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TMI Blog2019 (6) TMI 1280X X X X Extracts X X X X X X X X Extracts X X X X ..... the appellant was detected in the audit conducted by the department in May, 2012. The reason stated for the short payment was that the appellant had not included the value of cement and steel supplied by the clients free of cost in computing the value of taxable service rendered by it during the period from January, 2008 to March, 2011. In response to the letter sent by the department to pay the amount of shortage, the appellant paid an amount of Rs. 53,48,526/- on different dates during the period between 27.08.2012 and 06.03.2013. 4. On 23.10.2014, the appellant filed an application dated 14.10.2014 in the prescribed form for refund of the amount of Rs. 53,48,526/-. The plea of the appellant was that in the light of the decision of the larger bench of the Customs, Excise and Service Tax Appellate Tribunal (for short 'the Tribunal') in another case, the value of materials supplied by service recipient free of cost shall not be taken into consideration in computing the taxable value of services rendered. 5. The Assistant Commissioner concerned rejected the application for refund of the amount on the ground that, it was filed beyond one year from the relevant date stipu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has contended that, when the amount was paid by the appellant, it had the colour of tax and therefore, Section 11B of the Act is attracted and the application for refund in the prescribed form made beyond the prescribed period was not maintainable. He has contended that there is no basis for the plea of the appellant that the amount was paid on account of coercion and threat made by the authorities. He has also contended that any representation made by the appellant for refund of the amount cannot be treated as an application for refund because the statute specifically provides for filing application for refund in the prescribed form. He has also submitted that the payment was made by the appellant not under protest. He has also urged that there is no legal basis for the contention of the appellant that the period of limitation can be computed from the date of judgment of the Supreme Court in another case in which the appellant was not a party. 10. Section 11B (1) of the Act reads as follows: "Any person claiming refund of any duty of excise and interest, if any, paid on such duty may make an application for refund of such duty and interest, if any, paid on such duty to the As ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r the service provided. There shall be a nexus between the amount charged and the service provided. Any amount charged which has no nexus with the taxable service and is not a consideration for the service provided does not become part of the value which is taxable. The cost of goods supplied free of cost by the service recipient to the service provider is neither an amount charged by the service provider nor can it be regarded as a consideration for the service provided by the service provider. In fact, it has no nexus whatsoever with the taxable services. The value of goods/materials provided by the service recipient free of charge is not to be included while arriving at the taxable value of services provided, simply because of the reason that no price is charged by the assessee/service provider from the service recipient in respect of such goods/materials. The value of taxable services cannot be dependent on the value of goods supplied free of cost by the service recipient. The service recipient can use any quality of goods and the value of such goods can vary significantly. Such value has no bearing on the value of services provided. The Apex Court has held that a value which i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rules, regulations or notifications issued under such enactment, such a claim has necessarily to be preferred under and in accordance with the provisions of the respective enactment before the authorities specified thereunder and within the period of limitation prescribed therein. 16. Learned counsel for the appellant has heavily relied upon the decision of the Karnataka High Court in Commissioner of Central Excise (Appeals), Bangalore v. KVR Construction (2012 (26) STR 195) to buttress his contention that the amount was paid or levied not as service tax but under a mistake and that Section 11B(1) of the Act has no application to the claim of refund made by the appellant. 17. In KVR Construction (supra), the service tax was paid without noticing the exemption provided under a notification that, where the services were rendered to a nonprofit organisation, no tax was payable on the services so rendered. It was not a case in which service tax was levied on misinterpretation of the provisions of any statute. It was not a case where service tax was paid by mistake of law. It was case in which amount was paid by mistake without noticing the exemption provided. Therefore, the decisi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... letter sent by the appellant to the department cannot be treated as an application for refund of amount as envisaged under Section 11B (1) of the Act. 23. The only question now survives for consideration is whether the appellant can take advantage of the decision of the Supreme Court in Bhayana Builders (supra) to contend that the application for refund of amount filed by him in the prescribed form was within the time stipulated under Section 11B(1) of the Act. As noticed earlier, the issue whether value of the materials supplied by the service recipients free of cost can be included in computing the taxable value of services rendered by the assessee, was decided by the Supreme Court on 19.02.2018 in Bhayana Builders (supra). According to the learned counsel for the appellant, in view of the provision contained in Clause (ec) of Explanation (B) to Section 11B of the Act, an assessee is entitled to take advantage of the decision in Bhayana Builders (supra) and file application for refund of duty within one year from the date of that decision. 24. As noticed earlier, Clause (ec) of Explanation (B) to Section 11B of the Act states that in case where the duty becomes refundable as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... et. The orders in any of the situations have become final against him. Then what happens is that after an year, five years, ten years, twenty years or even much later, a decision rendered by a High Court or the Supreme Court in the case of another person holding that duty was not payable or was payable at a lesser rate in such a case. (We must reiterate and emphasise that while dealing with this situation we are keeping out the situation where the provision under which the duty is levied is declared unconstitutional by a court; that is a separate category and the discussion in this paragraph does not include that situation. In other words, we are dealing with a case where the duty was paid on account of misconstruction, misapplication or wrong interpretation of a provision of law, rule, notification or regulation, as the case may be.) Is it open to the manufacturer to say that the decision of a High Court or the Supreme Court, as the case may be, in the case of another person has made him aware of the mistake of law and, therefore, he is entitled to refund of the duty paid by him?" The Apex Court has answered the question posed above as follows: "Where a duty has been collecte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... demand. It is a case in which audit of the records of the assessee company was conducted by the department and shortage of tax paid was pointed out in the audit and it was communicated to the assessee company and payment of the amount was required to be made as per a letter (Annexure- A) sent by the Superintendent (Audit) of the department. The appellant paid the amount in response to this letter. It is also true that when proceedings for imposition of penalty were initiated against the appellant, a reply (Annexure-B) was sent by it to the department on 30.07.2013 stating that service tax was not payable on the value of materials supplied free of cost by the service recipients. But, the fact remains that the appellant did not make any application for refund of the amount in the prescribed form within one year from the date of last payment of tax made by it. The proceedings pending before the Tribunal, at the time when the Supreme Court rendered the decision in Bhayana Builders (supra), were not proceedings against assessment of service tax on the value of materials supplied free of cost by the service recipients. The appeal pending before the Tribunal was against the order passed b ..... X X X X Extracts X X X X X X X X Extracts X X X X
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