TMI Blog2024 (1) TMI 890X X X X Extracts X X X X X X X X Extracts X X X X ..... und of the duty. It is relevant to refer to the decision of the Karnataka High Court in COMMISSIONER OF CENTRAL EXCISE (APPEALS), BANGALORE VERSUS KVR CONSTRUCTION [ 2012 (7) TMI 22 - KARNATAKA HIGH COURT ], where the Department had objected to the maintainability of the writ petition against the rejection of the refund applications as there was alternate remedy of filing an appeal under the statute, the High Court held that writ petition could not be rejected on the ground of alternative remedy. So the relevant date in this case would be the date of the order of the High Court, i.e.12.12.2017 and not from the date of payment of tax as claimed by the revenue under Clause(f). The application for refund was filed by the appellant on 12.03.2018, i.e., within three months from the date of the order of the High Court and the same being before the expiry of one year as per Section 11B(1) of the Act has to be treated being filed within the prescribed time limit. Thus, the refund application is not barred by limitation as in the peculiar facts of the present case the relevant date would be the date of the High Court order i.e.,12.12.2017. Whether the excess tax deposited ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ated 19.01.2021, whereby the rejection of the refund application was affirmed. 2. The appellant is engaged in the business of Engineering, Procurement and Construction of various projects including offshore projects and was registered with the Service Tax Authorities and later on migrated into GST registration. The appellant in Consortium with PT Sempec Indonesia had entered into a Works Contract Agreement with ONGC on 21.12.2011. During the execution of the work allotted under the agreement, Notification No.30/2012-ST dated 20.06.2012 was issued providing that 50% of the service tax liability shall be paid by the Body Corporate receiving the services under the Works Contract from inter alia Association of Persons(AOP). In terms of the said notification for the financial year 2012-2013 to 2013-2014, ONGC paid 50% of the service tax liability under Reverse Charge considering the appellant to be an AOP. The appellant also paid 100% of the service tax liability amounting to Rs.10,80,68,227/- under protest considering it otherwise. This led to the deposit of 150% of the service tax with the Department. The appellant made a representation on 16.06.2015 and also a reminder dated 31.0 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 11B is not applicable in the instant case as the tax is collected in excess and without authority of law. On both the arguments, the learned counsel for the appellant has referred to a series of decisions, which we will discuss later. 5. The Authorized Representative for the Revenue reiterated the findings of the Authorities below and submitted that the Hon ble High Court has left the issue to be decided in accordance with law and accordingly the same has been considered in terms of the provisions of Section 11B of the Act. It is further their case that the said payment of tax is in consequence of appellant s own commercial delay, disputes and mis-understanding with ONGC rather than any mistake of law or error on the part of the Departmental Authorities or as a result of any unauthorized levy or collection of tax without the authority of law. 6. Having heard both the sides and perused the records of the case, we find that the issues raised in the present appeal are as follows:- (i) What would be the relevant date in the present case for computing the period of limitation in terms of Section 11B of the Central Excise Act? (ii) Whether the instant refund application is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le to (a) rebate of duty of excise on excisable goods exported out of India or on excisable materials used in the manufacture of goods which are exported out of India; (b) unspent advance deposits lying in balance in the applicant s account current maintained with the [Commissioner of Central Excise]; (c) refund of credit of duty paid on excisable goods used as inputs in accordance with the rules made, or any notification issued, under this Act; (d) the duty of excise paid by the manufacturer, if he had not passed on the incidence of such duty to any other person; (e) the duty of excise borne by the buyer, if he had not passed on the incidence of such duty to any other person; (f) the duty of excise borne by any other such class of applicants as the Central Government may, by notification in the Official Gazette, specify : Provided further that no notification under clause (f) of the first proviso shall be issued unless in the opinion of the Central Government the incidence of duty has not been passed on by the persons concerned to any other person. Explanation B(ec) and (f) [(ec) in case where the duty becomes refundable as a consequence of judgme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... realised without the authority of law, the same should be refunded and in an application under Article 226 of the Constitution the court has power to direct the refund unless there has been avoidable laches on the part of the petitioner. It is true that in some cases the period of three years is normally taken as a period beyond which the Court should not grant relief, but that is not an inflexible rule. 9. In the present case if the department had not contested the writ petition taking a preliminary objection about the proper remedy of filing an application for refund, the High Court would have considered the prayer in the writ petition on merits and in the event the same being decided in favour of the appellant, he would have been entitle to claim refund of the duty. We find it relevant to refer to the decision of the Karnataka High Court in Commissioner of Central Excise Vs. KVR Construction - 2012 (26) STR 195, where the Department had objected to the maintainability of the writ petition against the rejection of the refund applications as there was alternate remedy of filing an appeal under the statute, the High Court held that writ petition could not be rejected on the gr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ity should be considered as deposit which has to be refunded and in such cases limitation prescribed under Section 11B of the Act would not be applicable has been considered in series of decisions by the various High Courts and also by the Tribunal. In the case of M/s.Credible Engineering Construction Projects, Limited versus Commissioner, Central tax, Hyderabad GST- 2022 (9) TMI 844 CESTAT-HYDERABAD, where there was a difference of opinion between the two members regarding the application of limitation under Section 11B for the purpose of refund, the matter was referred to the Third Member who opined that if an amount is paid under a mistaken notion as it was not required to be paid towards any duty or tax, the limitation prescribed under Section 11B of the Act would not be applicable. In this case, the Member (Judicial) had relied on the decision of the Karnataka High Court in KVR Construction - 2012(26) STR 195, which was affirmed by the Supreme Court vide order dated 11.07.2011 by dismissing the Department s Appeal 2018 (14) GSTL J17. 13. We may now consider the decision of the Principal Bench in Oriental Insurance Company Ltd versus Commissioner of Central Excise and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... efund amount with proportionate interest, observing that -- 4. Concededly, at the relevant time Service Tax was not payable for any of the functions or work undertaken or performed by the appellant/assessee. In these circumstances, under a wrong impression that it was liable to Service Tax, the assessee was levied certain amounts. Subsequently, upon inquiry, it was informed by CBEC on 13-4-2009 that its activities were not taxable. Soon thereafter, it sought refund of the amounts deposited. The Deputy Commissioner refunded part of the amount but disallowed refund of Rs. 11,49,090/- on the ground that the application was filed after a lapse of period of one year. The Assessee unsuccessfully filed an appeal to CESTAT which appears to have relied upon the judgment of the Supreme Court in Collector of Central Excise, Chandigarh v. Doaba Co-operative Sugar Mills, 1988 (37) E.L.T. 478 (S.C.). 5 . Counsel for the assessee contends that when the amount in question was never payable as there was no levy at all, the question of denying the refund of part payment did not arise and that the general principal of limitation will be applicable from the date of discovery of mistaken pa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as to file a refund application and when the same was filed by the appellant within three months of the order of the High Court, they then disallowed the same on the ground of limitation. We do not find the approach of the Department to be justified to reject the refund claim on the ground of limitation. It has been repeatedly observed that just as an assessee cannot be permitted to evade payment of rightful tax, the Authority which recovers tax without any authority of law cannot be permitted to retain the amount merely because the tax payer was not aware at that time that the recovery being made was without any authority of law. 17. In the present case, the appellant had sought for the amount paid in excess to the 100% duty paid under mistake that they were liable to pay the same as per the existing statute, but for the notification issued subsequently, whereby the duty was apportioned 50:50 between the service recipient and the service provider, has not been disputed by the Revenue. It would be relevant to consider the following paras from the decision of the Karnataka High Court in KVR Construction (supra):- 18 . From the reading of the above Section, it refers to claim ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... them. When once there is lack of authority to demand service tax from the respondent company, the department lacks authority to levy and collect such amount. Therefore, it would go beyond their purview to collect such amount. When once there is lack of authority to collect such service tax by the appellant, it would not give them the authority to retain the amount paid by the petitioner, which was initially not payable by them. Therefore, mere nomenclature will not be an embargo on the right of the petitioner to demand refund of payment made by them under mistaken notion. xxxxxx xxxxxx xxxxxx 23 . Now we are faced with a similar situation where the claim of the respondent/assessee is on the ground that they have paid the amount by mistake and therefore they are entitled for the refund of the said amount. 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 Rs. 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sited the amount of service tax of Rs.10,80,68,227/- along with interest amounting to Rs.52,59,040/-. On adjudication, the Commissioner of Central Excise vide order dated 26.02.2009 confirmed the demand of service tax with interest and penalty. In challenge to the said order, the Tribunal vide Final Order dated 8.10.2015 set aside the Order-in- Original holding that the services classifiable under the category of Works Contract became taxable service only after 1.06.2007. In terms of the order of the Tribunal, the appellant on 13.10.2016 filed the refund application for a sum of Rs.52,59,040/- deposited towards interest (as the service tax amount was already recovered from the service receivers). That almost after three years, the Department issued show cause notice dated 27.04.2020 saying that the refund application is time barred under Section 11B of the Act. The Adjudicating Authority rejected the refund application on the ground of limitation as the refund application was filed on 13.10.2016, which is after the period of one year of the order of the Tribunal dated 8.10.2015. The appeal filed by the appellant was also rejected by the Commissioner (Appeals). Being aggrieved, t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the case, we need to consider the first argument raised by the appellant as to whether the period of limitation has to be computed from the date of the order or from the date of receipt of the order. We find from the memo of Appeals as well as from the synopsis filed by the appellant that the order of the Tribunal dated 8.10.2015 was signed only on 26.10.2015 and further received by the appellant on 2.11.2015 and therefore it is the date of receipt of the order from which the limitation shall be computed and if so the refund application is within the prescribed period of one year. We are afraid that the date of communication/receipt of the order is not relevant in the present case as clause (ec) of Explanation to Section 11B uses the expression from the date of such judgment, decree, order or direction , unlike the provisions of appeal under Section 35 and 35A which says that any person aggrieved by any decision or order may appeal within 60 days or three months as the case may be, from the date on which the order sought to be appealed against is communicated. In the later case of filing an appeal, the relevant date for computing the limitation period is the date on which the o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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