TaxTMI 
TaxTMI 
TaxTMI 
2021 (2) TMI 774
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....ral 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 returns were filed claiming the exemption under ....
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.... 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) appointed by State Government. Further all staff and office....
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.... 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 not amount to duty/tax so as to attract Section 11B. Therefore, it ....
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....s, 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 such project do not become service rendered to the Government, within the meaning and intention ....
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....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 further urges that in the facts and circumstances the appellant is eligible for exemption under Notificatio....
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....x - 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, Planning Commission Agricultural Division by allotting funds under 'Drought Mitigation Scheme' to the State Governments by way of Additional Central Assistance, including to the state o....
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....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 (Article 265 of the Constitution). The taxing statutes provide not only a charging section authorising collection of the tax but also a complete set of machinery sections laying down the mechanism to admini....
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.... 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 do constitute "law" within the meaning of Article 265 of the Constitution of India and hence, any tax collected, retained or not refunded in accordance with the said provisions must be held to be collected, retained or not....
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....o 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 explained in the body of the judgment. Where the burden of the duty has been passed on, the claimant cannot say that he has suffered any real loss or prejudice. The real loss or prejudice is suffered in such a case by the person who has ulti....
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....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 affairs of the State. The decision of this Court in (viii) Sales Tax Officer, Benaras v. Kanhaiyalal Mukundlal Saraf [1959 S.C.R. 1350] must be held to have been wrongly decided insofar as it lays down or is understood to have laid down propositions contrary to the p....
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....ings (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. Section 11B does provide for the purchaser making the (xii) claim for refund provided he is able to establish that he has not passed on the burden to another person. It, therefore, cannot be said that Section 11B is a device to retain the illegally collected taxes by the State. This is equally true of S....
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...., 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 pursuance thereto. The presumption is that the taxpayer has passed on the (D) liability to the consumer (or third party). It is open to him to rebut the presumption. The matter is exclusively within the knowledge of the taxpayer, whether the price of the goods included the `duty' element also and/or also as to whether he has passed ....
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....d, 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 made under the statute and filed before the Amendment of the Act and still pending on the date of commencement of Amendment Act, 1991 and (2) applications contemplated under law to obtain refund and filed after the commencement of the Amendment Act, 1991. (Cases dealt with in paras 5 and 29 of this judgment will not be covered by the above to the extent stated therein).....
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....im 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 tax-payer and must be struck down as violative of Article 265 of the Constitution. It in effect tries to perpetuate an illegal levy without altering the basis of the law under which the levy was made in any way. It is also a colourable piece of legislation and must be struck down. 301.Section 11D imposes unreasonable restriction on the right to carry trade and violates Article 19(1) (g). Excise authority ....
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....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 Courts would normally do in a suit. Such provision, however, does not exclude those cases where the provisions of the particular Act have not been complied with or the statutory Tribunal has not acted in conformity with the fundamental principles of judicial procedure. Where there is an express bar of the jurisdiction of the (2) court, an examination of the scheme of the particular Act to find the adequacy or the sufficiency of the remedies provided may be....
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.... 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 Act and the Rules framed thereunder by strictly adhering to the stipulated procedure. However, in cases where the authorities under the Excise Act arrogate to themselves jurisdiction even in cases where there is clear want of jurisdiction, the situation poses some difficulty. Reddy, J. has held that in all cases, except where unconstitutionality is alleged, the remedy is to be pursued within the framework of the Excise Act. This is a dangerous proposition for it will not cater to situations where the authorities under the Excise....
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.... 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. Considering the gravity of the case, in my opinion, it should be left open to such an assessee to use such legal remedy as may be available to him to have the earlier order reviewed or recalled on the basis of the order made in the subsequent case. If he succeeds, well and good; if he fails, he must take the consequence of an adverse order against him. 107.On the issue of the retrospective application of the amended provisions of the Excise Act, I wish to emphasise one practical difficulty that may arise. Reddy, J. has held that in respect of proceedi....
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....r 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 beyond and exercise powers conferred upon them under the Act and not beyond. It is for this reason that where the law itself is held unconstitutional, the remedy doesn't lie within the Act and is also not within the jurisdiction of the officers or authorities acting under it but it lies with the Hon'ble High Courts (under Writ jurisdiction) or with the civil courts (on the principle of restitution). The upshot of these elaborate findings by the Apex court is that officers work within the framework of their Statute from which their power flows. With respect to demands of Central Excise, it is under Secti....
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.... 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 limitation within it. 38. Learned Counsel for the appellant also relied upon the judgment of the Hon'ble High Court of Kerala in the Writ Petition filed by Geojit BNP Paribas Financial Services Ltd. vs CCE, Cus &ST, Kochi [2015 (39) STR 706] in which the Hon'ble High Court had allowed refund holding Section 11B is not applicable to that case. This judgment of a Single member of the Hon'ble High Court was, overruled by a division bench of the same High Court [2019 (28) G.S.T.L. 202 (Ker.)] 39. It is clear that in both the aforesaid cases where the refund was allowed Hon'ble High Courts have follo....