TaxTMI 
TaxTMI 
2025 (11) TMI 2030
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....case are that the appellants were engaged in construction of single houses/flats for EWS and lower income group person and society on the base os work order issued by Rajasthan House Board (RHB). With effect from 01.07.2012, the said activity was exempted from service tax as per S.No. 14(b) and (c) of Notification No. 25/2012-ST dated 20.06.2012. As per S.No. 9 of Notification No. 30/2012-ST dated 20.06.2012, the appellants were liable to pay 50% of service tax amount and RHB were liable to pay remaining 50% of service tax under Reverse Charge mechanism. On the bills raised by the appellants, RHB were clearing the bill after deducting service tax amount and depositing to the government account. Prior to 01.07.2012, total amount the service tax was to be paid by the appellants. It is the submission of the appellants that they have paid service tax by mistake which was not leviable on them, therefore, the amount paid by them as well as paid by RHB on their behalf are not liable to be deposited. As no service tax is leviable on the appellants, therefore the said amount remains deposits, therefore, the appellants filed refund claims and after some litigation, the Original Adjudicating ....
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...., this Tribunal held that the RHB has paid the service tax on behalf of the appellant under Reverse Charge Mechanism by deducting the amount tax deposited by them from the running bills of the appellants and the same has been recorded in Para 3 of the show cause notice. In that circumstances, the refund claim cannot be rejected. 4.1 Further, it is submitted that refund claims are to be sanctioned along with interest at the rate of 12% as provision of Section 11B and 11BB of Central Excise Act, 1944 are not applicable as it is the case of paid tax by mistake of law. Therefore, it is not a tax. It is only an amount deposited by the appellants. 5. On the other hand, learned Authorized Representative opposed the contention of the appellants and submits that if they are entitled to claim interest on delayed refund, the same is to be sanctioned after three month from the date of the order of this Tribunal as held by Hon'ble Kolkata High Court in the case of Commissioner of Customs Vs. Vedanta Ltd. (CUSTA No. 14 of 2025 decision dated 10.09.2025], wherein it has been held that the refund is to be crystallized in favour of the respondent only on and after 05.09.2023 when the asse....
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....e request for rectification of error in respect of the 12 shipping bills. Aggrieved by such order dated 11.05.2015 the respondent preferred appeal before the appellate authority and the appeal was rejected by order dated 13.05.2016. The respondent challenged the said order before the learned Tribunal by preferring an appeal and the learned Tribunal by order dated 28.07.2022 set aside the order passed by the appellate authority dated 13.05.2016 and the appeal was allowed by way of remand to the original authority with a direction to pass a speaking order, finalizing the assessment. Direction was issued that relief as per notification No. 62/2007-Cus dated 03.05.2007 be given taking into account the test reports; those consequential benefits, if any, be given to the respondent as per law. The respondent filed an application on 05.08.2007 in Form No. 102 which is a statutory format for filing an application for refund and they claim a sum of Rs. 6,93,69,000/- is liable to be refunded. The respondent also requested for implementation of the order passed by the learned Tribunal dated 28.07.2022. By order dated 05.01.2023, the original authority rejected the refund claim. Aggrieved by th....
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....e computed in terms of the order passed by the learned Tribunal dated 28.07.2024. Aggrieved by such order dated 18.07.2024, the respondent preferred appeal before the learned Tribunal. The learned Tribunal by order dated 07.01.2025 directed the appellant Department to pay interest to the respondent at the rate of 12% per annum and that the interest is payable from 11.01.2011 till 5/6. 9.2023 when the amount was finally paid by the respondent, time frame was fixed for compliance. This order dated 07.01.2025 is impugned in this appeal." 8. On those such facts, the Hon'ble High Court observed as under: "After taking note of the overall effect of the provisions prior to the amendment and post amendment under Finance Act, 2011 it was held that the claim for refund cannot be entertained unless the order of assessment or self-assessment is modified in accordance with law by taking recourse to the appropriate proceedings and it would not be within the ken of Section 27 to set aside the order of self- assessment and reassess the duty for making refund; and in case any person is aggrieved by any order which would include self-assessment, he has to get the order modified under....
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....f the work order and deposited with the same to the government exchequer fulfilling their tax liability under Reverse Charge Mechanism. In that circumstances, the appellant is not required to produce any certificate from RHB. In view of this, I hold that appellants are entitled for refund claim of the amount paid by RHB under "Reverse Charge Mechanism" in full. 11. Now next issue arises whether the appellants are entitled to claim interest at the rate of 12% or not. 12. The said issue has been examined by this Tribunal in the case of Meenu Builders (supra), wherein this Tribunal observed as under: "8. I find that the main issue in the impugned order is that it is alleged the appellant has not produced the relevant document in support of the payment by the Rajasthan Housing Board of the 50% of service tax which has been rejected by the learned Commissioner (Appeals). 9. I find that in paragraph 3 of the show cause notice it has been recorded as under :- "3 (i) On service portion in execution of works contract service provider is liable to pay service tax on 50% portion and on rest amount, service receiver is liable to pay tax under reverse charge mec....
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....appellant is not liable to service tax and service tax paid by the appellant by mistake of law, therefore, time limit prescribed under Section 11B of the Central Excise Act, 1944 is not applicable to the facts of the case as held by the Hon'ble Karnataka High Court in the case of Commissioner of Central Excise versus KVR Construction reported as 2012 (26) S.T.R. 195 (Kar.). In that circumstances, the Cross Objections filed by Revenue are contrary to the law, therefore, the said are not acceptable. Now issue arises as appellant has paid service tax by mistake of law. In that circumstances on the refund claim sanctioned to the appellant whether the appellant are entitled to with interest or not, if yes then at what rate. 13. The said issue has examined by the Tribunal in the case of Gajendra Singh Sankhla versus Commissioner of CGST, Jodhpur (Raj.) vide Final Order No. 50597-50599 of 2025 dated 06.05.2025. In view of the decision of this Tribunal in the case of Gajendra Singh Sankhla (supra), wherein this Tribunal observed as under :- '6. On hearing the arguments advanced by both the sides, the sole issue arises is that in the case where service tax is paid ....
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....ra), in the said case the respondent themselves has conceded the claim of said interest. Further, in the case of D.D. International Pvt. Ltd. (supra), a refund claim was sanctioned under Section 129EE of the Customs Act. In that circumstances, the Hon'ble High Court held that the interest is payable @ 6%, I find that whether the provision of Section 11B of the Act are examined by the Hon'ble Karnataka High Court. In the case of KVR Constructions Ltd. (supra) wherein the Hon'ble High Court recorded as under :- "15. We are not concerned with the other conditions of Section 11B of the Act because it is not the case of the appellant Department that the burden of service tax was passed on to any other person. As a matter of fact, the controversy in this appeal revolves around the maintainability of the very application filed under Section 11B of the Central Excise Act and whether Sec. 11 applies to the facts of the present case at all. In the case of Mafatlal Industries Ltd. v. Union of India (supra), the question was with regard to the refund of Central Excise and Customs Duties. It was held that all claims except where levy is held to be unconstitutional, is to be....
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.... made only in accordance with the provisions of the Act (Rule 11, Section 11B etc. as the case may be), and an action by way of suit or writ petition under Article 226 will not be maintainable under any circumstances. An action by way of suit or a petition under Article 226 of the constitution is maintainable to assail the levy or order which is illegal, void or unauthorized or without jurisdiction and/or claim refund, in cases covered by propositions No. (1), (3), (4) and (5) in Dulalbhai'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) M/s. Doaba Co-operative Sugar Mills Ltd., Jalandhar [1988 (37) E.L.T. 487 (S.C.) = 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 of categories enumerated in paragraph ....
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....of an application in Form-R of the Central Excise Act would indicate that the applicant was intending to claim refund of the duty with reference to Section 11B, therefore, now it is not open to him to go back and say that it was not refund of duty. No doubt in the present case, Form-R was used by the applicant to claim refund. It is the very case of the petitioner that they were exempted from payment of such service tax by virtue of circular dated 17-9-2004 and this is not denied by the Department and it is not even denying the nature of construction/services rendered by the petitioner was exempted from to payment of Service Tax. 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....
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....r placed reliance on the judgment rendered by the Hon'ble Karnataka High Court in case of CCE (Appeals) v. KVR Construction [2012] 22 taxmann.com 408/36 STT 33/2012 (26) S.T.R. 195 (Kar.). In the said judgment, the Hon'ble Karnataka High Court came to the conclusion that section 11B of the Central Excise Act was not applicable to a refund application filed by the petitioner based on mistake of law. The Hon'ble Karnataka High Court fairly held that section 35B(1)(b) was inapplicable. Learned counsel for the petitioner further relied upon the challenge to the said order of the Hon'ble Karnataka High Court before the Hon'ble Supreme Court in case of Commissioner v. KVR Construction 2018 (14) G.S.T.L. 170 (SC). The Hon'ble Supreme Court dismissed the challenge to the order passed by the Karnataka High Court referred hereinabove and came to hold that the Karnataka High Court had held that the provision of limitation under section 11B of the Central Excise Act, 1944 would not apply for refund of service tax paid by mistake on exempted services even though the assessee had filed claim under Form-R which shows that they had treated such payment as duty but later on ....