TMI Blog2023 (3) TMI 740X X X X Extracts X X X X X X X X Extracts X X X X ..... ablishments in Jodhpur and Bombay respectively, obtained Service Tax registrations and discharged Service Tax. They did this correctly, in terms of the plain language of Explanation 4 to Section 65B(44). The record also indicates that communications were exchanged between the branch offices and the Appellant. Moreover, the labour force to carry out the concerned work was also sourced domestically - Tribunal in the case of M/S. NAGARJUNA OIL CORPORATION LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE, PUDUCHERRY [ 2016 (8) TMI 41 - CESTAT CHENNAI] has held that when branch offices of foreign service providers obtained registration and discharged Service Tax in India on the transaction in question, the service recipient located in India (the assessee in that case) was not required to discharge the same,on reverse charge. 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 th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... low. National Oilwell Maintenance Company 2. The Appellant entered into agreement dated 30.04.2014 with National Oilwell Maintenance Company ( NOMC ) for the provision of cementing services for exploratory drilling . The said contract at Clause (iii) Schedule IV, General Notes for Table A provided that Service Tax will be extra at OIL s account but the liability for its payment would be on the contractor (i.e. NOMC). In other words, NOMC was to statutorily discharge Service Tax liability and was to then reimburse itself of the same from the Appellant. NOMC is originally based out of Doha located in Qatar.However, it setup an establishment in India at Jodhpur and obtained Service Tax registration. NOMC raised four invoices dated 1.08.2014, 1.09.2014, 1.10.2014 and 1.11.2014 on the Appellant. On 8.03.2016, it discharged Service Tax amounting to Rs. 8,35,576/- and Rs. 7,87,669/- totalling to Rs. 16,23,245/-. The Appellant also discharged Service Tax of these very amounts on 5.12.2014 and 6.01.2015 after entertaining a view that it was liable to discharge Service Tax on reverse charge on the services received. Both NOMC and the Appellant deposited Service Tax with the Depa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... x to the Department, as per the agreements wilfully and not by mistake. It was held that no evidence was submitted by the Appellant to establish that Service Tax was reimbursed to the contractors by the Appellant. Further it was observed that the accounting codes on challan paid by the Appellant and Haliburton did not match. Moreover, it was observed that NOMC took credit of output service provided and reversed it only when there was an objection raised by the Department. Finally, it was observed that the email from M/s Haliburton came on 29.04.2014 seeking release of payment of Service Tax portion for invoice no. 99418507. Thus, the Appellant should have applied for refund within the time frame stipulated in Section 11B of Central Excise Act. The Appellant appealed against OIO dated 31.08.2017 before the Commissioner (Appeals) Central Goods and Services Tax Excise Dibrugarh. 6. The Commissioner (Appeals) vide Order in Appeal No. 06/DIB/CE(A)/GHY/18 dated 23.01.2018 dismissed the Appellant s appeal. The appellate authority relied on Section 68(2) of Finance Act, 1994 and Notification 30/2012 to hold that Service Tax was payable on reverse charge by the recipient from entities l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l Excise, Hyderabad-GST [Service Tax Appeal No. ST/ 30781/2081] And Oriental Insurance Company Limited vs. Commissioner of Central Excise Service Tax [Service Tax Appeal No. 51609 of 2016]. 10. It was also contended that the bar of unjust enrichment was inapplicable in the present case. There was no allegation or finding against the Appellant that the Appellant priced the crude oil extracted by it in such a way that it also factored in the Service Tax paid by it on reverse charge. In any case, no such inference was sustainable because the price of crude oil is regulated by the Government based on international crude oil prices. Reliance was placed on Circular No. P-Excise 20012/11/2006-PP dated 01.05.2009 issued by the Ministry of Petroleum Natural Gas which provided that only Sales Tax and Pipeline Transportation Charges are to be paid by the refineries (and not Service Tax). The above concept was reiterated yet again in Circular No. P-20012/11/2006-PP Volume 1 issued by Ministry of Petroleum and Natural Gas dated 21.03.2011. The Crude Offtake Sales Agreements between the Appellant and its subsequent buyers i.e. Indian Oil Corporation Limitedand Numaligarh Refinery Limited, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... orrectly, in terms of the plain language of Explanation 4 to Section 65B(44). The record also indicates that communications were exchanged between the branch offices and the Appellant. Moreover, the labour force to carry out the concerned work was also sourced domestically. I find that Tribunal in the case of Nagarjuna Oil Corporation Ltd. vs. CCE Puducherry [2017 (47) S.T.R. 96 (Tri. Chennai)]has held that when branch offices of foreign service providers obtained registration and discharged Service Tax in India on the transaction in question, the service recipient located in India (the assessee in that case) was not required to discharge the same,on reverse charge. The Tribunal was interpreting the language of the erstwhile Section 66A, which isparimateria to Explanation 4 to Section 65B(44). Relevant portions of the said judgement are extracted below:- 5. The only point for determination is the appellant s liability to service tax on reverse charge basis in terms of Section 66A. The admitted facts are that there is an agreement between the appellant and NOC BV, Netherlands. NOC BV, Netherlands has an establishment in India recognized by various authorities in terms of appli ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stage, we will not consider the matter regarding maintainability of the Writ Petition, as first we have to look to the provisions of 11B of the Act and then decide whether Section 11B is applicable to the facts of the case as finding thereon would have bearing for considering the issue of maintainability of Writ Petition. Section 11B of the Central Excise Act reads as under : 11B. Claims for refund of duty : (1) Any person claiming refund of any duty of excise may make an application for refund of such duty to the Assistant Commissioner of Central Excise or Deputy Commissioner of Central Excise before the expiry of one year from the relevant date in such form and manner as may be prescribed and the application shall be accompanied by such documentary or other evidence (including the document referred to in Section 12A) as the applicant may furnish to establish that the amount of duty of excise in relation to which such refund is claimed was collected from, or paid by, him and the incidence of such duty had not been passed on by him to any other person. 18. From the reading of the above Section, it refers to claim for refund of duty of excise only, it does not r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... any, 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 the right of the petitioner to demand refund of payment made by them under mistaken notion . 19. The said principle was followed by this Tribunal in the following judgments: - i. M/s ASL Builders Private Limited vs. Commissioner of Central GST CX, Jamshedpur [2020 (1) TMI 431 CESTAT Kolkata] 13. The aforesaid propositions reveal that what one has to see is whether the amount paid by the assessee under a mistaken notion was payable or not. In other words, if the assessee had not paid those amounts, the authority could not have demanded from the assessee to make such payment. In other words, the department lacked authority to levy and collect such tax. In case, the department was to demand such payment, the assessee could have challenged it as unconstitutional and without a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 that the decisions relied upon by the Appellate Tribunal do not support the case of the respondent in rejecting the refund claim on the ground that it was barred by limitation. We are, therefore, of the view that the impugned order is unsustainable. 7. We accordingly allow the present appeals and quash and set aside the impugned order, insofar as it is against the appellant in both appeals. We fully allow refund of Rs. 8,99,962/- preferred by the appellant. We direct that the respondent shall refund the amount of Rs. 8,99,962/- to the appellant within a period of three ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Customs (Port) [2015 (318) ELT 379 (Cal.)] 17. Now I will consider the point of limitation. A person to whom money has been paid by mistake by another person, becomes at common law a trustee for that other person with an obligation to repay the sum received. This is the equitable principle on which Section 72 of the Contract Act, 1872 has been enacted. Therefore, the person who is entitled to the money is the beneficiary or cesti qui trust. When the said sum of Rs. 360.46 lakhs was paid by mistake by the petitioner to the Government of India, the latter instantly became a trustee to repay that amount to the petitioner. The obligation was a continuing obligation. When a wrong is continuing there is no limitation for instituting a suit complaining about it. (See Section 22 of the Limitation Act, 1963). The Supreme Court through Mr. Justice Krishna Iyer opined in Shiv Shankar Dal Mills v. State of Haryana reported in AIR 1980 Supreme Court 1037 as follows:- 1. Where public bodies, under colour of public laws, recover people s money, later discovered to be erroneous levies, the Dharma of the situation admits of no equivocation. There is no law of limitation, especiall ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ive for the Revenue cited several judgments which have been considered below. 23. The judgment of Mafatlal Industries vs. UOI [1997 (89) ELT 247 (SC)] 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. 24. The Kerala High Court held that the statutory limitation period would apply refunds of tax paid erroneously in its judgment in Southern Surface vs. Ast. Commissioner, Muvattupuzha - 2019 (28) GSTL 202 (Ker.)]. However, interesting, in the subsequent judgment of Uniroyal Marine Exports Ltd. Vs. CCE Kozhikode- 2021 (54) GSTL 156 (Ker.) it was held that if the Department had already granted a refund of the amount mistakenly paid by the assessee, the same is notto be recovered. 25. The judgments of CESTAT Mumbai in Benzy Tours vs. Commissioner of Service Tax Mumbai [2016 (43) STR 625 (Tri. Mum)], Casa Grande vs. Commissioner CGST Mumbai South[2019 (29) GSTL 349 (Tri.- Mum)] and Tanna Elec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . The appellant would be entitled to refund of the claim with interest. The appeal is, accordingly, allowed. 28. In similar vein, it is noticed that the judgments of National Institute of Public Finance supra, Way2wealth Brokers Pvt. Ltd. supra and3E Infotech supra are more instances of the High Courts dealing with the concerned issue, in their appellate capacity and not under writ jurisdiction. 29. 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) STR 117 . OR Limitation prescribed under Section 11B is ap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ppellant s buyers. In view of the same, I find that Service Tax paid by the Appellant never formed part of the crude oil sold by the Appellant. The judgment of Hon ble Supreme Court in State of Rajasthan and Ors. Vs. Hindustan Copper Ltd. 1998 (9) SCC 708 is applicable to the present case and has been extracted below:- 2. On the question of refund, an affidavit of Shri Prashant Swarup, authorised representative of the respondent, has been filed wherein it has been stated that there is no question of any unjust enrichment of the respondent as a result of the refund of the excise duty paid on rectified spirit because the respondent has not passed on the duty to any consumer of the final product, viz., copper, manufactured by the respondent. It has been stated in the said affidavit that the price of copper has always been fixed by the Mineral Metal Trading Corporation (MMTC) on the basis of the prevailing price fixed by the London Metal Exchange (LME) and this was done not only for the period in question but also for prior and subsequent period and that only such price could be charged and that no part of the duty in respect of rectified spirit captively consumed in the manuf ..... X X X X Extracts X X X X X X X X Extracts X X X X
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