TMI Blog2020 (1) TMI 324X X X X Extracts X X X X X X X X Extracts X X X X ..... t the distinguishing feature for attracting the provisions under section 11B is that the levy should have the colour of validity when it was paid and only consequent upon interpretation of law or adjudication, the levy is liable to be ordered as refund. When payment was effected, if it has no colour of legality, section 11B is not attracted. Thus, when service tax is not leviable, but it is deposited mistakenly by the Appellant, the provisions of section 11-B of the Excise Act relating to limitation would not be applicable - In the instant case, the Commissioner (Appeals) has rejected the refund claim of the Appellant only for the reason that it was made beyond a period of one year from the date of payment of duty. Appeal allowed - decided in favor of appellant. - SERVICE TAX APPEAL NO. 51609 OF 2016 - FINAL ORDER NO.50011/2020 - Dated:- 9-1-2020 - MR. DILIP GUPTA, PRESIDENT AND MR. BIJAY KUMAR, MEMBER (TECHNICAL) Shri Narender Singhvi, Advocate, for the Appellant Shri Sanjay Jain, Authorised Representative of the Respondent ORDER This Appeal seeks to assail the order dated 17 March, 2016 passed by the Commis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Appellant as it was not made within one year from the relevant date contemplated under section 11-B of the Excise Act. 6. Feeling aggrieved, the Appellant filed an Appeal which has also been dismissed by the Commissioner (Appeals). 7. Learned Counsel for the Appellant, Shri Narender Singhvi, submitted that as the insurance service provided to the State of Uttar Pradesh under the Yojana was exempted from payment of service tax, the service tax mistakenly paid by the Appellant was liable to be refunded and as the tax was not to be paid, the time limit for filing the refund claim provided for under section 11-B of the Excise Act would not be applicable. In support of his submission, learned Counsel placed reliance upon certain decisions, to which reference shall be made at the appropriate stage. 8. Shri Sanjay Jain, learned Authorised Representative of the Department, however, supported the impugned order and contended that the Commissioner (Appeals) committed no illegality in dismissing the Appeal. In support of his contention, learned Authorised Representative placed reliance upon decisions of the Supreme Court in Collector of Central Excise, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... evant date has been defined in the Explanation to section 11-B of the Excise Act to mean, amongst others, the date of payment of duty. 12. It is not in dispute that the Appellant carries on General Insurance Business under the Yojana. The Notification dated 01 March, 2011 grants exemption from payment of service tax to taxable insurance service provided under the Yojana and it is as follows : Notification: 7/2011-S.T. dated 01/Mar/2011 Insurance service Exemption to insurance service provided under Rashtriya Swasthya Bima Yojana In exercise of the power conferred by sub-section (1) of section 93 of the Finance Act, 1994 (32 of 1994) (hereinafter referred to as the Finance Act), the Central Government, on being satisfied that it is necessary in the public interest so to do, hereby exempts the taxable service specified in sub-clause (d) of clause (105) of section 65 of the Finance Act, provided by an insurer carrying on General Insurance Business to any person for providing insurance under the Rashtriya Swasthya Bima Yojana from the whole of the service tax leviable thereon under section 66 of the Finance Act. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Central Excise Act and the Rules framed thereunder must be adhered to. The authorities functioning under the Act are bound by the provisions of the Act. If the proceedings are taken under the Act by the department, the provisions of limitation prescribed in the Act will prevail . 17. In M/s National Institute of Public Finance Policy [Service Tax Appeal No. 55433/2013(SM) decided on 24 November, 2017 by the Tribunal ] , the refund claim was rejected by the Principal Bench of the Tribunal, after placing reliance upon the decision of the Supreme Court in Doaba Co-operative Sugar Mills. But in the Appeal filed by M/s National Institute of Public Finance 10 Service Tax Appeal No. 55433/2013(SM) decided on 24 November, 2017 by the Tribunal Policy before the Delhi High Court (M/s National Institute of Public Finance Policy vs Commissioner of Service Tax) [ 2019 (20) GSTL 330 (Del.) ], the aforesaid decision of the Tribunal was set aside and it was held that the Appellant would be entitled to refund of the entire amount with proportionate interest. The relevant portion of the judgment is as follows : 4. Concededly, at the relevant time Service Tax wa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Court found that section 11-B of the Excise Act refers to a claim for refund of duty of excise only and does not refer to any other amount collected without authority of law. Thus, it was held that section 11-B of the Excise Act would not be applicable. The relevant observations are as follows : 18. From the reading of the above Section, it refers to claim for refund of duty of excise only, it does not refer to any other amounts collected without authority of law. In the case on hand, admittedly, the amount sought for as refund was the amount paid under mistaken notion which even according to the department was not liable to be paid. 19 . According to the appellant, the very fact that said amounts are paid as service tax under Finance Act, 1994 and also filing 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 f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt. If we consider this payment as service tax and duty payable, automatically, Section 11B would be applicable. When once there was no compulsion or duty cast to pay this service tax, the amount of ₹ 1,23,96,948/- paid by petitioner under mistaken notion, would not be a duty or service tax payable in law. Therefore, once it is not payable in law there was no authority for the department to retain such amount. By any stretch of imagination, it will not amount to duty of excise to attract Section 11B. Therefore, it is outside the purview of Section 11B of the Act. [emphasis supplied] 19. The Supreme Court, on 11 July, 2011, dismissed the Special Leave Petition filed by the Department to assail the aforesaid judgment of the Karnataka High Court. 20. The same view was taken by the Madras High Court in M/s 3E Infotech vs Customs, Excise Service Tax Appellate Tribunal Anr.[ 2018-TIOL-1268-HC-MAD-ST ]. It was observed 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 pe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The observations are as follows : 8 . The learned counsel for the Department, relying on the judgment of the Hon‟ble Supreme Court in Mafatlal Industries Ltd. and Others v. Union of India and Others [(1997) 5 SCC 536 = 1997 (89) E.L.T. 247 (S.C.)] would argue that even if the payment was made under a mistake, the refund can only be processed in terms of Section 11B of the Central Excise Act. In the above case, the Apex Court elaborately classified claim for refund into three groups or categories, vis- -vis, (i) unconstitutional levy, (ii) illegal levy, and (iii) mistake of law, and held that the remedies involved in all the three categories are the remedies provided under the Excise and Customs Act. None of the above categories would attract to the case in hand. In this case, the levy was purely on account of mistake of fact in understanding the law. The petitioner assumed that the transaction for which he has paid tax, is covered under the law. The law does not cover such transaction for payment of Service Tax. Therefore, it is not on account of any mistake of law but mistake of fact the Service Tax was paid. In that view of the matter it has no colour of tax ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Learned Members of the Bench, after referring to the provisions of section 11-B of the Excise Act, observed as follows : 7. What is crucial is that the appellants paid the claimed amount as service tax. They have approached the jurisdictional authority of service tax for refund of the said money. It is clear that the jurisdictional service tax authority is governed by the provisions of Section 11B as the claim has been filed as per the said mandate only . Here, we have specifically asked the Learned Counsel for the appellant under what provision of law he is seeking the return of the money earlier paid. He admitted that the claim has been preferred in terms of the provisions of Section 11B. If that being the case, it cannot be said that except for limitation other provisions of Section 11B will be made applicable to the appellant. The Learned Counsel also did not advance such proposition. He repeatedly submitted that the amount is paid mistakenly. The same is not a tax and should be returned without limitation as mentioned in Section 11B. We are not convinced by such submission. 8. Here it is relevant to note that in various cases the High Courts and th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se Appeals but not exercising writ jurisdiction power granted to the Hon‟ble High Court under Constitution of India and allowed the refund claim holding that time limit prescribed under Section 11B of the Act is not applicable and the decision of Hon‟ble Bombay High Court in Central Excise Appeals is binding on this Tribunal. Therefore, in my considered view, for entertaining the refund claim of amount paid by mistake, the time limit prescribed under Section 11B of the Act is not applicable. 26. What needs to be noticed is that the decision of the Delhi High Court in M/s National Institute of Public Finance Policy was rendered on 23 August, 2018 after the decision of the Larger Bench of the Tribunal on 27 March, 2018. The Madras High Court also on 28 June, 2018 in M/s 3E Infotech held that when service tax is paid by mistake, a claim for refund cannot be barred by limitation under section 11-B of the Excise Act. 27. Learned Authorised Representative of the Department has also placed reliance upon the decision of the Bombay High Court in Andrew Telecom (I) Pvt. Ltd. that was rendered on 03 April, 2014. The decision of the Karnataka High Court ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vy should have the colour of validity when it was paid and only consequent upon interpretation of law or adjudication, the levy is liable to be ordered as refund. When payment was effected, if it has no colour of legality, section 11B is not attracted. 32. In Collector of Central Excise, Chandigarh vs Kashmir Conductors [ 1997 (96) ELT 257 (Tri.)] , a Larger Bench of the Tribunal consisting of five Members held that the view taken by the jurisdictional High Court on a proposition of law has to be followed by the Tribunal and the observations are as follows : 10.2 In a recent decision of the Tribunal in the case of Madura Coats v. CCE, Bangalore reported in 1996 (82) E.L.T. 512, it has been held that the decision of a particular High Court should certainly be followed by all authorities within the territorial jurisdiction of that High Court and that the authorities in another State are not bound to follow the views taken by a particular High Court in the absence of a decision by the jurisdictional High Court with regard to constitutionality of a provisions. The Tribunal has held that since the adjudication of vires of a provision of a statute or Notifica ..... X X X X Extracts X X X X X X X X Extracts X X X X
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