TaxTMI 
TaxTMI 
2021 (2) TMI 774
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....tation under Section 11B of the Central Excise Act, which specifies the time limit of one year. 2. The brief facts are that the appellant is registered and engaged in providing Commercial and Industrial Construction services to various clients. For the services rendered to the MP Government, through the nodal agency M.P. State Co-operative Marketing Federation Ltd. (MP MARKFED), the appellants have initially paid the service tax under the mistaken notion that they were required to pay the service tax. 3. After coming to know that in terms of exemption granted under Notification No. 25/2015-ST dated 20.6.2012 [Sl. No. 12(a)], the construction services rendered to Govt. or Govt. authorities is exempt from service tax, they stopped making service tax payment (under intimation to Deptt.) from July, 2014. The construction activity continued till July, 2015. No service tax was paid during the period July, 2014 to July, 2015. 4. The appellant suo moto, vide their letter dated 3.8.2015, intimated the Deptt. that no service tax is being paid from July, 2014 onwards. Though no service tax was paid subsequent to June 2014, and the ST-3 return....
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....ederation Ltd., MP State Agricultural Warehousing Board and MP Warehousing Logistics Corporation were related as the nodal agencies to select the contractors to undertake the work. 8. Madhya Pradesh State Cooperative Marketing Federation Ltd. (MP MARKFED) allotted construction work to the appellant. MP MARKFED is an apex body of marketing cooperative societies established in 1956. It is registered body under the Madhya Pradesh State Cooperative Societies Act, 1960. It is a society set up by State Government with commitment towards social responsibility to provide services to the society without any profit motive. MARKFED is involved in promotion of cooperative marketing of agricultural produce for the benefit of farmers. The institution is involved in the purchase, sale and distribution of agricultural related commodities like fertilizers, seeds, pesticides, agricultural machinery and procurement of food grains under 'minimum price support scheme' from primary and the Agricultural Credit Cooperative Societies, the marketing cooperative society, and farmers in the remote areas. MARKFED is headed by the Managing Director (an IAS officer) a....
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....uted after 1 April, 2015. 12. With respect of next objection of Revenue as regards limitation under Section 11B, it was submitted that service tax was paid by mistake as service tax was not payable ab initio under Sr. No. 12(a) of the exemption Notification No. 25/2012-ST dated 20 June, 2012. As the amount was paid under mistaken impression the said amount cannot be termed as service tax, and is at best in the nature of deposit. Hence the provisions of Section 11B of Central Excise Act are not attracted. Reliance was placed on the ruling of Hon'ble Karnataka High Court in the case of Commissioner of Central Excise (Appeals), Bangalore Vs. KBR Construction - 2012 (26) STR 195 (KAR.), wherein the High Court held under the fact that amount was paid towards tax on construction of educational institutions even though there was an exemption. Hence when there was no compulsion or duty cast to pay the service tax but was paid under mistaken notion, it would not be a duty or service tax payable in law. Therefore, once tax is not paid in law, there was not authority for the department to retain such amount. By any stretch of imagination, it will n....
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....Drought Mitigation Package'. In view of the rejection of refund on merits, the Commissioner (Appeals) left the ground of limitation open. 16. Being aggrieved the appellant is in appeal before this Tribunal on the following grounds: (i) The learned Counsel reiterates the facts and submission noticed hereinabove. He further urges that admittedly under Sr. No. 12(a) of Notification No. 25/2012-ST, exemption is available for services provided to the Government, a local authority or a governmental authority, by way of construction, erection, commissioning, installation, completion, fitting out, repair, maintenance, renovation or alteration of - (a) A civil structure or any other original works meant predominantly for use other for commerce, industry, or any other business or profession. 17. The Commissioner (Appeals) have also observed that the work was given to the appellant by MP MARKFED, and they have made payment for the civil construction done by the appellant. It was also observed that even if services have finally been utilised in a project, which had got approval of the Government, the services rendered or execution of ....
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....the key post of MARKFED is done by the Government of MP. Even the website and e-mail of the MP MARKFED is with the suffix @ mp.go.in. 19. Learned Counsel further urges that the appellant had paid service tax out of pocket which is evident from the facts on record particularly certificate dated 20 April, 2017 issued by the Senior Accounts Officer of MARKFED to the effect that under the aforementioned work orders, the construction and development of Farmer Facilitation Centre has been done for MP State Government which is funded by Government of India under Drought Mitigation package. The said certificate further clarifies that no service tax amount have been paid to the appellant. The said certificate is pre approved by Chief Accounts Officer cum Finance Controller of MARKFED. The learned Counsel draw our attention to the another certificate dated 27.11.2017 issued by the Senior Accounts Officer of MARKFED, which also certifies that the work has been done for Government of MP and appellant have been paid the amount up to financial year 2014-2015, further certifying that no amount of service tax have been paid. 20. Learned Counsel furth....
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....ment. He further places reliance on the following rulings:- (i) Oil India Ltd. Vs. Commissioner of Central Tax - 2019 (5) TMI 515-CESTAT-Hyderabad; (ii) Veer Overseas Ltd. Vs. Commissioner of Central Excise, Panchkula - 2018-TIOL-1432-CESTAT-CHD-LB; (iii) M/s Future Foundations Pvt. Ltd. Vs. CCE - 2020-TIOL369-CESTAT-Bang; (iv) Sarita Handa Exports (P) Ltd. Vs. Union of India - 2015 (321) ELT 434 (P&H); (v) Commissioner of Customs NS-II Vs. Purab Textile Pvt. Ltd. - 2019 (365) ELT 285 (Bom.); (vi) Assistant Collr. of Cus. Vs. Anam Electrical Manufacturing Co. - 1997 (90) ELT 260 (SC); (vii) CMS Info Systems Ltd. Vs. Union of India - 2017 (349) ELT 236 (Bom.). 24. Having considered the rival contentions, we find that admittedly the construction of warehousing facility etc. was considered by the State Government of MP in its meeting held in July 2011, for which they sought assistance from the Central Government. Such assistance was admittedly provided by the Central Government, Plann....
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....ectfully disagree with my brother Hon'ble Member (Judicial) Shri Anil Chowdhary insofar as ordering that the amount be refunded to the appellant even though it is clearly time-barred as per Section 11B of the Central Excise Act as made applicable to the Service Tax by Section 83 of the Finance Act, 1994. As far as the applicability of the exemption notification is concerned, it is clear that the Revenue had not disputed it for the subsequent period when the appellant had not paid the tax nor has the department raised any demand on this count. Even the audit para raised in this regard was closed. The issue having been settled by the department itself, I do not find any reason to take a different view with respect to the same activity of the same assessee with respect to the eligibility of the same exemption notification. 28. Tax is an amount collected compulsorily from the tax payer for use by the Government for common good without giving anything in return to the tax payer. Thus, it is a payment mandated by law and hence is owed by the tax payer to the people of India represented by the Government. Therefore, it has to be strictly in accordance with the relevant law (Artic....
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....944 read with Central Excise Tariff Act, 1985 or Customs Act, 1962 read with Customs Tariff Act or by mis-interpreting or mis-applying any of the rules, regulations or notifications issued under the said enactments, such a claim has necessarily to be preferred under and in accordance with the provisions of the respective enactment before the authorities specified thereunder and within the period of limitation prescribed therein. No suit is maintainable in that behalf. While the jurisdiction of the High Courts under Article 226 - and of this Court under Article 32 - cannot be circumscribed by the provisions of the said enactments, they will certainly have due regard to the legislative intent evidenced by the provisions of the said Acts and would exercise their jurisdiction consistent with the provisions of the Act. The writ petition will be considered and disposed of in the light of and in accordance with the provisions of Section 11B. This is for the reason that the power under Article 226 has to be exercised to effectuate the rule of law and not for abrogating it. The said enactments including Section 11B of Central Excises and Salt Act and Section 27 of the Customs Act d....
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.... of sub-section (1) of Section 17 of the Limitation Act, 1963. A refund claim in such a situation cannot be governed by the provisions of the Central Excises and Salt Act or the Customs Act, as the case may be, since the enactments do not contemplate any of their provisions being struck down and a refund claim arising on that account. In other words, a claim of this nature is not contemplated by the said enactments and is outside their purview. A claim for refund, whether made under the provisions (iii) of the Act as contemplated in Proposition (i) above or in a suit or writ petition in the situations contemplated by Proposition (ii) above, can succeed only if the petitioner/plaintiff alleges and establishes that he has not passed on the burden of duty to another person/other persons. His refund claim shall be allowed/decreed only when he establishes that he has not passed on the burden of the duty or to the extent he has not so passed on, as the case may be. Whether the claim for restitution is treated as a constitutional imperative or as a statutory requirement, it is neither an absolute right nor an unconditional obligation but is subject to the above requirement, as ex....
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....ht of the goal and the ideals set out in the Preamble to the Constitution and in Articles 38 and 39 thereof. The concept of economic justice demands that in the case of indirect taxes Central Excises duties and Customs duties, the tax collected without the authority of law shall not be refunded to the petitioner-plaintiff unless he alleges and establishes that he has not passed on the burden of duty to a third party and that he has himself borne the burden of the said duty. Section 72 of the Contract Act is based upon and (vi) incorporates a rule of equity. In such a situation, equitable considerations cannot be ruled out while applying the said provision. While examining the claims for refund, the financial (vii) chaos which would result in the administration of the State by allowing such claims is not an irrelevant consideration. Where the petitioner-plaintiff has suffered no real loss or prejudice, having passed on the burden of tax or duty to another person, it would be unjust to allow or decree his claim since it is bound to prejudicially affect the public exchequer. In case of large claims, it may well result in financial chaos in the administration of the a....
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....ot for abrogating it. Even while acting in exercise of the said constitutional power, the High Court cannot ignore the law nor can it over-ride it. The power under Article 226 is conceived to serve the ends of law and not to transgress them. Section 11B applies to all pending proceedings (xi) notwithstanding the fact that the duty may have been refunded to the petitioner/plaintiff pending the proceedings or under the orders of the Court/Tribunal/Authority or otherwise. It must be held that Union of India v. Jain Spinners [1992 (61) E.L.T. 321 (SC) = 1992 (4) S.C.C. 389] and Union of India v. I.T.C. [1993 (67) E.L.T. 3 (SC) = 1993 Suppl. (4) S.C.C. 326] have been correctly decided. It is, of course, obvious that where the refund proceedings have finally terminated - in the sense that the appeal period has also expired - before the commencement of the 1991 (Amendment) Act [September 19, 1991], they cannot be re-opened and/or governed by Section 11B(3) [as amended by the 1991 (Amendment) Act]. This, however, does not mean that the power of the Appellate Authorities to condone delay in appropriate cases is affected in any manner by this clarification made by us. Secti....
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.... no loss or injury, the action for restitution based on Section 72 of the Contract Act, is unsustainable. (This is the legal position even under general law, without reference to Section 11B of Central Excises & Salt Act as amended by Act 40/1991). The decision in (B) Kanhaiya Lal's case, and the cases following the same, cannot be understood as laying down the law that even in cases the liability has been "passed on", the assessee can maintain an action for restitution. If the decision in Kanhaiya Lal's case (supra) and the cases following the saidx decision, enables such a person to claim refund (restitution), with great respect to the learned Judges, who rendered the above decisions, I express my dissent thereto. In this context, the observations in Para 29 - Clause III shall also be borne in mind. Article 265 should be read along with the Preamble and (C) Article 39(b) and (c) of the Constitution, and so construed in cases where the assessee has passed on the liability to the consumer or third party, he is not entitled to restitution or refund. The fact that the levy is invalid need not automatically result in a direction for refund of all collections made in ....
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....court or the refund ordered by the statutory authorities, which have become final. It follows from a plain reading of Section 11B, Clauses (1), (2) and (3) of the Act. The provisions contemplate the pendency of the application on the date of the coming into force of the Amendment Act or the filing of an application which is contemplated under law, to obtain a refund, after the Amendment Act comes into force. If the said provisions are held applicable, even to matters concluded by the judgments or final orders of courts, it amounts to stating that the decision of the court shall not be binding and will result in reversing or nullifying the decision made in exercise of the judicial power. The legislature does not possess such power. Alternatively, it may be stated that duty paid in cases, which finally ended in orders or decrees or judgments of courts, must be deemed to have been paid under protest and the procedure and limitation etc. stated in Section 11B(2) read with Section 11B(3) will not apply to such cases. It need hardly be stated, that Section 11B(1), the proviso (I) thereto, Section 11B(2) and Section 11B(3) read together will apply, only to (1) refund applications....
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.... of the Constitution. 298.Various other points were raised in these cases. I am not dealing with them separately, but I express my respectful concurrence with the views of my learned Brother Paripoornan, J. that an action by way of a suit or writ petition will be maintainable, depending upon the facts and circumstances of the case. I am entirely in agreement with the views expressed by him and the reasoning thereof on points E, F and G of the concluding part of his judgment. 299.In conclusion, I hold that the Government is permitted to levy and retain only that much of excise duty which can be lawfully levied and collected under the Central Excise Act read with the Central Excise Tariff Act, 1985 and the Central Excise Rules and various notifications issued from time to time. Anything collected beyond this is unlawful and cannot be retained by the Government under any pretext. The illegal levy and collection of duty violate not only the Central Excise Act and the Rules but also offends Article 265 of the Constitution of India. 300.I am of the view that the provision of Section 11B is a device for deying the claim for refund of duty to a ....
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....nd myself to be broadly in agreement with the conclusions recorded by Reddy, J., subject to the two aspects on which I have recorded my views hereunder : 103. The first of these is the issue regarding the extent to which the jurisdiction of ordinary courts is ousted in respect of claims for refund of taxes illegally levied and collected. In my view, it would be incorrect to hold, as Reddy, J. has done, that every claim for refund of illegal or unauthorised levy of tax is necessarily required to be made in accordance with the provisions of the Central Excise Act, 1944 (hereinafter called "the Excise Act"). The leading authority governing this issue is the decision of this Court in Dhulabhai and Others v. State of Madhya Pradesh and Another, (1968) 3 S.C.R. 662. In this case, after analysing the leading decisions in the field, this Court laid down the following propositions with a view to determining the extent to which the jurisdiction of civil courts can be ousted : Where the statute gives a finality to the orders of the "(1) special Tribunals the Civil Courts' jurisdiction must be held to be excluded if there is adequate remedy to do what the Civil Co....
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....ed by this Court on several occasions and thus constitute sound law, it is clear that actions by way of suits or petitions under Article 226 of the Constitution cannot be completely eliminated. The claims for refund can arise under three broad classes and the issue of ouster of jurisdiction of civil courts can be understood by focussing on the parameters of these classes which are as follows : Class I :"Unconstitutional levy" - where claims for refund are founded on the ground that the provision of the Excise Act under which the tax was levied is unconstitutional. Cases falling within this class are clearly outside the ambit of the Excise Act. In such cases assessees can either file a suit under Section 72 of the Contract Act, 1872 (hereinafter called "Contract Act") or invoke the writ jurisdiction of the High Court under Article 226 of the Constitution. Class II :"Illegal levy" - where claims for refund are founded on the ground that there is mis-interpretation/mis-application/erroneous interpretation of the Excise Act and the Rules framed thereunder. Oridinarily, all such claims must be preferred under the provisions of the Excise A....
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....istake of law. This is because such claims are outside the ambit of the Excise Act. In such cases, the limitation period applicable will be that specified in Section 17(1)(c) of the Limitation Act. 106. Reddy, J. has moulded an exception to the above stated principle. He has held that where a person approaches the High Court or the Supreme Court challenging the constitutional validity of a provision but fails, he cannot take advantage of the declaration of unconstitutionality obtained by another person on another ground; this is for the reason that so far as he is concerned, the decision has become final and cannot be ignored or put aside as if it did not exist on the basis of the decision in another person's case. However, in my opinion, since the levy of tax has been held to be unconstitutional (which would lead to the conclusion that it should never have been levied in the first place) such an interpretation would be unfair to an assessee who had the foresight to discern the unconstitutionality of the provision (albeit on a different ground) but was unfortunate in not being able to convince the concerned court of the unconstitutionality of the provision. Consideri....
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....he Hon'ble Apex Court with respect to refunds; (i) Applications for refund of excise duty (or Service tax) can be filed under Section 11B and must be processed according to the provisions of this section; this section constitutes a law within the meaning of Article 265 of the Constitution. (ii) Wherever the charge of the duty or tax is held to be unconstitutional, it cannot fall within the ambit of the statute itself and therefore, the provisions of the statute do not apply. In such cases, refund can be sought by filing a Civil Suit in a civil court under Section 72 of the Contract Act within the time limit prescribed under the Limitation Act. Such cases can also be pursued by filing a Writ Petition under Article 226 of the Constitution of India. (iii) According to the judgment of Hon'ble Justice Ahmadi, such civil suits and writs under Article 226 can also be filed where the levy is considered illegal. The majority judgment was that even if the levy is illegal, it still needs to be processed within the provisions of section 11B. (iv) Central excise officers can only act within the framework of the law and not ....
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....ot apply but Writ Petition under Article 226 was maintainable. Para 25 of this judgment is as follows: 25. However, the petitioner has not approached the Tribunal after the order passed by 1st appellate authority and they have approached this Court. Therefore, even the provisions of Section 35B(1)(b) would not be applicable. From the facts of the case as discussed herein above, it emerges that petitioner has approached this Court contending that Section 11B is not applicable as there was no duty cast on them to pay "service tax" and they have paid such amount under mistaken notion. Viewed from any angle, we are of the opinion that the learned Single Judge was justified in setting aside that portion of the order which rejected the claim of refund and accordingly same is confirmed. 37. Even following this ratio, if it is viewed that the levy was unconstitutional or illegal or what is paid is not Service Tax, recourse can be had only to a Civil Suit under Section 72 of the Contract Act or through a Writ Petition under Article 226 as laid down by the Hon'ble Apex Court in the case of Mafatlal (supra). This judgment also does not hold that Section 11B applies but not the lim....