TaxTMI 
TaxTMI 
2025 (7) TMI 698
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....le to State Excise, as such, amount discharged by the Appellant towards Central Excise duty on the product containing Alcohol, after excluding the clearance of Alcoholic product, which is purely a subject matter of State Excise, and not includable in aggregate clearance of Rs.1.5 crore. The liability towards duty on the Appellant was NIL inasmuch as after excluding value of alcoholic products the clearances of the Appellant was under the SSI Exemption during the Financial Year 2011-12 to 2015-16, the Appellant had never crossed the clearance of Rs.1.5 crore, as such an amount of Rs.1,03,396/- paid towards duty of excisable goods has been made under mistake of law. Similarly, an amount of Rs.5,46,772/- deposited during the abovementioned period on Alcoholic products has also been paid under mistake of law. Accordingly, the Appellant filed refund application on 07.12.2020, date wise chronology of events is reproduced for better appreciation of facts : - 18.12.2016 and 03.03.3017 : Date of Audit for the period from April, 2012 to March, 2016. 28.12.2016 : Letter filed by the Appellant to the Audit Officer regarding stop payment of Duty payable on Ethyl Alcohol Produc....
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....the General Rule of Interpretation are not applicable on the products of the Appellant for which refund claim has been filed. The Appellant draws attention on the provision of Section 2(a) of the Medical and Toilet Preparations (Excise Duties) Act, 1955, which defines that "Alcohol means ethyl alcohol of any strength and purity having the chemical composition C2H5OH". 7. I find that the Appellant vide letter dated 28.12.2016, has also apprised the said fact and also the fact that excess duty has been deposited by the Appellant to the Superintendent (Field Audit Group-1), Central Excise, Audit Circle-Kanpur with a copy to the Superintendent, Central Excise Range-III, Division-I, Kanpur, but neither any heed has been given nor adjustment of excess duty paid by the Appellant has been allowed. I find that the Appellant has deposited an amount of Rs.5,46,772/- during the Financial Year 2011-12 to 2015-16 under mistake of law as such the same is liable to be refunded being outside the purview of the enactment and cannot be equated with Central Excise duty and is simply a deposit made under mistake of law. Since Alcoholic preparation is liable to State Excise, as such amount discharged....
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....ioner of Central Excise, Hyderabad-GST [Service Tax Appeal No. ST/30781/2081] [2020 (43) G.S.T.L. J129 (Tri.-Hyd.) and Oriental Insurance Company Limited vs. Commissioner of Central Excise & Service Tax [Service Tax Appeal No.51609 of 2016]. It was also contended that the bar of unjust enrichment was inapplicable in the present case. 9. Both sides have relied on a plethora of judgments on the issue of the applicability of the limitation provided under Section 11B to amounts paid under mistake of law. The tenor of the jurisprudence on the subject indicates that the limitation prescribed under Section 11B is not applicable to a refund claim in a situation where the concerned tax was never payable by the assessee. In other words, had the Department raised a demand of such an amount, the assessee could have successfully challenged the constitutionality of the same. 10. This principle was laid down by the Hon'ble Karnataka High Court in KVR Constructions vs. CCE, Bangalore [2010 (17) S.T.R. 6 (Kar.)], the relevant portions of which have been extracted below :- "17. If this Court ultimately concludes that Section 11B of the Act is applic....
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....x. What one has to see is whether the amount paid by petitioner under mistaken 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. In 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 na....
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....e Appellant was not required to pay the amount so paid by them, such amount could not have been recovered by the Revenue and therefore, such amount cannot now be retained by the Revenue. 17. I find that the refund claim filed by the Appellant was filed within the limitation period prescribed under the Article 113 of the Limitation Act, 1963 and since, the amount was not payable by the Appellant under the provisions of the Finance Act, 1994 or the Central Excise Act, 1944, the provisions under the Limitation Act, 1963 would apply." 12. The High Courts of Bombay, Madras, Telangana and Calcutta have similarly held that refunds of amounts paid under mistake of law would not be hit by the statutory limitation periods, in the following judgments:- (i) Parijat Construction vs. CCE, Nashik [2018 (9) G.S.T.L. 8 (Bom.)] "5. We are of the view that the issue 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 vs. M/s.....
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....d of limitation under section 11B had expired. Such a position would be contrary to the law laid down by the Hon'ble Apex Court, and therefore we have no hesitation in holding that the claim of the Assessee for a sum of Rs.4,39,683/- cannot be barred by limitation, and ought to be refunded. 14. There is no doubt in our minds, that if the Revenue is allowed to keep the excess service tax paid, it would not be proper, and against the tenets of Article 265 of the Constitution of India. On the facts and circumstances of this case, we deem it appropriate to pass the following directions :- (a) The Application under section 11B cannot be rejected on the ground that is barred by limitation, provided for under Section." (iii) Vasudha Bomireddy vs. Assistant Commissioner of Service Tax [2020 (35) G.S.T.L. 52 (Telangana)]. "18. Having regard to these decisions, we are of the opinion that if the petitioners were not liable to pay "service tax" on the transaction of the purchase of the constructed area along with goods apart from undivided share of land at all, the payment which was made by the petitioners would not be a payment of service tax at all; that the depart....
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..... 247 (S.C.)] has been considered and interpreted by several judgments including the Karnataka High Court in KVR Construction (supra), by this Tribunal in the case of ASL Builders (supra), by CESTAT Delhi in Credible Engineering (supra). The said judgments have concluded that statutory limitation periods are not applicable to amounts paid under mistake of law. 14. Finally, in the case of Credible Engineering Construction Projects Ltd. vs. Commissioner of Central Tax, Hyderabad GST - Service Tax Appeal No.30781 of 2018 - Order dated 25.09.2020, there was a dissent between the members and the matter was referred to a Third Member. Relevant portions of the order are extracted below :- "(1) Whether the limitation prescribed under section 11B of the Central Excise Act will not be applicable as the tax was paid erroneously though eligible to exemption and as such is in the nature of deposit and hence limitation is not attracted as held by Member (Judicial) following the ruling of Hon'ble Karnataka High Court in KVR Construction affirmed by Hon'ble Supreme Court - 2018 (14) S.T.R. 117. OR Limitation prescribed under section 11B is applicable as held by Member....