2025 (6) TMI 447 - AT - Service Tax

Refund of service tax paid under protest - time limitation - refund was rejected on the ground that the refund claim was filed after one year from the date of payment of service tax - HELD THAT - The learned Commissioner has passed order-in-original in his capacity as adjudicating authority. The order passed by the adjudicating authority cannot be considered as an order passed by appellate authority or Appellate Tribunal. Clause (ec) provides for relevant date to be the date on which appellate authority or Appellate Tribunal passed the order. In the present case Appellate Tribunal passed order on 27.10.2021 as a result of which refund became consequential. The grounds raised by Revenue are not tenable. Conclusion - The refund claim was timely filed within one year from the date of the appellate order. The appeal filed by Revenue is dismissed.

Summary

The core legal questions considered by the Tribunal in this appeal filed by the Revenue against the order of the Commissioner (Appeals) are:

1. Whether the respondent was entitled to claim refund of service tax paid under protest beyond the one-year limitation period prescribed under the relevant statute.

2. What is the "relevant date" for the purpose of limitation for filing a refund claim under the Central Excise Act, 1944 (as applicable to service tax matters) - whether it is the date of the original adjudicating authority's order or the date of the final appellate order passed by the Tribunal.

3. Whether the payment made by the respondent under protest during the pendency of investigation qualifies for refund under Section 11B of the Central Excise Act, 1944 as applied to service tax.

4. The applicability and interpretation of Board Circular No.984/08/2014-CX dated 16.09.2014 regarding payments made during investigation and the limitation period for refund claims.

5. The impact of judicial precedents, especially the stay by the Supreme Court on the Gujarat High Court decision in Petronet LNG Ltd., on the determination of limitation and refund eligibility.

Issue-wise Detailed Analysis

1. Limitation Period and Relevant Date for Refund Claim

Legal framework and precedents: Section 11B of the Central Excise Act, 1944, as made applicable to service tax, governs refund claims. The explanation to Section 11B was amended on 11.05.2017 to include clause (ec), which states that where duty becomes refundable as a consequence of a judgment, decree, order, or direction of an appellate authority, Appellate Tribunal, or any court, the "relevant date" for limitation is the date of such judgment, decree, order or direction.

Court's interpretation and reasoning: The Tribunal examined whether the limitation period for filing refund should run from the date of the original order-in-original (20.01.2015) passed by the Commissioner (adjudicating authority) or from the date of the final appellate order passed by the Tribunal (27.10.2021). The Tribunal held that the original order was passed by the adjudicating authority and not by an appellate authority. Clause (ec) specifically refers to appellate authority or Appellate Tribunal, and therefore, the limitation period starts from the date of the appellate order, i.e., 27.10.2021.

Key evidence and findings: The respondent paid a lump sum of approximately Rs.3 crores under protest during the pendency of investigation. The original adjudicating authority's order held that these amounts were not recoverable as service tax. The Tribunal's final order dismissed the Revenue's appeal, thus confirming the respondent's entitlement to refund.

Application of law to facts: Since the refund entitlement arose only after the appellate order, the refund claim filed on 15.12.2021 was within the prescribed one-year period from the relevant date of 27.10.2021.

Treatment of competing arguments: The Revenue contended that the limitation should run from the original order date (20.01.2015) and that the protest ceased with that order, thus making the refund claim time-barred. The Tribunal rejected this, emphasizing the distinction between adjudicating and appellate authorities and the statutory amendment clarifying the relevant date.

Conclusion: The Tribunal upheld the Commissioner (Appeals) decision that the refund claim was timely filed within one year from the date of the appellate order.

2. Payment Under Protest and Board Circular No.984/08/2014-CX

Legal framework and precedents: Board Circular No.984/08/2014-CX dated 16.09.2014 clarifies that payments made during the course of investigation or prior to filing of appeal can be considered as deposited under Section 35F of the Central Excise Act, 1944, which allows payment under protest to protect the revenue's interest while preserving the right to claim refund.

Court's interpretation and reasoning: The Commissioner (Appeals) relied on this circular to hold that the respondent's payment made under protest during investigation qualifies for refund. The Revenue argued that the circular was not applicable since the payment was not during investigation or prior to appeal filing.

Key evidence and findings: The respondent had made payments without accepting liability and had informed the Revenue accordingly. The original adjudicating authority's order confirmed no liability. The Tribunal found that the circular's purpose was to enable such payments to be treated as under protest, preserving refund rights.

Application of law to facts: The payment by the respondent was in line with the circular's intent, and thus the refund claim was valid despite the initial payment during investigation.

Treatment of competing arguments: The Revenue's objection to applicability of the circular was overruled as the circular explicitly covers payments made during investigation, which applied to the facts here.

Conclusion: The Tribunal affirmed that the respondent's payment under protest was valid for refund claim purposes.

3. Impact of Judicial Precedents, Particularly Petronet LNG Ltd. Case

Legal framework and precedents: The Gujarat High Court in Petronet LNG Ltd. had ruled on limitation for refund claims, but the Supreme Court stayed the operation of this ruling, thereby suspending its precedential effect.

Court's interpretation and reasoning: The Tribunal noted that the stay by the Supreme Court on the Gujarat High Court decision meant that the Revenue could not rely on that judgment to deny refund on limitation grounds. The Tribunal emphasized that until the Supreme Court decides finally, the earlier appellate order remains binding.

Key evidence and findings: The Revenue's reliance on the Petronet LNG Ltd. judgment was undermined by the Supreme Court's stay.

Application of law to facts: The Tribunal applied the principle of judicial hierarchy and binding effect of appellate orders, holding that the stay on the High Court's ruling precludes using it to defeat the refund claim.

Treatment of competing arguments: The Revenue's argument based on the High Court's decision was rejected due to the Supreme Court's stay.

Conclusion: The Tribunal held that the refund claim could not be denied on the basis of the stayed judgment.

Significant Holdings

"The order passed by the adjudicating authority cannot be considered as an order passed by appellate authority or Appellate Tribunal. Clause (ec) provides for relevant date to be the date on which appellate authority or Appellate Tribunal passed the order. In the present case, Appellate Tribunal passed order on 27.10.2021 as a result of which refund became consequential."

"We, therefore, are of the considered view that the grounds raised by Revenue are not tenable."

"The relevant date in the present case was the date on which this Tribunal has passed order on 27.10.2021. The refund application was filed within the period of limitation."

Core principles established include the clear distinction between adjudicating authority and appellate authority for the purpose of determining the relevant date for refund claims under Section 11B, and that payments made under protest during investigation qualify for refund claims if ultimately held not leviable.

Final determination on each issue: The Tribunal affirmed the Commissioner (Appeals) order allowing the refund claim as timely filed and rejected the Revenue's appeal.