TaxTMI 
TaxTMI 
TaxTMI 
2025 (11) TMI 438
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.... ST/40013/2021 Jan. 2018 to March 2018 Rs.92,51,952.00 4. ST/40014/2021 April 2018 to Sept. 2018 Rs.89,53,797.00 5. ST/40482/2021 July 2017to March 2018 Rs.97,74,741.00 6. ST/40483/2021 Oct. 2018 to March 2019 Rs.1,05,64,294.00 7. ST/40484/2021 April 2019 to Sept. 2019 Rs.36,88,752.00 8. ST/40485/2021 Oct. 2019 to March 2020 Rs.47,11,938.00 9. ST/40890/2023 April 2018 to March 2019 Rs.21,59,463.00 10. ST/40891/2023 April 2020 to March 2021 Rs.8,16,766.00 2. Brief facts of the case is that MHR is a public limited company engaged in timeshare business. They provide holiday and leisure services under the flagship brand 'Club Mahindra Holidays' in resorts to their club members by collecting one-time membership fees (Time share fees), the service tax on membership fee is stated to be paid on collection basis. The subscriber is also required to pay an Annual Subscription Fees (ASF) every year. ASF invoices to members are raised every year on accrual basis and applicable service tax is paid by the company on accrual basis, irrespective of whether the amount is collected from members or not. Howeve....
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....d to adjust the service tax paid on services which were cancelled towards the service tax liability in subsequent month/quarter liability per the provisions of Rule 6(4A) of the Service Tax Rules 1994 read with Rule 6(3) the Service Tax Rules 1994. However, post introduction of the GST Law in India, in the event of cancellation of membership for the above-mentioned reasons, the appellant has no option to adjust the excess service tax paid against the tax liability in subsequent period. Therefore, post July 2017, the appellant has been filing refund of service tax paid on the services which were cancelled under Section 142(5) of the GST Act, 2017, which provides for refund of tax paid under the pre-GST regime in respect of services which were not provided. In this regard, the Ld. Counsel made the following submissions. A) Refund Claim under Section 142(5) of the CGST Act cannot be rejected as time barred. B) There is no unjust enrichment by the appellant. C) Tax paid on services which were not rendered shall be treated as a "Deposit". D) Lack of Consistency in passing orders. (Details of the submissions made in the appeal memorandum, written an....
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....o show that it is worded in such a way that it frees the refund claims arising in the said circumstances from the fetters of limitation which is provided under sub-section (1) of Section 11B. The only thing that is not overridden is the requirement of fulfilment of unjust enrichment clause as provided under sub-section (2) of Section 11B. Reliance was placed on the following case laws in support of their stand: (a) M/s. Lifecell International Pvt Ltd Vs. Commissioner of GST & Central Excise, Chennai - 2022 (6) TMI 1134 - CESTAT, Chennai. (b) M/s. Chalet Hotels Ltd Vs. Commissioner of Central Tax Bengaluru - 2022 (8) TMI 640 - Karnataka High Court (c) M/s. Wave One Private Limited Vs. Commissioner, Office of the Commissioner (Appeals-I), Central Goods and Service Tax and Central Excise, Delhi - 2023 (11) TMI 1078 - CESTAT New Delhi. (d) M/s. Welldone Infrastructure Pvt Ltd. Vs. Commissioner of Customs, GST & Central Excise, Lucknow - 2024 (3) TMI 501 - CESTAT Allahabad. 5.3 Submissions made by Revenue 5.4 The appellant's interpretation of Section 142(5) of the CGST Act appears incorrect and contrary to the plain language of the statute. The ....
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.... further stated that the words, 'disposed of' and 'eventually' appearing in Section 142(5) of the CGST Act are not meaningless and carry significance. He submitted that the word, 'disposed of' is integrally connected and embedded with the 'provisions of existing law'. Also, the word "eventually" refers to the final outcome of the process of adjudicating or disposing of a refund claim. The term signifies that any amount determined to be refundable to a claimant, after the claim has been processed and scrutinized in accordance with the provisions of the existing law will be paid in cash. However, only the amount that is legitimately refundable, after all checks and balances, will be paid in cash, overriding any conflicting provisions in the existing law. This includes: a) Verification of the claim for time-limitation; b) Verification of the claim for requisite documentation. c) Scrutiny for compliance with the relevant existing law(s). d) Ensuring the claimant meets conditions, such as proving that the tax was paid and the service was not provided or proving that it was a case of payment under 'mistake of law', etc. Thus, the word, 'eventually' ....
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.... the RTI Act must prevail and therefore, the RTI Act would prevail over the rules framed by the High Court. The Hon'ble Court held that the non-obstante clause of the RTI Act does not mean an implied repeal of the High Court Rules and Orders framed under Article 225 of the Constitution of India; but only has an overriding effect in case of inconsistency. A special enactment or rule cannot be held to be overridden by a later general enactment simply because the latter opens up with a non-obstante clause, unless there is clear inconsistency between the two legislations. Hence non obstante clauses apply only in the event of inconsistency where the issue arises with respect to giving overarching status to one of the conflicting provisions. [See: Synergy Fertichem Pvt. Ltd Vs State of Gujarat (Gujarat High Court) - 2019 SCC OnLine Guj 6127 / 2019-TIOL-2950-HC-AHMGST; KAMAL ENVIROTECH PVT LTD Vs COMMISSIONER OF GST AND ANR - 2025-TIOL-130-HC-DEL-GST] 5.8 Moreover a non obstante clause does not only mean that it is meant to allow a provision of law to prevail over other conflicting provisions/ law. The Hon'ble Supreme Court in Dominion of India Vs Shrinbai A. Irani [AIR 1954 SC 596, pa....
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....ruing to him (claimant) shall be paid in cash. The non obstante clause makes its appearance immediately after, in segment (f). The issue raised at this stage by revenue is that this clause is by way of an abundant caution and pertains to the payment of refund in cash, since under the earlier law payment of refund of duty paid through credit was to be paid as re-credit in the ledger only and not as cash. The appellant on the other hand reads the clause with segment (d) and is of the opinion that the clause overrides all other provisions of the erstwhile law in as much as it pertains to their refund claim and the benefit of the said segment i.e. 'other than the provisions of sub-section (2) of section 11B of the Central Excise Act, 1944', removes the element of time limit provided for in sub-section (1) of section 11B. 5.12 We find that section 142(5) does not refer to overriding any particular provision and hence the non obstante clause has to be examined and given a restricted meaning limited to the context in which it is used. Further unlike in cases where the protection of the non obstante clause is sought to be made all encompassing and the section itself starts with the non ....
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....ines prescribed under Section 11(B). Further Rule 6(3) does not govern cash refunds from the government; it pertains to self-adjustment of tax liability. However in the case of the appellant the refund claim of the appellant is hit by laches as per their own making. The ASF Invoices were raised in 09/2012 and in case of non-payment by Members of the Time-Share Agreement, the Agreements were to be terminated after default in payment in full or part for two consecutive years. However, Credit Notes for the said Invoices came to be issued much later as late as 01/2018. Further the Refund claims were filed as late as on 21.02.2020. 5.15 We find that the term 'existing law' pertains to the law under which the tax has been charged and paid i.e. Finance Act 1994 and not the Service Tax Rules, which is part of a sub-ordinate legislation and is procedural in nature. Rule 6(3) was a procedural facility which ceased to be law by the time the refund claim was filed by the appellant and cannot be revived without a specific enabling provision. The Hon'ble Supreme Court in M/S. Ispat Industries Ltd Vs Commissioner Of Customs, Mumbai [AIRONLINE 2006 SC 69 / (2006) 202 ELT 561 (SC)] held as under....
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....not found from a plain reading of the section. Judgments and orders interpret the provisions of law and cannot add anything to it. A Constitution Bench of the Supreme Court in the case of Commissioner of Sales Tax, U.P. Vs Modi Sugar Mills Ltd., AIR 1961 SC 1047 observed thus: "In interpreting a taxing statute, equitable consideration are entirely out of place. Nor can taxing statutes be interpreted on any presumptions or assumptions. The court must look squarely at the words of the statute and interpret them. It must interpret a taxing statute in the light of which is clearly expressed; it cannot imply anything which is not expressed it cannot import provisions in the statute so as to supply any assumed deficiency." (emphasis added) Further the judgments of Constitutional Court on the principles involved in applying the non obstante clause, some of which are discussed above, were not placed before the Bench nor were they independently perceived and discussed; hence the Order came to be passed sub-silentio. Moreover, the decision of a Single Member Bench is not binding on a Bench of larger quorum. This being so the Order does not have any precedential val....
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....ant submitted ST Return, Copy of invoices and credit notes, bank statements/remittance details on sample basis evidencing refund to customers. The appellant's customers could not availed Cenvat Credit on the membership of the club as the club membership has been clearly excluded from the definition of "input services" under Rule 2(l)(c) of the Cenvat Credit Rules, 2004. 6.2 Submissions made by revenue 6.3 Reliance is placed on the 7-Member Larger Bench Hon'ble Supreme Court judgement - Mafatlal Industries Vs Union of India [1997 (89) E.L.T. 247 (S.C.)] which held that all refund claims, except where the levy is unconstitutional, must be filed and adjudicated under Section 11B, subject to its time limit and unjust enrichment provisions. The appellant's claim does not challenge the constitutionality of the levy but seeks a refund due to subsequent cancellations, which falls squarely within Section 11B's ambit. 6.4 Discussion on the submissions 6.5 The issue of unjust enrichment is a mixed question of fact and law. The question of limitation involves a question of jurisdiction [See: Simplex Infrastructure Ltd. Vs Commissioner of Service Tax, Kolkata [(2016) 42 STR 634 (Cal....
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....t rendered shall be treated as a "Deposit". 7.1 Submissions made by MHR 7.2 As an alternate submission, MHR has submitted that the service tax paid on services which are eventually not rendered is only a "deposit" collected without any authority of law. It is outside the ambit of the Statute and as such the limitations imposed (such as time-limit and unjust enrichment) for claiming the refund of tax under the Statute will not be applicable. They have drawn reference to the decision of the Hon'ble Madras High Court in the case of M/s. 3E Infotech Vs. Customs, Excise & Service Tax Appellate Tribunal, Commissioner of Central Excise (Appeals-I) 2018 (7) TMI 276 - Madras High Court, wherein it has been held that: "13. On an analysis of the precedents cited above, we are of the opinion that when service tax is paid by mistake a claim for refund cannot be barred by limitation, merely because the period 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. 4,39,683.00/- cannot be barred by limitation and ought....
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.... but a 'deposit'. It is the appellant's view that once tax is paid but the service was not rendered it amounts to tax having been collected without the authority of law and is hence only a 'deposit'. Per contra revenue is of the opinion that Service tax was paid by the appellant on accrual basis for ASF invoices as per the self-assessment provisions of the Finance Act, 1994. The appellant treated the amount as "service tax" and paid it under the appropriate head of account, as admitted by them in the Statement of Facts. 7.7 The authority to tax, is traceable to the Constitution. As stated by a 9 Judge Bench of the Apex court in Mafatlal Industries Ltd. (supra), Article 265 does not itself lay down any criteria for testing the validity of a statute, when it speaks of 'law', it refers to a valid law but the validity has to be determined with reference to other provisions of the Constitution. For an understanding of the issue, some of the Articles of the Constitution where a reference to 'law' has been made are listed below: Article 265. Taxes not to be imposed save by authority of law - No tax shall be levied or collected except by authority of law. +++++ ....
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....f the taxing authority is a burden imposed upon a person's right to carry on trade or business. This burden is not lessened or lifted merely because the decision proceeds upon a misconstruction of a provision of the law, which the taxing authority has to construe. Therefore, it makes no difference whether the decision is right or wrong so long as the error does not pertain to jurisdiction." (emphasis added) Thus any refund arising out of a wrong assessment made has to be dealt with under section 11B of the Central Excise Act only. 7.9 As held by Constitutional Courts while the power to levy taxes is an attribute of sovereignty, exercise of that power is controlled by the Constitution. The collection of tax by the authority of law must hence be understood to mean by a valid law. A 7 Judge Bench of the Apex Couret in JINDAL STAINLESS LTD.& ANR. VS. STATE OF HARYANA & ORS. NEW DELHI, [CIVIL APPEAL NO. 3453/2002, Dated: 11/11/2016], examined the power to levy taxes. The Court held: Power to Tax : an Attribute of sovereignty 14. Power to levy taxes has been universally acknowledged as an essential attribute of sovereignty. Cooley in his Book on Taxat....
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....Central Government (1) Any person who is liable to pay service tax under the provisions of this Chapter or the rules made thereunder, and has collected any amount in excess of the service tax assessed or determined and paid on any taxable service under the provisions of this Chapter or the rules made thereunder from the recipient of taxable service in any manner as representing service tax, shall forthwith pay the amount so collected to the credit of the Central Government. (2) Where any person who has collected any amount, which is not required to be collected, from any other person, in any manner as representing service tax, such person shall forthwith pay the amount so collected to the credit of the Central Government. (emphasis added) Once the amount is collected as Service Tax as per the authority of law and is deposited to Government any refund can be claimed only as per the provisions of the said Act. As stated in the Mafatlal industries judgment (supra), even a finding regarding the invalidity of a levy need not automatically result in a direction for a refund of all collections thereof made earlier. It further stated: "Section 11B of ....
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....ned". 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 Section 11B, as it now stands, is to the same effect - indeed, more comprehensive and all-encompassing. It says, "(3) Notwithstanding anything to the contrary contained in any judgment, decree, order or direction of the Appellate Tribunal or any court or in any other provision of this Act or the rules made thereunder or in any law for the time being in force, no refund shall be made except as provided in sub-section". The language could not have been more specific and emphatic. The exclusivity of the provision relating to refund is not only express and un....
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.... 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 that all questions about the said right and liability shall be determined by the Tribunals so constituted, the resort to civil court is not available - except to the limited extent pointed out therein. Central Excise Act specifically provides for refund. It expressly declares that no refund shall be made except in accordance therewith. The Jurisdiction of a civil court is expressly barred - vide sub-section (5) of Section 11B, prior to its amendment in 1991, and sub-section (3) of Section 11B, as amended in 1991. It is relevant to notice that the....
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....e 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. . . . . ." ********* "PART - IV 99. The discussion in the judgment yields the following propositions. We may forewarn that these propositions are set out merely for the sake of convenient reference and are not supposed to be 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 mis-interpreting or misapplying the provisions of the Central Excises and Salt Act, 1944 read with Central Excise Tariff Act, 19....
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.... 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. . . . ." (emphasis added) As per the judgment, a refund arises on two grounds; i) where the charging section of a statutory provision ("law") is itself challenged by an assessee for an unconstitutional levy as it is violative of some provision of the Constitution and succeeds then the claim for refund arises outside the provisions of the Act. [See para 17 of judgment] ii) where the tax is collected by the authorities under a statute by misconstruction or wrong interpretation of the provisions of the Act, Rules or Notifications or by an erroneous determination of the relevant facts, i.e., an illegal levy. In this class of cases, the claim for refund arises under the provisions of the Act. In other words these are situations contemplated by and provided for by the Act and the Rules. [See para 18 of judgment] As per the judgment tax collected under an illegal levy are also c....
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.... by the Hon'ble Supreme Court is binding on all courts and judicial bodies. Hence we do not propose to discuss individually the judgements cited by the appellant. Moreover as stated by the Apex Court in UoI & Ors. Vs VKC Footsteps India Pvt Ltd. [2021 (9) TMI 626 - Supreme Court], refund is not a constitutional right but a statutory right and therefore, the legislature, in its wisdom, and through statute, can decide how the refund is to be granted. Further this is a case where the appellant has self-assessed the duty but has failed to file the refund claim in time. Hence this is not a situation where the refund is sought to be denied to them. While they may (after verification of the claim) be found to have a right to the refund, the remedy of processing the refund is not available because of their own negligence in not claiming the refund in time. It is trite law that limitation bars the judicial remedy, while it does not extinguish the right. 8. Lack of Consistency in passing orders 8.1 Submissions by MHR 8.2 The appellant submits that although all the refund claims pertain to the same issue, in certain cases, the Respondent held that the Refund claim is hit by time-limi....