TMI Blog2021 (2) TMI 774X X X X Extracts X X X X X X X X Extracts X X X X ..... RT] affirmed by Hon ble Supreme Court in COMMISSIONER VERSUS KVR CONSTRUCTION [ 2011 (7) TMI 1334 - SC ORDER] . OR Limitation prescribed under Section 11B is applicable as held by Member (Technical) in view of the ruling of Hon ble Supreme Court in MAFATLAL INDUSTRIES LTD. VERSUS UNION OF INDIA [ 1996 (12) TMI 50 - SUPREME COURT] . Registry is directed to put up the appeal record before Hon ble President for nomination of 3rd member to consider the aforesaid questions and difference of opinion for his opinion. - Service Tax Appeal No. 30781 of 2018 - Interim Order No. 24/2020 - Dated:- 25-9-2020 - MR. ANIL CHOUDHARY, MEMBER (JUDICIAL) AND MR. P. VENKATA SUBBA RAO, MEMBER (TECHNICAL) Shri R. Muralidhar, Advocate - for the appellant Shri A.V.L.N. Chary, Supdt./AR - for the respondent ORDER The issue in this appeal is whether the services provided by the appellant is in the nature of construction service to the Government of Madhya Pradesh through the nodal agency - Madhya Pradesh State Cooperative Marketing Federation Ltd. (MP MARKFED), being funded by the Government of India towards Drought Mitigation Scheme, whether the same is exempt from paym ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ellant filed a refund claim on 10.2.2017. 6. The Deptt. issued show cause notice dated 17.2.2017 seeking to know as to why the refund should not be rejected on the following grounds: (a) The service rendered to the M.P. State Co-operative Marketing Federation Ltd., cannot be considered as services rendered to Government . Hence, the service tax was correctly paid. Therefore, the refund of the service tax paid is not required to be refunded to the appellant. (b) The refund claim has been filed on 10.2.2017 for the service tax paid during 2012-2013, 2013-2014 and 20142015. Hence the refund claim is barred by time in terms of Section 11B of the CEA Act, 1944 read with Section 84 of the Finance Act, 1994. 7. The appellant in response to show cause notice filed replies dated 27 April, 2017 and also led documentary evidence with regard to its contention. The Government of India through Planning Commission allocated funds under Drought Mitigation Scheme by way of Additional Central Assistance (ACA) to State Government(s) including the state of Madhya Pradesh with the direction that the said fund should be utilised by the State Government only for the purpose for w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Madhya Pradesh, Principal Secretary (Planning), Government of Madhya Pradesh, Principal Secretary, (Finance) Government of Madhya Pradesh. From para 2 of the said letter, it is evident that Additional Central Assistance has been released after the MP State Government submitted utilisation certificate for the funds released earlier and the additional funds have been released for the ongoing project for development of warehousing and marketing infrastructure, referred to in the said letter. 10. It was further urged that MP MARKFED have issued certificate No. 67 dated 20 April, 2017 to the effect that the appellant have been awarded the contract for construction and development of farmers facilitation centres for MP State Government. The certificate have been issued by the Senior Accounts Officer duly approved by the Chief Accounts Officer cum Finance Controller of MARKFED. 11. It was further pointed out that pursuant to withdrawal of exemption under Notification No. 25/2012-ST for construction work for Government authorities and Government companies with effect from 1st April, 2015 MARKFED issued letter No. Technical/861/8379 directing the appellant to pay service tax f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... provided various services for the welfare of the farmers, milk producers and others. Further observing that the appellant was aware as per their reply to the audit para on 5 September, 2015, that they are exempted from payment of service tax. Thus they cannot claim time limit indefinitely for claiming refund. Consequent to that also held that services in question is not exempt, therefore, the time period prescribed under Section 11B is rightly attracted. 14. Being aggrieved, the appellant preferred appeal before the learned Commissioner (Appeals). The Commissioner (Appeals) was pleased to reject the appeal agreeing with the findings of the Assistant Commissioner. 15. The alternative plea taken by the appellant, that as the construction done by them in relation to post harvest storage infrastructure for agricultural produce, such construction under Sr. No. 14(d) of Notification No. 25/2012 is exempt, was also rejected, observing that the appellant have constructed development of farmers facilitation centres for improvement of warehousing and agro marketing infrastructure under Bundelkhand Drought Mitigation Package . In view of the rejection of refund on merits, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ate Agricultural Marketing Board. The three consolidated nodal agencies were obligated to call for bids for construction, after taking approval from the Council of Ministers. Accordingly, on the tender floated by MARKFED, the appellant was allotted three different work orders dated 20 June, 2012. The work orders were based on schedule of rates fixed by the MP Public Works Department. Further on the proposal for development of agricultural infrastructure in the drought prone area, was sanctioned by the Central Government. It is urged that on harmonious reading of the facts aforementioned, the construction work done by the appellant is for the State Government and MP MARKFED only acted as a nodal agency, as implementing agency on behalf of the Government of MP. 18. Even MARKFED also qualify as the Government authority as it came in existence at the instance of the State Government, which has provided the capital for its objects of agricultural and farm related welfare, and further selection to all the key post of MARKFED is done by the Government of MP. Even the website and e-mail of the MP MARKFED is with the suffix @ mp.go.in. 19. Learned Counsel further urges tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nce on the details of MARKFED, downloaded from the website of department of Farmer and Welfare and Agricultural Department, Government of MP, wherein as regards MARKFED it is stated that it is society registered under the MP Cooperative Societies Act, 1960 having the objects inter alia to assist and strengthen its member marketing and other marketing societies in the state, to provide agricultural inputs to the farmers through member of societies, numbering over six thousand to promote the production of their agricultural produce, to procure the agricultural produce from farmers in regulated Mandies, to carry out welfare activity as per the State Government directives, to construct godowns to increase the storage facility in the state, etc. Learned Authorised Representative further urges that in the facts and circumstances the appellant have not provided the service to the State Government. He further places reliance on the following rulings:- (i) Oil India Ltd. Vs. Commissioner of Central Tax 2019 (5) TMI 515-CESTAT-Hyderabad; (ii) Veer Overseas Ltd. Vs. Commissioner of Central Excise, Panchkula 2018-TIOL-1432-CESTAT-CHD-LB; (iii) M/s Future Foundations Pvt. L ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... officer of MP MARKFED dated 20 July, 2017 and 27 November, 2017. Accordingly, we hold that in the facts and circumstances unjust enrichment is not attracted. 26. Accordingly, we allow this appeal and set aside the impugned order. We further direct the adjudicating authority to grant refund of the refundable amount of ₹ 1,60,81,347/- with interest as per rules, within a period of three months from the date of receipt or service of copy of this order. (Pronounced in open Court on....................) (Anil Choudhary) Member (Judicial) (P. Venkata Subba Rao) Member (Technical) [Order per: P.V. SUBBA RAO] 27. I respectfully disagree with my brother Hon ble Member (Judicial) Shri Anil Chowdhary insofar as ordering that the amount be refunded to the appellant even though it is clearly time-barred as per Section 11B of the Central Excise Act as made applicable to the Service Tax by Section 83 of the Finance Act, 1994. As far as the applicability of the exemption notification is concerned, it is clear that the Revenue had not disputed it for the subsequent period when the appellant had not paid the tax nor has the department raised ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the judgment yields the following propositions. We may forewarn that these propositions are set out merely for the sake of convenient reference and are not supposed to be exhaustive. In case of any doubt or ambiguity in these propositions, reference must be had to the discussion and propositions in the body of the judgment. Where a refund of tax/duty is claimed on the ground (i) that it has been collected from the petitioner/plaintiff - whether before the commencement of the Central Excises and Customs Laws (Amendment) Act, 1991 or thereafter - by misinterpreting or mis-applying the provisions of the Central Excises and Salt Act, 1944 read with Central Excise Tariff Act, 1985 or Customs Act, 1962 read with Customs Tariff Act or by mis-interpreting or mis-applying any of the rules, regulations or notifications issued under the said enactments, 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 . No suit is maintainable in that behalf. While the jurisdiction of the High Courts under Article 226 - and of this Cou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion of unconstitutionality obtained by another person on another ground; this is for the reason that so far as he is concerned, the decision has become final and cannot be reopened on the basis of a decision on another person s case ; this is the ratio of the opinion of Hidayatullah, CJ. in Tilokchand Motichand and we respectfully agree with it. Such a claim is maintainable both by virtue of the declaration contained in Article 265 of the Constitution of India and also by virtue of Section 72 of the Contract Act. In such cases, period of limitation would naturally be calculated taking into account the principle underlying Clause (c) of sub-section (1) of Section 17 of the Limitation Act, 1963. A refund claim in such a situation cannot be governed by the provisions of the Central Excises and Salt Act or the Customs Act, as the case may be, since the enactments do not contemplate any of their provisions being struck down and a refund claim arising on that account. In other words, a claim of this nature is not contemplated by the said enactments and is outside their purview. A claim for refund, whether made under the provisions (iii) of the Act as contemplated in Propo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... il in such proceedings. Once the assessment of levy has become final in his case, he cannot seek to reopen it nor can he claim refund without reopening such assessment/order on the ground of a decision in another person s case. Any proposition to the contrary not only results in substantial prejudice to public interest but is offensive to several well established principles of law. It also leads to grave public mischief. Section 72 of the Contract Act, or for that matter Section 17(1)(c) of the Limitation Act, 1963, has no application to such a claim for refund. Article 265 of the Constitution has to be construed in (v) the light of the goal and the ideals set out in the Preamble to the Constitution and in Articles 38 and 39 thereof. The concept of economic justice demands that in the case of indirect taxes Central Excises duties and Customs duties, the tax collected without the authority of law shall not be refunded to the petitioner-plaintiff unless he alleges and establishes that he has not passed on the burden of duty to a third party and that he has himself borne the burden of the said duty. Section 72 of the Contract Act is based upon and (vi) incorporates a rule ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tainable in that behalf. So far as the jurisdiction of the High Courts under Article 226 of the Constitution or of this Court under Article 32 - is concerned, it remains unaffected by the provisions of the Act. Even so, the Court would, while exercising the jurisdiction under the said articles, have due regard to the legislative intent manifested by the provisions of the Act. The writ petition would naturally be considered and disposed of in the light of and in accordance with the provisions of Section 11B. This is for the reason that the power under Article 226 has to be exercised to effectuate the regime of law and not for abrogating it. Even while acting in exercise of the said constitutional power, the High Court cannot ignore the law nor can it over-ride it. The power under Article 226 is conceived to serve the ends of law and not to transgress them. Section 11B applies to all pending proceedings (xi) notwithstanding the fact that the duty may have been refunded to the petitioner/plaintiff pending the proceedings or under the orders of the Court/Tribunal/Authority or otherwise. It must be held that Union of India v. Jain Spinners [1992 (61) E.L.T. 321 (SC) = 1992 (4) S.C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... led to the benefit of this direction. 101. The individual cases may now be listed before a Division Bench for being disposed of in the light of this judgment. 30. The dissenting judgment written by Hon ble Justice K S Paripoornan and concurred in by Hon ble Justice B L Hansaria was as follows: 149 .For the sake of convenience, I shall summarise my conclusions as hereunder :- (in case of doubt, the body of the judgment should be looked into). If the excise duty paid by the assessee was ultimately passed (A) on to the buyers or any other person, and that the assessee has suffered no loss or injury, the action for restitution based on Section 72 of the Contract Act, is unsustainable. (This is the legal position even under general law, without reference to Section 11B of Central Excises Salt Act as amended by Act 40/1991). The decision in (B) Kanhaiya Lal s case, and the cases following the same, cannot be understood as laying down the law that even in cases the liability has been passed on , the assessee can maintain an action for restitution. If the decision in Kanhaiya Lal s case (supra) and the cases following the saidx decision, enables such a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stitution of India will lie in the cases, and subject to the conditions stated in Paragraphs 29 and 30 of the judgment. The jurisdiction of civil courts is not barred in entirety (G) regarding the attack against the levy and/or claim for refund; in those cases, coming within the three categories mentioned in Paras 5 and 29 of this judgment, the jurisdiction of the ordinary courts will not be ousted, in the circumstances and subject to the conditions stated therein and in Para 30 (supra). Section 11B(2) and (3) cannot be made applicable to refunds (H) already ordered by the court or the refund ordered by the statutory authorities, which have become final. It follows from a plain reading of Section 11B, Clauses (1), (2) and (3) of the Act. The provisions contemplate the pendency of the application on the date of the coming into force of the Amendment Act or the filing of an application which is contemplated under law, to obtain a refund, after the Amendment Act comes into force. If the said provisions are held applicable, even to matters concluded by the judgments or final orders of courts, it amounts to stating that the decision of the court shall not be binding and will ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tained in Article 19(1) (g) of the Constitution of India. 297 .I am further of the view, the Legislature has merely adopted a device and a cloak to confiscate the property of the tax-payer by not only withholding repayment of unlawfully gathered tax but also taking away a portion of the sale price collected from the buyer without any lawful demand or excuse. Every person has a right to contract and bargain for the price. Section 11D places unreasonable fetter to the freedom to carry on trade and commerce and violates the guarantee given by Article 19(1)(g) of the Constitution. 298 .Various other points were raised in these cases. I am not dealing with them separately, but I express my respectful concurrence with the views of my learned Brother Paripoornan, J. that an action by way of a suit or writ petition will be maintainable, depending upon the facts and circumstances of the case. I am entirely in agreement with the views expressed by him and the reasoning thereof on points E, F and G of the concluding part of his judgment. 299 .In conclusion, I hold that the Government is permitted to levy and retain only that much of excise duty which can be lawfu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gment, the appeals should be allowed and the writ petitions should succeed. 32. The judgment of Hon ble Justice A M Ahmadi concurred with the majority view with some modifications as follows: 102. [Judgment per : A.M. Ahmadi, CJI, Concurring with majority view except to the extend stated in paras 103 to 107]. - I have had the benefit of studying the judgments of my learned brothers Reddy, Sen and Paripoornan, JJ. Pursuant to the discussions that I have had with them and with all my other learned brothers on this Bench, I find myself to be broadly in agreement with the conclusions recorded by Reddy, J., subject to the two aspects on which I have recorded my views hereunder : 103 . The first of these is the issue regarding the extent to which the jurisdiction of ordinary courts is ousted in respect of claims for refund of taxes illegally levied and collected. In my view, it would be incorrect to hold, as Reddy, J. has done, that every claim for refund of illegal or unauthorised levy of tax is necessarily required to be made in accordance with the provisions of the Central Excise Act, 1944 (hereinafter called the Excise Act ). The leading authority governin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nstitutionality are for the decision of the authorities and a civil suit does not lie if the orders of the authorities are declared to be final or there is an express prohibition in the particular Act. In either case the scheme of the particular Act must be examined because it is a relevant enquiry. An exclusion of the jurisdiction of the Civil Court is not (7) readily to be inferred unless the conditions above set down apply. 104 .In view of these propositions, which have been reiterated by this Court on several occasions and thus constitute sound law, it is clear that actions by way of suits or petitions under Article 226 of the Constitution cannot be completely eliminated. The claims for refund can arise under three broad classes and the issue of ouster of jurisdiction of civil courts can be understood by focussing on the parameters of these classes which are as follows : Class I : Unconstitutional levy - where claims for refund are founded on the ground that the provision of the Excise Act under which the tax was levied is unconstitutional. Cases falling within this class are clearly outside the ambit of the Excise Act. In such cases assessees ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essee. This is because an order which has become final in the case of an assessee will continue to stand until it is specifically recalled or set aside in his own case. 105 . In cases where the levy of a tax has been held to be (1) unconstitutional; or (2) void for want of inherent jurisdiction (as explained in Class II), it is open for the assessees to take advantage of the declaration of the law so made and claim refunds on the ground that they paid the tax under a mistake of law. This is because such claims are outside the ambit of the Excise Act. In such cases, the limitation period applicable will be that specified in Section 17(1)(c) of the Limitation Act. 106 . Reddy, J. has moulded an exception to the above stated principle. He has held that where a person approaches the High Court or the Supreme Court challenging the constitutional validity of a provision but fails, he cannot take advantage of the declaration of unconstitutionality obtained by another person on another ground; this is for the reason that so far as he is concerned, the decision has become final and cannot be ignored or put aside as if it did not exist on the basis of the decision in anot ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... even though he was protesting its recovery. To ensure that such orders and decrees are not frustrated, it must be deemed that the duties of excise in such cases were paid under protest within the meaning of the second proviso to Clause (1) of Section 11B. This would enable the assessees in such cases to file fresh applications under Section 11B(2), thereby complying with the scheme of the amended Excise Act. 33. In view of the law laid down by the Hon ble Apex Court with respect to refunds; (i) Applications for refund of excise duty (or Service tax) can be filed under Section 11B and must be processed according to the provisions of this section; this section constitutes a law within the meaning of Article 265 of the Constitution. (ii) Wherever the charge of the duty or tax is held to be unconstitutional, it cannot fall within the ambit of the statute itself and therefore, the provisions of the statute do not apply. In such cases, refund can be sought by filing a Civil Suit in a civil court under Section 72 of the Contract Act within the time limit prescribed under the Limitation Act. Such cases can also be pursued by filing a Writ Petition under Article 226 of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nstruction - 2018 (14) G.S.T.L. J70 (S.C.)]. I have carefully studied this judgment in which the Hon ble High Court has considered the judgment of the Supreme Court in the case of Mafatlal Industries (supra). There was a specific finding by the Hon ble High Court that what was paid was not Service Tax and hence outside the scope of the Act and Section11B does not apply but Writ Petition under Article 226 was maintainable. Para 25 of this judgment is as follows: 25. However, the petitioner has not approached the Tribunal after the order passed by 1st appellate authority and they have approached this Court. Therefore, even the provisions of Section 35B(1)(b) would not be applicable. From the facts of the case as discussed herein above, it emerges that petitioner has approached this Court contending that Section 11B is not applicable as there was no duty cast on them to pay service tax and they have paid such amount under mistaken notion. Viewed from any angle, we are of the opinion that the learned Single Judge was justified in setting aside that portion of the order which rejected the claim of refund and accordingly same is confirmed. 37. Even following this ratio, if it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... notification) within the time limit under section 11A. Therefore, even if the department now feels that it was inapplicable, they cannot raise a demand. For the period for which the appellant paid the service tax, they had not filed a refund claim within the time prescribed under Section 11B. 43. Had it been a case of the levy being held unconstitutional by a High Court or Supreme Court, the appellant could have had recourse to a civil suit under Contract Act or a Writ under Article 226 and section 11B would not be applicable at all. It would have been completely out of the competence of this Tribunal to decide such suits or Writ Petitions. This Tribunal cannot issue an order to the officers to refund under Section 11B (only ignoring its limitation). 44. Since this is merely a case of the appellant not claiming the benefit of an exemption notification, it falls within the scope of the Statute itself and the provisions of Section 11B apply in full force. The officers who are authorised cannot act beyond the scope of the Section 11B and sanction time barred refund claims nor can this Tribunal order the officers to do so. Therefore, the appellant is not entitled to refund as ..... X X X X Extracts X X X X X X X X Extracts X X X X
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