TaxTMI 
TaxTMI 
2025 (1) TMI 50
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.... 4.1 The petitioner is engaged in the business of manufacturing various types of textile machinery and equipment. Petitioner is registered under the provisions of the Central/State Goods and Services Tax Act, 2017 (for short the 'GST Act') , after coming into force of the said Act. 5. The petitioner for manufacturing the goods, various types of textile machinery and equipment was procuring various inputs, raw materials, capital goods including the supplies by way of import during the period from May 2019 to March 2020. The petitioner imported various inputs and material by filing 33 Bills of Entry which were cleared from the ports of imports to the factory premises of the petitioners on payment of import duties leviable including the integrated tax of Rs. 2,48,28,300/- which is admissible as Input Tax Credit (ITC). Accordingly, the petitioner availed the ITC of the said amount on the basis of the Bills of Entry and challans. However, it appears that due to some wrong impression created on the petitioner' s part that an excess credit of Rs. 40,00,000/- was availed regarding the tax paid on imported goods, which the petitioner paid on account of the mismatch between the figures ....
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....efund claim. 10. The respondent No. 2 Assistant Commissioner by impugned order dated 14. 6. 2024 rejected the refund application of the petitioner being time barred. 11. Being aggrieved the petitioner has preferred this petition. 12. Learned advocate Mr. Paresh Dave for the petitioners submitted that there are no disputes with regard to the facts of the case as it is admitted by the respondents in the affidavit-in-reply filed that the payment made by the petitioner was not recovered as tax by the authorities but was a voluntary payment. It was further submitted that the petitioner has not paid the amount of Rs. 40,00,000/- towards any tax and interest as contemplated under Section 54 (1) of the Act and therefore, the limitation of two years prescribed in Section 54 (1) shall not be applicable to the refund of the amount voluntarily deposited by the petitioner in Form DRC-03. It was further submitted that the issue of refund of such voluntary payment is no more res-integra in view of decision of this Court in case of M/s. Joshi Technologies International Versus Union of India reported in (2016) 339 ELT 21, which was subsequently followed in decision of M/s Gujarat State Pol....
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....g explanation on why the application may not be rejected being time barred. (copy annexed at pg 47 of the petition). The petitioner failed to submit their reply to the SCN issued to them in the form of RFD-08 and also failed to appear for personal hearing. Hence, after considering the facts, the impugned order dated 14. 06. 2024 came to be passed. 10. It is submitted that, a contention is raised by the petitioner that, the cause of action for claiming refund has arisen in April, 2024 based on ASMT-12 order. Such contentions are completely misplaced, in as much as the order of ASMT-12 has been issued by the jurisdiction Range Superintendent on 24.04.2024 whereas the refund claim was filed by petitioner, prior to that, i.e. on 30.03.2024. Furthermore, even assuming, without admitting, that upon intimation of GST ASMT-10 dated 23.02.2024, it came to the knowledge of petitioner regarding such mistake, it would not be of any relevance, since as per the Act, the period of limitation of 2 years does not start with such knowledge of mistake but starts with payment of tax. Hence, the petitioner' s computation of delay is against the provisions of the Act and they shift the onus....
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....fore, no acknowledgement under Form DRC-04 can be issued without any due verification and scrutiny. Therefore, the pendency of Form DRC-04 would not have any relevance for the petitioner. 14. It was therefore submitted that the petitioner is not entitled to any refund in view of the belated claim of refund made by the petitioner after the period of two years from the date of deposit. 15. Having considered the rival submissions made by both the learned advocates, it is not in dispute that the petitioner deposited amount of Rs. 40,00,000/- by mistake on 20.11.2020 voluntarily which was neither towards any tax, interest or penalty. The similar issue came up for consideration before this Court in case of M/s. Joshi Technologies International (Supra) as well as in case of Gujarat State Police Housing Corporation Ltd. (Supra), wherein it is held by this Court as under : - "22. Having heard learned advocates for the respective parties and having considered the facts of the case, it is not in dispute that the petitioner is entitled to the exemption under Notification No. 32/2017 read with Notification No. 12 of 2017 dated 13. 10. 2017, which reads as under: - "GOVERNMENT ....
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....y Central Government, State Government, Union territory or local authority against consideration received from Central Government, State Government, Union territory or local authority, in the form of grants. " 24. Section 5A (1A) of Central Excise Act, 1944 stipulates as under: - "Section 5A [(1A) For the removal of doubts, it is hereby declared that where an exemption under sub-section ( 1) in respect of any excisable goods from the whole of the duty of excise leviable thereon has been granted absolutely, the manufacturer of such excisable goods shall not pay the duty of excise on such goods" 25. Section 54 (1) of the CGST Act reads as under: - "Section 54 (1) Refund of tax paid on zero rated supplies of goods or services or both or on "input or input service" ( not the capital goods) used in making such zero rated supplies. " 27. Explanation 2 (h) of Section 54 of the CGST Act defining the relevant date reads as under: - "(2) "relevant date" means- (a) in the case of goods exported out of India where a refund of tax paid is available in respect of goods themselves or, as the case may be, the inputs or input services u....
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.... as per clause (h) explanation 2, refund date would be the date of payment of tax, which petitioner has failed ignoring the Notification No. 32/2017. Therefore, the petitioner is ought to have filed refund claim as per the Section 54 (1) of the CGST Act. 29. This Court in the case of Joshi Technologies International (supra) has held that the amount paid by mistake or through ignorance as self-assessment of tax cannot be retained by the revenue and revenue is duty bound to refund as its retention is hit by Article 265 of the Constitution of India, which mandates that no tax shall be levied or collected except by authority of law. It was held as under: - "13. The next question that needs to be addressed is the aspect of limitation. The refund application has been made in July 2014 seeking refund of the amount paid for the period July, 2004 to April 2014. On behalf of the revenue it has been contended that in view of the provisions of section 11B of the CE Act, the limitation for filing the refund claim would be before the expiry of one year from the relevant date. The expression "relevant date" is defined under clause (B) of the Explanation to section 11B of CE Act ....
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....petition was filed explaining all the circumstances. The High Court considered the delay as inordinate. In our view, the High Court failed to appreciate all material facts particularly the fact that the demand is illegal as already declared by it in the earlier case. 13. The rule which says that the Court may not enquire into belated and stale claim is not a rule of law but a rule of practice based on sound and proper exercise of discretion. Each case must depend upon its own facts. It will all depend on what the breach of the fundamental right and the remedy claimed are and how delay arose. The principle on which the relief to the party on the grounds of laches or delay is denied is that the rights which have accrued to others by reason of the delay in filing the petition should not be allowed to be disturbed unless there is a reasonable explanation for the delay. The real test to determine delay in such cases is that the petitioner should come to the writ court before a parallel right is created and that the lapse of time is not attributable to any laches or negligence. The test is not as to physical running of time. Where the circumstances justifying the conduct exist, ....
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....ely on 1-11-2003, such refund claim was filed. 17. In a recent judgment in case of C. C. Patel & Associates Pvt. Ltd. (supra) , this court had occasion to deal with somewhat similar situation where the petitioner had deposited service tax twice which was not being refunded by the Department. In that context, it was observed as under: - (12) We fail to see how the department can withhold such refund. We say so for several reasons. Firstly, we notice that under sub-section (3) of section 68, the time available to a service provider such as the petitioner for depositing with the Government service tax though not collected from the service recipient was 75 days from the end of the month when such service was provided. This is in contrast to the duty to be deposited by a service provider upon actual collection by the 15th of the month following the end of the month when such duty is collected. Sub-section (3) of section 68 thus provided for an outer limit of 75 days, but never provided that the same cannot be paid by the 15th of the month following the end of the month when such service was provided. Thus, if the petitioner deposited such duty with the Government durin....
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....Court in the instant case after analysing the various decisions came to the conclusion that where a petitioner approached the High Court with the sole prayer of claiming refund of money by writ of mandamus, the same was normally not granted but where the refund was prayed as a consequential relief the same was normally entertained if there was no obstruction or if there was no triable issue like that of limitation. We agree that normally in a case where tax or money has been realised without the authority of law, the same should be refunded and in an application under Article 226 of the Constitution the court has power to direct the refund unless there have been avoidable laches on the part of the petitioner which indicate either the abandonment of his claims or which is of such nature for which there is no probable explanation or which will cause any injury either to respondent or any third party. It is true that in some cases the period of three years is normally taken as a period beyond which the court should not grant relief but that is not an inflexible rule. It depends upon the facts of each case. In this case, however, the High Court refused to grant the relief on the ground....
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....issuing a writ of mandamus directing this to be done since there was unreasonable delay in filing the petition. The High Court rejected all the contentions of the appellant and a writ of mandamus was issued as prayed for. It was held that tax was violative under Article 301 of the Constitution. But it was held that even though the tax contravened Article 301 of the Constitution, it was valid if it came within the saving provisions of Article 304 of the Constitution. Tobacco manufactured or produced in the appellant State, similar to the tobacco imported from outside had not been subjected to the tax and therefore the tax was not within the saving provisions of Article 304 (a) of the Constitution. It was reiterated that the tax which had already been paid was so paid under a mistake of law under Section 72 of the Indian Contract Act. The High Courts had power for the purpose of enforcement of fundamental rights and statutory rights to grant consequential reliefs by ordering repayment of money realised by the government without the authority of law. It was reiterated that as a general rule if there has been unreasonable delay the court ought not ordinarily to lend its aid to a party ....
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....hat the legal position was not clear and hence, pursuant to representations made by the trade and field formations, the CBEC was required to issue the circular dated 07. 01. 2014 clarifying the issue. As noticed earlier, the petitioner had all along, right from July 2004 been paying Education Cess and subsequently, from the year 2007 was paying Secondary and Higher Secondary Education Cess, till April 2014. It was only when the Circular dated 07. 01. 2014 came to be issued by the CBEC, clarifying the issue, that the petitioner came to know about its mistake. Considering the nature of the mistake and the fact that the issue was not free from doubt till the above circular came to be issued by the CBEC, it also cannot be said that the petitioner could with reasonable diligence have discovered the mistake. It appears that it is only sometime after the Education Cess and Secondary and Higher Secondary Education Cess came to be paid for the month of April 2014 that the petitioner came to know about its mistake and in July 2014, it filed the application for refund before the second respondent. Since the period of limitation begins to run only from the time when the applicant comes to know....
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....case, 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 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 t....
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....ication was Section 27 (3) which confines refunds to the situations contemplated in Section 27 (2), notwithstanding any judgment, order or decree of the court. This Court is at a loss to observe the relevance of that reasoning, given that SRF Limited (supra) had ruled in principle that import implied a deemed manufacture, without any corresponding obligation on the part of the importer to have availed CENVAT credit. As such, the amount claimed was not duty and could not have been recovered by the Customs authorities in the first instance, given the declaration of law in SRF Limited (supra). Therefore, they cannot now seek shelter under Section 27 (3) to resist a legitimate refund claim." 33. The Hon'ble Madras High Court in the case of M/s. 3E Infotech (supra) Court has held thus: - "8. The present appeal lies from the order of the Appellate Tribunal. We have heard the learned counsel for the Assessee and the State. The issue, which arises for consideration in this case, whether the provisions of Section 11B of the Central Excise Act would be applicable to claim of refund made by an Assessee when the tax has been paid under mistake of law. In this case, indisputab....
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....sue as to whether limitation prescribed under Section 11B of the said Act applies to a refund claimed in respect of service tax paid under a mistake of law is no longer res integra. The two decisions of the Division Bench of this Court in Hindustan Cocoa (supra) and Commissioner of Central Excise, Nagpur v. M/s. SGR Infratech Ltd. (supra) are squarely applicable to the facts of the present case. 5. Both decisions have held the limitation prescribed under Section 11B of the said Act to be not applicable to refund claims for service tax paid under a mistake of law. The decision of the Supreme 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 ....
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....Ltd., and Anr. v. Union of India and Ors. 1984 (16) ELT 171 SC, this Court, while examining the question as to what is the point of time from which the limitation should be deemed to commence observed that relief in respect of payments made beyond the period of three years may not be granted from the date of filing of the petition, taking into consideration the date when the mistake came to be known to the party concerned. Just as an assessee cannot be permitted to evade payment of rightful tax, the authority which recovers tax without any authority of law cannot be permitted to retain the amount, merely because the tax payer was not aware at that time that the recovery being made was without any authority of law. In such cases, there is an obligation on the part of the authority to refund the excess tax recovered to the party, subject of course to the statutory provisions dealing with the refund. 9. We are, therefore, of the opinion that the High Court, while disposing of the writ petition under Article 226 of the Constitution of India, was perfectly justified in holding that the bar of limitation which had been put against the respondent by the Collector Central Excise (....