TMI Blog2023 (12) TMI 11X X X X Extracts X X X X X X X X Extracts X X X X ..... tribunal holding that the refund claims filed beyond statutory period of limitation as prescribed by the statute (Section 11B of Central Excise Act, 1944 or Section 27 of the Customs Act, 1962) are barred by limitation. There are no merits in the appeal - appeal dismissed. - MR. SANJIV SRIVASTAVA, MEMBER (TECHNICAL) Shri Amit Neogi, Chartered Accountant for the Appellant Shri Manish Raj, Authorised Representative for the Respondent ORDER This appeal is directed against Order-in-Appeal No. NOI- EXCISE-002-APP-1092-2019-20 dated 13/11/2019 passed by Commissioner (Appeals) Central Excise Services Tax, Noida. By the impugned order Commissioner (Appeals) has dismissed the appeal filed by the appellant by observing as follows:- 6. I find that the appellant had filed the aforesaid refund claim on 09.01.2018. The appellant deposited service tax on 01.06.2016 in the present case. Accordingly, under Section 11B of the Central Excise Act' 1944 the refund claim should have been filed on or before 30.05.2017, but the appellant failed to do so and filed their refund claim on 09.01.2018, after the lapse of more than one year. 7. I find that the appellant ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on which service tax liability as per appellant working out to be Rs.80,475/-. Therefore, appellant claimed that they have paid excess service tax of Rs.4,99,525/- for which the said refund claim is made. 2.3. On scrutiny of refund claim filed on 09.11.2018, it was observed that an amount of Rs.5,80,000/- which appellant had deposed as service tax was not refunded by them to M/s. Umang Realtech Pvt. Ltd. Accordingly, them have not bound the burden of excess tax paid. It was also noticed that the refund claim filed on 09.01.2018 was barred by limitation as has been filed after more than one year from the date of payment of the service tax claimed as refund. 2.4. Accordingly, a show cause notice dated 27.03.2018 was issued to the appellant asking them to show cause as to why the refund claim may not be rejected for the above stated reasons. This show cause notice was adjudicated vide the Order-in- Original dated 11.05.2018, rejecting the refund claim of the appellant. 2.5. Aggrieved appellant challenged the Order-in-Original before Commissioner (Appeals), who has rejected the appeal by the impugned order as referred in para-1 above. Hence, appellant has filed this appeal. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (2) that it is open to an assessee to claim refund of tax paid by him under orders which have become final - or to reopen the orders which have become final in his own case - on the basis of discovery of a mistake of law based upon the decision of a court in the case of another assessee, regardless of the time-lapse involved and regardless of the fact that the relevant enactment does not provide for such refund or reopening; (3) whether equitable considerations have no place in situations where Section 72 of the Contract Act is applicable; and (4) whether the spending away of the taxes collected by the State is not a good defence to a claim for refund of taxes collected contrary to law. 68 . Re. : (I) : Hereinbefore, we have referred to the provisions relating to refund obtaining from time to time under the Central Excises and Salt Act. Whether it is Rule 11 (as it stood from time to time) or Section 11B (as it obtained before 1991 or subsequent thereto), they invariably purported to be exhaustive on the question of refund. Rule 11, as in force prior to August 6, 1977, stated that no duties and charges which have been paid or have been adjusted....shall be refunded unless ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... luding the amended Section 11B is questioned, no specific reasons have been assigned why a provision of the nature of sub-section (3) of Section 11B (amended) is unconstitutional. Applying the propositions enunciated by a seven-Judge Bench of this Court in Kamala Mills, it must be held that Section 11B [both before and after amendment] is valid and constitutional. In Kamala Mills, this Court upheld the constitutional validity of Section 20 of the Bombay Sales Tax Act (set out hereinbefore) on the ground that the Bombay Act contained adequate provisions for refund, for appeal, revision, rectification of mistake and for condonation of delay in filing appeal/revision. The Court pointed out that had the Bombay Act not provided these remedies and yet barred the resort to civil court, the constitutionality of Section 20 may have been in serious doubt, but since it does provide such remedies, its validity was beyond challenge. To repeat - and it is necessary to do so - so long as Section 11B is constitutionally valid, it has to be followed and given effect to. We can see no reason on which the constitutionality of the said provision - or a similar provision - can be doubted. It must also ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... appeals, obviating the necessity of a suit or a writ petition in matters relating to refund. Once the constitutionality of the provisions of the Act including the provisions relating to refund is beyond question, they constitute law within the meaning of Article 265 of the Constitution. lt follows that any action taken under and in accordance with the said provisions would be an action taken under the authority of law , within the meaning of Article 265. In the face of the express provision which expressly declares that no claim for refund of any duty shall be entertained except in accordance with the said provision, it is not permissible to resort to Section 72 of the Contract Act to do precisely that which is expressly prohibited by the said provisions. In other words, it is not permissible to claim refund by invoking Section 72 as a separate and independent remedy when such a course is expressly barred by the provisions in the Act, viz., Rule 11 and Section 11B. For this reason, a suit for refund would also not lie. Taking any other view would amount to nullifying the provisions in Rule 11/Section 11B, which, it needs no emphasis, cannot be done. It, therefore, follows t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... /tax to others, he has no just claim for refund. It would be a parody of economic justice to refund the duty to a claimant who has already collected the said amount from his buyers. The refund should really be made to the persons who have actually borne its burden - that would be economic justice. Conferring an unwarranted and unmerited monetary benefit upon an individual is the very anti-thesis of the concept of economic justice and the principles underlying Articles 38 and 39. Now, the right to refund arising as a result of declaration of unconstitutionality of a provision of the enactment can also be looked at as a statutory right of restitution. It can be said in such a case that the tax paid has been paid under a mistake of law which mistake of law was discovered by the manufacturer/assessee on the declaration of invalidity of the provision by the court. Section 72 of the Contract Act may be attracted to such a case and a claim for refund of tax on this score can be maintained with reference to Section 72. This too, however, does not mean that the taxes paid under an unconstitutional provision of law are automatically refundable under Section 72. Section 72 contains a rule of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erstood as saying that such a course is permissible. Later decisions commencing from Bhailal Bhai have held that the period of limitation in such cases is three years from the date of discovery of the mistake of law. With the greatest respect to the learned Judges who said so, we find ourselves unable to agree with the said proposition. Acceptance of the said proposition would do violence to several well-accepted concepts of law. One of the important principles of law, based upon public policy, is the sanctity attaching to the finality of any proceeding, be it a suit or any other proceeding. Where a duty has been collected under a particular order which has become final, the refund of that duty cannot be claimed unless the order (whether it is an order of assessment, adjudication or any other order under which the duty is paid) is set aside according to law. So long as that order stands, the duty cannot be recovered back nor can any claim for its refund be entertained. But what is happening now is that the duty which has been paid under a proceeding which has become final long ago - may be an year back, ten years back or even twenty or more years back - is sought to be recover ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sments made by the appropriate authorities under the Act whether the assessments are correct or not and that the words an assessment made cannot mean an assessment properly and correctly made. It was also pointed out in the said decision that the provisions of the Bombay Sales Tax Act clearly indicate that all questions pertaining to the liability of the dealer to pay assessment in respect of their transactions are expressly left to be decided by the appropriate authorities under the Act as matters falling within their jurisdiction. Whether or not a return is correct and whether a transaction is exigible to tax or not are all matters to be determined by the authorities under the Act. The argument that the finding of the authority that a particular transaction is taxable under the Act is a finding on a collateral fact and, therefore, resort to civil court is open, was expressly rejected and it was affirmed that the whole activity of assessment beginning with the filing of the return and ending with the order of assessment falls within the jurisdiction of the authorities under the Act and no part of it can be said to constitute a collateral activity not specifically or expressly in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng advantage of the decision in another assessee's case. All claims for refund ought to be, and ought to have been, filed only under and in accordance with Rule 11/Section 11B and under no other provision and in no other forum. An assessee must succeed or fail in his own proceedings and the finality of the proceedings in his own case cannot be ignored and refund ordered in his favour just because in another assessee's case, a similar point is decided in favour of the manufacturer/assessee. (See the pertinent observations of Hidayatullah, CJ. in Tilokchand Motichand extracted in Para 37). The decisions of this Court saying to the contrary must be held to have been decided wrongly and are accordingly overruled herewith. 4.4. This decision of the Hon'ble Supreme Court has been followed constantly by the various courts and tribunal holding that the refund claims filed beyond statutory period of limitation as prescribed by the statute (Section 11B of Central Excise Act, 1944 or Section 27 of the Customs Act, 1962) are barred by limitation. Some of the decisions are reproduced below: A. Hon'ble Supreme Court in the case of Anam Electricals [1997 (90) ELT 260 (SC)] ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on is within the period of limitation. 5. Proceedings under Article 226 are not envisaged by the Limitation Act. The period of limitation prescribed under Limitation Act has no application to the extra ordinary jurisdiction of this Court exercisable under Article 226 of the Constitution of India writ of this Court. The submissions in this behalf are devoid of any merit. Even otherwise, the Authorities under the Customs Act duly empowered to collect the duty, could make a mistake or error in exercise of their power. However, it cannot be successfully argued that erroneous act to which the Petitioner has questioned is without any jurisdiction. Even in view of this matter, the provisions of Section 27 of the Act has application as laid down by the Supreme Court in the case cited supra. Since application is beyond the period of limitation, the same cannot be entertained. C. In case of Kirloskar Pneumatic Co. Ltd. [1999 (105) E.L.T. 277 (Bom.)] Hon'ble Bombay High Court held as follows: 2. In view of the decision laid down by the Supreme Court in case of Mafatlal Industries Ltd. v. Union of India 1997 (89) E.L.T. 247 (S.C.), petition cannot be entertained as the clai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es not envisage any such refunds except in accordance with the procedure prescribed thereunder. The question whether an amount paid by the assessee which was not otherwise due and recoverable from the assessee could be claimed by way of a refund even outside the provision of Sec. 27 and beyond the period prescribed therein fell directly for consideration of the Supreme Court in Mafatlal Industries Case (Supra). On a review of the entire case law on the subject the Court summed up the legal position thus :- Where a refund of tax/duty is claimed on the ground 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 mis-interpreting 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 thereun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be a valid piece of legislation within the meaning of Article 265 of the Constitution, the result is that the recovery and retention of the money although strictly speaking not recoverable from the citizen concerned shall be treated to be a recovery with the authority of law. There is as is apparent from a reading of the conclusions extracted above only one exception to that general Rule namely where the recovery is made in terms of a provision which is declared constitutionally invalid. In any such case, the refund would fall outside the purview of the enactment and would therefore be immune from the rigors of Section 27. To the same effect is the view taken by the Apex Court in Kirloskar's case (supra) also. In that case the argument that the High Court could under Article 226 of the Constitution direct the Authorities to grant refund was repelled in no uncertain terms. The Court observed that the provisions of Article 226 of the Constitution could not be invoked to direct the Officers to ignore a validly made provision of law like Section 27 of the Customs Act. The jurisdiction under Article 226 could on the contrary be invoked only to direct the authorities to act in accord ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ending Act with a larger period of limitation comes into force. A number of judgments of this Court have recognized the aforesaid proposition. Thus, in S.S. Gadgil v. Lai and Company, AIR 1965 S.C. 171, this Court stated :- 13. As we have already pointed out, the right to commence a proceeding for assessment against the assessee as an agent of a non-resident party under the Income Tax Act before it was amended, ended on March 31, 1956. It is true that under the amending Act by Section 18 of the Finance Act, 1956, authority was conferred upon the Income Tax Officer to assess a person as an agent of a foreign party under Section 43 within two years from the end of the year of assessment. But authority of the Income Tax Officer under the Act before it was amended by the Finance Act of 1956 having already come to an end, the amending provision will not assist him to commence a proceeding even though at the date when he issued the notice it is within the period provided by that amending Act. This will be so, notwithstanding the fact that there has been no determinable point of time between the expiry of the time provided under the old Act and the commencement of the amending Act. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is rule also. Where the right of suit is barred under the law of limitation in force before the new provision came into operation and a vested right has accrued to another, the new provision cannot revive the barred right or take away the accrued vested right. For the latest exposition of the same Rule see: Thirumalai Chemicals Ltd. v. Union of India, (2011) 6 SCC 739 : 2011 (268) E.L.T. 296 (S.C.) at para 29. 11. The effect of the amendment of Section 11B on 12th May, 2000 is that all claims for rebate pending on this date would be governed by a period of one year from the date of shipment and not six months. This, however, is subject to the rider that the claim for rebate should not be made beyond the original period of six months. On the facts of the present case, since the claims for rebate were made beyond the original period of six months, the respondents cannot avail of the extended period of one year on the subsequent amendment to Section 11B. The effect of Section 11B, and in particular, applications for rebate being made within time, has been laid down in Mafatlal Industries Ltd. v. Union of India, (1997) 5 SCC 536 : 1997 (89) E.L.T. 247 (S.C.), thus : ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... endment) Act are constitutionally valid and have to be followed and given effect to. Section 72 of the Contract Act has no application to such a claim of refund and cannot form a basis for maintaining a suit or a writ petition. All refund claims except those mentioned under Proposition (ii) below have to be and must be filed and adjudicated under the provisions of the Central Excises and Salt Act or the Customs Act, as the case may be. It is necessary to emphasise in this behalf that Act provides a complete mechanism for correcting any errors whether of fact or law and that not only an appeal is provided to a Tribunal - which is not a departmental organ - but to this Court, which is a civil court. From the law laid down by this decision it is clear that all claims for rebate/refund have to be made only under Section 11B with one exception - where a statute is struck down as unconstitutional. Further, the limitation period of six months has to be strictly applied. 4.5 Interestingly in case of ASL Builders [Final Order No. 75043/2020 dated 09.01.2020 of Kolkata Bench] referred to by the counsel for appellant, following has been held: 10. The constitutional Bench of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rovisions of the Act or by acting in violation of the fundamental principles of judicial procedure. (III) Mistake of law - the levy or imposition was unconstitutional or illegal or not exigible in law (without jurisdiction) and, so found in a proceeding initiated not by the particular assessee, but in a proceeding initiated by some other assessee either by the High Court or the Supreme Court, and as soon as the assessee came to know of the Excise Appeal No.78558 of 2018 judgment (within the period of limitation), he initiated action for refund of the tax paid by him, due to mistake of law. After referring several judgments and provisions of Section 11A 11B of Central Excise Act, at paragraph 137 of the said judgement, their Lordships have concluded as under:- 137. Applying the law laid down the decisions aforesaid, it is not possible to conclude that any and every claim for refund of illegal/unauthorised levy of tax, can be made only in accordance with the provisions of the Act (Rule 11, Section 11B etc. as the case may be), and an action by way of suit or writ petition under Article 226 will not be maintainable under any circumstances. An action by way of suit o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... once there is lack of authority to demand service tax or excise duty from the assessee, the department lacks authority to levy and collect such amount and the said amount is not Service Tax or Excise duty and Section 11B of the Act has no application in such cases. The above decision refers to para 113 and 137 of the decision in case of Mafatlal Industries, for coming at this conclusion. Para 113 and 137 are not the majority view, in the aforesaid decision of the Hon'ble Supreme Court, the majority decision has concluded in para 99 of the said decision. Accordingly the findings recorded by relying on the minority view in the said decision cannot create a binding precedence. In case of Orient Fabrics Pvt Ltd [2003 (158) E.L.T. 545 (S.C.)] Hon'ble Supreme Court has observed as follows: 9. The Gujarat High Court in Ashok Fashion Ltd. (supra) although took notice of the fact that the cause of action therein arose in the year 1993, but inadvertently or otherwise noticed the amended provisions of sub-section (3) of Section 3 of the Act. It furthermore although noticed the decision of M/s. Khemka Co. (Agencies) Pvt. Ltd. (supra), as would appear from the discussio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the province of permissible delegated Legislation on the principles laid down long ago by this Court in Re Delhi Laws's case (supra) as no guidelines are given in Section 9(2) about the nature, conditions, or extent of penalties leviable. If such a power was really conferred would it not amount to an abdication of an essential legislative function with respect to a matter found as Item 92A of the Union List I of the Seventh Schedule so that, according to Article 246(1) of our Constitution, Parliament has exclusive power to legislate on a topic covered by it? As this question was not argued before us I would only say that the correct canon of construction to apply in such a case is that we should so interpret Section 9(2) of the Central Act, if possible, that no part of it may conceivably be invalid for excessive delegation. The well known maxim applicable in such cases is : ut res magis valeat quam pereat. 38. It is evident from Section 16(4) of the Bombay Act of 1953 that there is a particular percentage of the amount of tax levied which is prescribed as penalty to be paid as an addition to the amount of tax for every month after the expiry of the prescribed period of d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... further referred to the amended provisions of the said Act, as would appear from the following : 7. It will be noticed from sub-section (3) of Section 3 of the Additional Duties Act that all the provisions of the Central Excise Act, 1944 and the Rules made thereunder including those relating to refunds and exemptions are made applicable, so far as may be, in relation to the levy and collection of additional duty of excise. The provisions of the Central Excise Act, 1944 and the Rules made thereunder are made applicable to the additional duty of excise in the same manner and extent to which they apply in relation to the levy and collection of the duties of excise on the goods specified in column 3 of the First Schedule referred to in Section 3(1) of the Additional Duties Act. This is so stated, because, all the goods specified in the said First Schedule were also subjected to duties of excise at the rates set forth in the Schedule to the Central Excise Tariff of 1985, under Section 3 of Central Excise Act, 1944, which provision also lays down that such duties of excise shall be 'levied and collected' in such manner as may be prescribed. 15. The decision in Ashok F ..... X X X X Extracts X X X X X X X X Extracts X X X X
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