounds raised in the show cause notice and for this reason the impugned order was set aside. In Tata Johnson Controls Automotive a Division Bench of the Mumbai Tribunal observed that it was not open to the Commissioner (Appeals) to make out a new case in the order passed by the Commissioner and, therefore, the Order passed by the Commissioner (Appeals) deserved to be set aside on this ground alone. 19. It also needs to be pointed out that an Appellant cannot be placed in a worse situation in a Appeal. This is what was observed by the Supreme Court in Jaswal Neco. The relevant portion of the order is reproduced below:- "18. ----------The Appellant cannot be worse off by reason....
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.... which were heard together by the CESTAT with the appeal of the appellant and which were allowed by the same impugned order. 3. Having heard the submissions of counsel for the parties, this Court finds that the question of applicability of Section 11B of the CE Act read with Section 83 of the Finance Act, 1994 to the refund application of the Appellant would arise only if the CESTAT came to the conclusion that the services rendered by the Appellant were in fact liable to service tax. If, on the other hand, the CESTAT finds that the services rendered by the Appellant were not amenable to service tax at all, the question of processing the refund application of the appellant with reference to Section 11B of the Act would not arise. This legal position has been made explicit in the context of a claim for refund under the Customs Act, 1962 in the decision of this Court in Hind Agro Industries Limited v.s Commissioner of Customs, 2008 (221) E.L.T. 336 (Del.). In that decision the Court has discussed the legal position emerging from the decision of the Supreme Court in Mafatlal Industries v. Union of India, 1997 (89) E.L.T. 247 (S.C.)." 25. The Delhi High Court clearly observe....
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....ken notion was payable by the petitioner. Though under Finance Act, 1994 such service tax was payable by virtue of notification, they were not liable to pay, as there was exemption to pay such tax because of the nature of the institution for which they have made construction and rendered services. In other words, if the respondent had not paid those amounts, the authority could not have demanded the petitioner to make such payment. In other words, authority lacked authority to levy and collect such service tax. Incase, the department were to demand such payments petitioner could have challenged it as unconstitutional and without authority of law. If we look at the converse, we find mere payment 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....