TaxTMI 
TaxTMI 
2023 (12) TMI 11
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....appeal that *Extra payment of Service Tax is a mere deposit and does not amount to payment of tax; hence time-limit of section 11B and principle of unjust enrichment would not apply to refund thereof. In this regard, I place reliance on the decision of Hon'ble Supreme Court of India in the case of Anam Electrical Manufacturing Company [1997(90) E.L.T. 260 (S.C.)], wherein Apex Court has held that refund application has to be filed within the time limit under Section 11B of the Central Excise Act' 1944/Section 27 of Customs Act1962 and Statutory time limit not extendable by any authority or Court in case of "illegal levy". Further, Division Bench of the Tribunal in the case of Prabhakar C. Suvarna Vs. CCE&ST, Mangalore [2015-TIOL- 2576-CESTAT-BANG], has held that the refund of service tax paid under mistake, the claim has to be filed within prescribed period of one year and the limitation for claiming the refund cannot be extended in any circumstances including when the payments are made by error of law or under mistake. Accordingly, I find that the aforesaid refund claim is time barred and hit by period of limitation. Further, I also agree with the view of adjudicating auth....
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....tered Accountant appearing for the appellant and Shri Manish Raj, learned Authorised Representative appearing for the revenue. 3.2. Arguing for the appellant learned Chartered Accountant submits that they have paid some amount under mistake of law and this Tribunal has not taking the view that in case of payment on the mistake of law, provisions of Section 11B of the Central Excise Act would not be applicable for the refund claim of said amount. The reliance is placed on the decision of this Tribunal in the case of M/s. Asl Builders Pvt. Ltd. vs. Jamshedpur Commissionerate (CESTAT-Kolkatta). Accordingly, he argued that refund claim should be allowed in their favour by setting aside the impugned order. 3.3. Learned Authorised Representative reiterates the findings of the impugned order and submits that the appeal needs to be dismissed. 4.1. I have considered the impugned order along with the submissions made in the appeal and during the course of arguments. 4.2. From the facts as stated in the impugned order it is evident that the refund claim has been rejected primarily on the ground of being much beyond the period of one year as prescribed by Section83 of the Finance Act, 1994....
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.... and lodges it to the proper officers within three months from the date of such payment or adjustment, as the case may be". Rule 11, as in force between August 6, 1977 and November 17, 1980 contained sub-rule (4) which expressly declared: "(4) Save as otherwise provided by or under this rule, no claim of refund of any duty shall be entertained". Section 11B, as in force prior to April, 1991 contained sub-section (4) in identical words. It said : "(4) Save as otherwise provided by or under this Act, no claim for refund of any duty of excise shall be entertained". Sub- section (5) was more specific and emphatic. It said : "Notwithstanding anything contained in any other law, the provisions of this section shall also apply to a claim for refund of any amount collected as duty of excise made on the ground that the goods in respect of which such amount was collected were not excisable or were entitled to exemption from duty and no court shall have any jurisdiction in respect of such claim." It started with a non- obstante clause; it took in every kind of refund and every claim for refund and it expressly barred the jurisdiction of courts in respect of such claim. Sub-section (3) of Sect....
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....reating new and special obligations and rights, which at the same time prescribes the procedure for levy, assessment, collection, refund and all other incidental and ancillary provisions. As pointed out in the Statement of Objects and Reasons appended to the Bill which became the Act, the Act along with the Rules was intended to "form a complete central excise code". The idea was "to consolidate in a single enactment all the laws relating to central duties of excise". The Act is a self-contained enactment. It contains provisions for collecting the taxes which are due according to law but have not been collected and also for refunding the taxes which have been collected contrary to law, viz., Sections 11A and 11B and its allied provisions. Both provisions contain a uniform rule of limitation, viz., six months, with an exception in each case. Sections 11 and 11B are complimentary to each other. To such a situation, Proposition No. 3 enunciated in Kamala Mills becomes applicable, viz., where a statute creates a special right or a liability and also provides the procedure for the determination of the right or liability by the Tribunals constituted in that behalf and provides further ....
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....n accordance with Rule 11 or Section 11B, as the case may be, in the forums provided by the Act. No suit can be filed for refund of duty invoking Section 72 of the Contract Act. So far as the jurisdiction of the High Court under Article 226 - or for that matter, the jurisdiction of this court under Article 32 - is concerned, it is obvious that the provisions of the Act cannot bar and curtail these remedies. It is, however, equally obvious that while exercising the power under Article 226/Article 32, the Court would certainly take note of the legislative intent manifested in the provisions of the Act and would exercise their jurisdiction consistent with the provisions of the enactment. 69. There is, however, one exception to the above proposition, i.e., where a 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. The Act does not contemplate any of its provisions being declared unconstitutional and therefore it does not provide for its consequences. Rule 11/Section 11B are premised upon the supposition that the provisions of the Act are good ....
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....rations are relevant in applying the said rule - an aspect which we shall deal with a little later. Thus, whether the right to refund of taxes paid under an unconstitutional provision of law is treated as a constitutional right flowing from Article 265 or as a statutory right/equitable right affirmed by Section 72 of the Contract Act, the result is the same - there is no automatic or unconditional right to refund. 70. Re : (II) : We may now consider a situation where a manufacturer pays a duty unquestioningly - or he questions the levy but fails before the original authority and keeps quiet. It may also be a case where he files an appeal, the appeal goes against him and he keeps quiet. It may also be a case where he files a second appeal/revision, fails and then keeps quiet. The orders in any of the situations have become final against him. Then what happens is that after an year, five years, ten years, twenty years or even much later, a decision is rendered by a High Court or the Supreme Court in the case of another person holding that duty was not payable or was payable at a lesser rate in such a case. (We must reiterate and emphasise that while dealing with this situation we a....
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....urt or the Supreme Court. It is necessary to point out in this behalf that for filing an appeal or for adopting a remedy provided by the Act, the limitation generally prescribed is about three months (little more or less does not matter). But according to the present practice, writs and suits are being filed after lapse of a long number of years and the rule of limitation applicable in that behalf is said to be three years from the date of discovery of mistake of law : The incongruity of the situation needs no emphasis. And all this because another manufacturer or assessee has obtained a decision favourable to him. What has indeed been happening all these years is that just because one or a few of the assessees succeed in having their interpretation or contention accepted by a High Court or the Supreme Court, all the manufacturers/Assessees all over the country are filing refund claims within three years of such decision, irrespective of the fact that they may have paid the duty, say thirty years back, under similar provisions - and their claims are being allowed by courts. All this is said to be flowing from Article 265 which basis, as we have explained hereinbefore, is totally un....
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....authority under the Act holds erroneously, while exercising its jurisdiction and powers under the Act that a transaction is taxable, it cannot be said that the decision of the authority is without jurisdiction. We respectfully agree with the above propositions and hold that the said principles apply with equal force in the case of both the Central Excises and Salt Act and the Customs Act. Once this is so, it is un-understandable how an assessment/adjudication made under the Act levying or affirming the duty can be ignored because some years later another view of law is taken by another court in another person's case. Nor is there any provision in the Act for re-opening the concluded proceedings on the aforesaid basis. We must reiterate that the provisions of the Central Excise Act also constitute "law" within the meaning of Article 265 and any collection or retention of tax in accordance or pursuant to the said provisions is collection or retention under "the authority of law" within the meaning of the said article. In short, no claim for refund is permissible except under and in accordance with Rule 11 and Section 11B. An order or decree of a court does not become ineffectiv....
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.... (89) E.L.T. 247 (S.C.) : 1996 (9) SCALE 457, the appeals/Special Leave Petitions coming up for disposal shall be disposed of in terms of one or the other of the clauses below : (1) Where a refund application was filed by the manufacturer/purchaser beyond the period prescribed by the Central Excise Act/Customs Act in that behalf, such petition must be held to be untenable in law. Even if in any appeal, suit or writ petition, direction has been given that the refund application shall be considered with reference to the period of limitation prescribed in the Central Excise Act/Customs Act - or that the period of limitation shall be taken as three years - such a direction of the Appellant Court/Civil Court/High Court shall be deemed to be unsustainable in law and such direction shall be set aside. The period prescribed by the Central Excise Act/Customs Act for filing a refund application in the case of "illegal levy" cannot be extended by any Authority or Court. (2) ...." B. Hon'ble Bombay High Court has in case of Orkay Silk Mills Ltd. [1998 (98) E.L.T. 310 (Bom.)] held as follows: "2. In view of the decision of the Supreme Court reported in 1997 (89) E.L.T. 247 (S.C.) as....
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....invited to observation recorded in para 100 of the report of the judgment. The Supreme Court to mitigate the situation, owing to law as declared, observed that Petitioner who filed Writ Petition or suit is at liberty to present claim for refund within 60 days from the date of the judgment i.e., 19th December, 1996. However, the Petitioners have not availed the opportunity as such and therefore cannot now take the advantage. 4. Another decision referred to us is reported in the case of Assistant Collector of Customs v. Anam Electrical Manufacturing Co. 1997 (90) E.L.T. 260 (S.C.) wherein it is observed that even if the claim is not instituted within a stipulated period but petition or suit filed within the period prescribed, the parties according to law are entitled to the relief of refund. Even this observation is of no avail since the instant Petition is filed beyond the period of limitation as envisaged by Section 27. 5. The learned Counsel Mr. Nankani then urged that observation of the Supreme Court needs to be interpreted liberally. Even acceding to the submission, the words which are deployed are plain, unambiguous and cannot be stretched beyond what they convey in common ....
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....rts 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. xxx xxx xxx xxx All refund claims except those mentioned under Proposition (ii) below have to be and must be filed and adjudicated under the provisions of the Central Excises and Salt Act or the Customs Act, as the case may be. It is necessary to emphasise in this behalf that Act provides a complete mechanism for correcting any errors whether of fact or law and that not only an appeal is provided to a Tribunal - which is not a departmental organ - but to this Court, which is a civil court." 6. The above in my opinion provides a complete answer to the petitioner's case. The decisions unequivocally declares that r....
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....lying upon the decision of the Supreme Court in Collector of Central Excise v. Sugar Mills - 1988 (37) E.L.T. 478. In the light of the above pronouncements therefore the contrary view taken by the Division Bench of this Court in Assistant Commissioner C.C. Ex. v. Kashyap Engineering & Metallurgicals (P) Ltd. - 1990 (45) E.L.T. 375 (Kar.) must be deemed to have been impliedly over-ruled." E. Hon'ble Supreme Court has in case of Sansera Engineering Ltd.[ 2022 (382) E.L.T. 721 (S.C.)] observed as follows: 12. As such, the issue involved in the present appeal is squarely covered by the decision of this Court in the cases of Mafatlal Industries Ltd. (supra) and Uttam Steel Limited (supra). After taking into consideration Section 11B of the Act and the notification and procedure under Rule 12, it is specifically observed and held that rebate of duty of excise on excisable goods exported out of India would be covered under Section 11B of the Act. After referring to the decision of this Court in the case of Mafatlal Industries Ltd. (supra), it is further observed in the case of Uttam Steel Limited (supra) that such claims for rebate can only be made under Section 11B within the per....
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....bject to the rule that in the absence of an express provision or clear implication, the legislature does not intend to attribute to the amending provision a greater retrospectivity than is expressly mentioned, nor to authorise the Income Tax Officer to commence proceedings which before the new Act came into force had by the expiry of the period provided, become barred." To similar effect is the judgment in J.P. Jani, Income Tax Officer v. Induprasad Devshanker Bhatt, AIR 1969 SC 778. The Court held : "6. In our opinion, the principle of this decision applies in the present case and it must be held that on a proper construction of Section 297(2)(d)(ii) of the new Act, the Income Tax Officer cannot issue a notice under Section 148 in order to re-open the assessment of an assessee in a case where the right to re-open the assessment was barred under the old Act at the date when the new Act came into force. It follows therefore that the notices dated 13-11-1963 and 9-1-1964 issued by the Income Tax Officer, Ahmedabad were illegal and ultra vires and were rightly quashed by the Gujarat High Court by the grant of a writ." In New India Insurance Co. Ltd. v. Shanti Misra, (1975) 2 SCC....
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....exhaustive. In case of any doubt or ambiguity in these propositions, reference must be had to the discussion and propositions in the body of the judgment. (i) Where a refund of tax/duty is claimed on the ground that it has been collected from the petitioner/plaintiff - whether before the commencement of the Central Excises and Customs Laws (Amendment) Act, 1991 or thereafter - by misinterpreting or misapplying the provisions of the Central Excises and Salt Act, 1944 read with Central Excise Tariff Act, 1985 or Customs Act, 1962 read with Customs Tariff Act or by misinterpreting or misapplying 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 enactments 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 t....
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..... While summarizing the propositions, the Hon'ble Court at para 99(ii) held as follows:- "(ii) Where, however, a refund is claimed on the ground that the provision of the Act under which it was levied is or has been held to be unconstitutional, such a claim, being a claim outside the purview of the enactment, can be made either by way of a suit or by way of a writ petition. This principle is, however, subject to an exception : where a person approaches the High Court or Supreme Court challenging the Excise Appeal No.78558 of 2018 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 re-opened on the basis of a decision on another person's case; this is the ratio of the opinion of Hidayatullah, CJ. in Tilokchand Motichand and we respectfully agree with it. Such a claim is maintainable both by virtue of the declaration contained in Article 265 of the Constitution of India and also by virtue of Section 72 of the Contract Act. In such cases, period of limitation would n....
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....) in Dulabhai's case, as explained hereinabove, as one passed outside the Act and ultra vires. Such action will be governed by the general law and the procedure and period of limitation provided by the specific statute will have no application. [Collector of Central Excise, Chandigarh v. M/s. Doaba Co-operative Sugar Mills Ltd., Jalandhar [1988 (37) E.L.T. 478 (SC) : 1988 Supp. SCC 683); Escorts Ltd. v. Union of India & Ors. [1994 Supp. (3) SCC 86)] Rule 11 before and after amendment, or Section 11B cannot affect Section 72 of the Contract Act or the provisions of Limitation Act in such situations. My answer to the claims for refund broadly falling under the three groups or categories enumerated in Paragraph 5 of this judgment is as follows : where the levy is unconstitutional - Outside the Category (I) provisions of the Act or not contemplated by the Act :- In such cases, the jurisdiction of the civil courts is not barred. The aggrieved party can invoke Section 72 of the Contract Act, file a suit or a petition under Article 226 of the Constitution, and pray for appropriate relief inclusive of refund within the period of limitation Excise Appeal No.78558 of 2018 provided by....
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....ction. It is not merely adjunct to assessment. It is not merely consequential to assessment. It is not merely machinery. Penalty is in addition to tax and is a liability under the Act. Reference may be made to Section 28 of the Indian Income-tax Act, 1922 where penalty is provided for concealment of income. Penalty is in addition to the amount of income-tax. This Court in Jain Brothers v. Union of India., 1970 (77) ITR 107 : 1969 (3) SCC 311, said that penalty is not a continuation of assessment proceedings and that penalty partakes of the character of additional tax. 26. The Federal Court in Chatturam v. C.I.T., Bihar, 1947 (15) ITR 302, said that liability does not depend on assessment. There must be a charging section to create liability. There must be first a liability created by the Act. Second, the Act must provide for assessment. Third, the Act must provide for enforcement of the taxing provisions. The mere fact that there is machinery for assessment, collection and enforcement of tax and penalty in the State Act does not mean that the provision for penalty in the State Act is treated as penalty under the Central Act. The meaning of penalty under the Central Act cannot be ....
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....enalty may be equated with a fine. Section 63 of the Bombay Act of 1959 speaks of certain "offences and penalties". Indeed, Chapter 8 of that Act is itself headed as "Offences and Penalties". 12. Mathew, J., however, in his dissenting opinion, inter alia, held that penalty can be levied as incidental to the levy and recovery of tax stating as under : "As the power to impose penalty is specifically provided for in Section 16 of the Bombay Sales Tax Act for enforcing payment of tax payable under it, it is unnecessary to speculate whether, but for the express provision in that Act, a power to impose penalty for enforcement of tax payable under that Act would have been implied. The object of the provision for the imposition of penalty in Section 16 of the Bombay Sales Tax Act is to provide a stimulant to the dealer to observe the mandate of the section directing the payment of the tax within the prescribed time. In other words, the provision for imposition of penalty in Section 16 of the Bombay Sales Tax Act facilitates the collection of tax as it is a sanction for non-observance of the duty to pay the tax within the prescribed time. It operates as a deterrent against the commissio....