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TMI Blog2023 (9) TMI 1252X X X X Extracts X X X X X X X X Extracts X X X X ..... escribed under Section 11B of the Central Excise Act, 1944 [Act]. On appeal by the respondent before the Commissioner (Appeals), Central Excise, the Appellate Authority in its order dated 17 March 2016 affirmed the rejection of refund of service tax by placing reliance on the judgment of the Supreme Court in Mafatlal Industries Ltd. and Others vs. Union of India and Others (1997) 5 SCC 536. 3. Further, the Appellate Authority also observed that the respondent's refund claim was hit by the principle of unjust enrichment as embodied in Section 11B of the Act. The relevant part of the order is extracted hereinbelow: "....Although the instant case involves refund of service tax payments made by the appellant for the period May 2011 to November 2011 and it is presumed that they stopped paying Tax on the same after that, yet they contend that they came to know of this mistake only on 27.08.2013 when the state Government informed them and subsequently filed a claim after 3 months. The appellant has given no cogent explanation for this delay in filing the claim. The appellant could always have taken the recourse to adjustment of the said tax under the provisions of Rule 6 of the Service ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pulated under S.11BB of the Act. The Appellate Authority in this order however did not deal with the issue of unjust enrichment, as observed by the concerned authority in the Order-in-Original dated 24 July 2020. 6. Having dealt with the history of the litigation between the parties, we note that when the matter reached the CESTAT against the Appellate Authority's order dated 17 March 2016, arguments appear to have been addressed principally on the issue of limitation as constructed in terms of Section 11B of the Act and whether in the facts of the present case, the claim was liable to be rejected on that score. 7. We may note before proceeding further that there is no dispute inter partes with respect to the respondent not being liable to pay service tax in terms of the provisions made in the Finance Act, 1994 [The 1994 Act]. It may only be additionally noted that the respondent was engaged in the general insurance business and was registered with the Service Tax Department under the categories of "General Insurance Service" and "Re-insurance Services". It had been engaged by the Government of Uttar Pradesh to provide insurance services under the Rashtriya Swasthya Bima Yojana. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and that the general principal of limitation will be applicable from the date of discovery of mistaken payment in the present case. So the refund claim is made within the stipulated period of the limitation. 6. Counsel for the Revenue, on the other hand, relied upon the judgment of the Supreme Court in Collector of C.E., Kanpur v. Krishna Carbon Paper Co., 1988 (37) ELT 480 (SC). Relying upon the said judgment, it is submitted that the refund claim before a departmental authority is to be made within the four corners of the statute and the period of limitation prescribed in the Central Excise Act and the Rules framed there-under. 7. This court is of the opinion that the CESTAT clearly fell into error. Krishna Carbon Paper Co. (supra) was a case where principal duty was payable; excess amount had been paid on a mistaken notion with respect to the liability for excess production under a notification which was later discovered to be not correct. In the present case, levy never applied - a fact conceded by no less than the authority of CBEC. In these circumstances, the general principle alluded to in Krishna Carbon Paper Co. (supra) would apply. Consequently, the appeal has to su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sought for as refund was the amount paid under mistaken notion which even according to the Department was not liable to be paid. 20. According to the appellant, the very fact that the said amounts are paid as service tax under the 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 from payment of such service tax by virtue of circular-dated September 17, 2004 and this is not denied by the Department and it is not even denying the nature of construction/services rendered by the petitioner was exempted from to payment of service tax. What one has to see is whether the amount paid by the petitioner under mistaken notion was payable by the petitioner: Though under the Finance Act, 1994 Such service tax was payable by virtue of notification, they were not liable to pay, as there was exemption to pay such tax because ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ection-11B of the Act." 12. Similar is the view which has been taken by the Bombay High Court in Parijat Construction vs. Commissioner of Central Excise, Nashik 2017 SCC Online Bom 9480. It would thus appear that High Courts across the board have taken a consistent view that where once it is found that the assessee was not liable to be subjected to a service tax, it would not be bound by the limitation as prescribed under Section 11B of the Act. 13. This would also appear to appeal to reason since undisputedly and in terms of Article 265 of the Constitution, the Union can only levy a tax which is authorized by law. Since it is conceded before us that the respondent was not liable to pay any service tax, it would be wholly unjust to permit the Union to retain monies which were not liable to be collected or were authorized by law. We find that an identical view has been expressed by a Division Bench of the Madras High Court in 3E Infotech vs. CESTAT, Chennai 2018 SCC Online Mad 13637. We deem it appropriate to reproduce the relevant extracts from that decision hereinbelow :- "7. The present appeal lies from the order of the Appellate Tribunal. We have heard the Learned Counsel fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hit by laches. 9. The High Court of Gujarat in Oil and Natural Gas Corporation Ltd., v. Union of India, reported in (2017) 354 ELT 577 (Guj.) relied on another judgment of the Gujarat High Court in Joshi Technologies International, INC-India Projects v. Union of India = (2016) 339 ELT 21 (Guj.) and quoted the relevant paragraph, which reads as under:- "Merely because the provisions of the Central Excise Act, 1944 and the rules framed thereunder for collection and refund viz., the machinery provisions have been incorporated in the OID Act for collection and refund of the cess levied thereunder, it cannot be inferred that the Oil Cess imposed tinder the provisions of the OID Act assumes the character of central excise duty. The finding recorded by the adjudicating authority that the Oil Cess is in the nature of excise duty, is erroneous and contrary to the law laid down by this court in Commissioner v. Sahakari Khand Udyog Mandli Ltd. (supra). In the Circular dated 7th January, 2014, reference to sugar cess and tea case levied under the Sugar Cess Act, 1982, and the Tea Act, 1953, respectively, is merely illustrative in nature and what is meant by the circular is that the ce ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assed by the adjudicating authority rejecting its claim for refund of the amount paid under a mistake. Since Oil Cess is not a duty of excise, the amount paid by the petitioner by way of Education Cess and Secondary and Higher Secondary Education Cess, cannot in any manner be said to be a duty of excise inasmuch as what was paid by the petitioner was not a duty of excise calculated on the aggregate of all the duties of excise as envisaged under the provisions of Section 93 of the Finance Act, 2004 and Section 138 of the Finance Act, 2007. Thus, the amount paid by the petitioner would not take the character of Education Cess and Secondary and Higher Secondary Education Cess but is simply an amount paid under a mistake of law. The provisions of Section 11B of the Central Excise Act, 1944 would, therefore, not be applicable to an application seeking refund thereof. The petitioner was therefore, wholly justified in making the application for refund under a mistake of law and not under section 11B of the Central Excise Act, 1944. Since the provisions of Section 11B of the Act are not applicable to the claim of refund made by the petitioner, the limitation prescribed under the said ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt cannot be legally sustained. xxx xxx xxx 11. Further, the claim of the respondent in refusing to return the amount would go against the mandate of Article 265 of the Constitution of India, which provides that no tax shall be levied or collected except by authority of law. 12. 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 period of limitation under Section 11B had expired. Such a position would be contrary to the law laid down by the Hon'ble Apex Court, and therefore we have no hesitation in holding that the claim of the Assessee for a sum of Rs. 4,39,683/- cannot be barred by limitation, and ought to be refunded. There is no doubt in our minds, that if the Revenue is allowed to keep the excess service tax paid, it would not be proper, and against the tenets of Article 265 of the Constitution of India. On the facts and circumstances of this case, we deem it appropriate to pass the following directions:- (a) The Application under Section 11B cannot be rejected on the ground that is barred by limitation, provided for under Section. (b) ..... X X X X Extracts X X X X X X X X Extracts X X X X
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