TMI Blog2023 (9) TMI 1252X X X X Extracts X X X X X X X X Extracts X X X X ..... by law. This only leaves to deal with the issue of unjust enrichment. It is noted that the Order-in-Original dated 24 July 2020 while dealing with the aforesaid aspect has held in favour of the assessee solely on the ground that since service tax was not liable to be deposited, the question of unjust enrichment would not be applicable. As noted, the Appellate Authority in appeal against this order did not deal with the issue of unjust enrichment in its order dated 26 March 2021. However, prior to the passing of the CESTAT s impugned order dated 09 January 2020, when the matter reached the desk of the Appellate Authority against the Adjudicating Authority s order dated 17 October 2014, it was noted that the assessee had not submitted any documentary evidence to establish that the incidence of tax had not been passed on. CESTAT, however, has completely failed to allude to this aspect of the matter. In view of the above, while its decision is liable to be upheld, the assessee would be obliged to place adequate material before the concerned Assessing Authority, establishing that the incidence of service tax was not passed on. This since the issue of unjust enrichment and the bur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 Tax rules, on the other tax liabilities incurring on related provisions of output services in the same field, had they kept themselves updated about the exemption notification. Further, the appellant could have also availed the relief of refund of the same as per relevant provisions of FA 1994 read with CEA 1944. The appellant has also not submitted any documentary evidence at the appellate stage in support of their claim of having not received service tax from the Stare Government of Uttar Pradesh or the burden of the same was not passed on to the ultimate consumer of the impugned output service. The said claim is thus also hit by the principle of unjust enrichment as specified under section 11B of the CEA 1944. Therefore, the AA has rightly rejected the refund claim of the appellant as time barred as per applicable provisions of section 11B of the CEA 1944. 4. Thereafter, post the CESTAT s impugned order of 09 January 2020 according refund of service tax, the respond ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he 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. Undisputedly, in terms of the Notification dated 01 March 2011, exemption was accorded under Section 65(105)(d) of the 1994 Act in respect of services provided by an insurer to any person, for providing insurance under the scheme as aforenoted. 8. However, and inadvertently, the respondent continued to pay service tax between March 2011 to November 2011 till that mistake was ultimately rectified. This led to the filing of a refund claim on 23 December 2013. The CESTAT has taken note of various decisions rendered by different High Courts and which had held that where service tax had been paid under a mistake, there would exist no justification for the assessee being bound by the period of one year as prescribed under Section 11B of the Act, and that in such a situation, it would be the date when the mistake was discovered which would be relevant. 9. We note that two Division Benches of our Court have also answered the aforesaid issue in favour of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... red 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 succeed and is therefore allowed. The appellant shall be entitled to refund of entire amount with proportionate interest. 10. Identical conclusions came to be rendered by the Division Bench in Alar Infrastructures. We deem it apposite to extract paragraphs 3 and 4 of the report hereinbelow: - 3. Having heard the submissions of counsel for the parties, this Court finds that the question of applicability of Section 11B of the CE Act read with Section 83 of the Finance Act, 1994 to the refund application of the Appellant would arise only if the CESTAT came to the conclusion that the services rendered by the Appellant were in fact liable to service tax. If, on the other hand, the CESTAT finds that the services rendered by the Appellant were not amenable to service tax at all, the question of processing the refund application of the Appellant with reference to Section 11B of the Act would not arise. This legal position ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ax. 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 of the nature of the institution for which they have made construction and rendered services. In other words, if the respondent had not paid those amounts, the authority could not Have demanded the petitioner to make such payment. In other words, the authority lacked authority to levy and collect such service tax. In case, the Department were to demand such payments, the petitioner could have challenged it as unconstitutional and without authority of law. If we look at the converse, we find mere payment of amount, would not authorize the Department to regularise such payment. When once the Department had no authority to demand service tax from the respondent because of its circular dated September 17, 2004, the payment made by the respondent-company would not partake the character of service tax liable to be paid by them. Therefore, mere payment made by the respondent will neither validate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xpressed 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 for the Assessee and the State. The issue, which arises for consideration in this case, whether the provisions of Section 115 of the Central Excise Act would be applicable to claim of refund made by an Assessee when the tax has been paid under mistake of law. In this case, indisputably, there was no liability on the petitioner to pay service tax. The Supreme Court of India, in the case of Union of India v. ITC Ltd. reported in 1993 Supp (4) SCC 326 : (1993) 67 ELT 3 (S.C.) while dealing with the question of refund of excess excise paid held:- 8. In Shri Vallabh Glass Works Ltd. v. Union of India , this Court, while examining the question as to what is the point of time from which the limitation should be deemed to commence observed that relief in respect of payments made beyond the period of three years may not be granted from the date of filing of the petiti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd 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 cesses which are collected by the Department of Revenue, but levied under an Act which is administered by different Department are not chargeable to Education Cess and Secondary and Higher Secondary Cess chargeable under the provisions of the Finance Acts, 2004 and 2007, respectively. Education Cess and Secondary and Higher Secondary Education Cess being cesses levied at a percentage of the aggregate of all duties of excise, the basic requirement for levy thereof is the existence of excise duty. In the present case Oil Cess is not a duty of excise and hence, the basic requirement of levy of such cesses is not satisfied. Furthermore, for the purpose of levy of Education Cess and Secondary and Higher Secondary Education Cess, two other conditions precedent, are required to be satisfied, viz., (i) that the duty of excise should be levied ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 provision would also not be applicable and the general provisions under the Limitation Act, 1963 would be applicable. Section 17 of the Limitation Act inter alia provides that when a suit or application is for relief from the consequences of a mistake, the period of limitation would not begin to run until the plaintiff or applicant has discovered the mistake, or could, with reasonable diligence, have discovered it. Since the period of limitation begins to run only from the time when the applicant comes to know of the mistake, the application made by the petitioner was well within the prescribed period of limitation. Moreover, since the very retention of the Education Cess and Secondary and Higher Secondary Education Cess by the respondents is without authority of law, in the light of the decision of this court in Sioastik Sa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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) The claim for return of money must be considered by the authorities. 14. In view of the aforesaid, we find no ground to interfere with the view as expressed by the CESTAT which has taken note of the broad consensus struck by various High Courts on the question including the decision rendered by this Court in National Institute. The decisions that we have noticed above, came to be rendered post Mafatlal and which judgment of the Supreme Court has also been duly noticed and explained. 15. This only leaves us to deal with the issue of unjust enrichment. We note that the Order-in-Original dated 24 July 2020 while dealing with the aforesaid aspect has held in favour of the assessee solely on the ground that since service tax was not liable to be deposited, the question of unjust enrichment would not b ..... X X X X Extracts X X X X X X X X Extracts X X X X
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