Custom, Excise & Service Tax Tribunal
Mahindra Holidays And Resorts India Ltd vs Principal Chief Commissioner Of ... on 7 November, 2025
IN THE CUSTOMS, EXCISE & SERVICE TAX
APPELLATE TRIBUNAL, CHENNAI
Service Tax Appeal Nos. 40011 to 40014 of 2021
(Arising out of Order in Appeal No. 79 to 82/2020 (CTA - I) dated 9.10.2020
passed by the Commissioner of Central Excise (Appeals - I), Chennai)
With
Service Tax Appeal Nos. 40482 to 40485 of 2021
(Arising out of Order in Appeal No. 71 to 74/2021 (CTA - I) dated 6.5.2021 passed
by the Commissioner of GST & Central Excise (Appeals - I), Chennai)
And
Service Tax Appeal Nos. 40890 and 40891 of 2023
(Arising out of Order in Appeal No. 307 to 311/2023 (CTA - I) dated 27.9.2023
passed by the Commissioner of GST & Central Excise (Appeals - I), Chennai)
Mahindra Holidays and Resorts India Ltd. Appellant
Mahindra Towers, 2nd Floor
17/18, Patullas Road
Chennai - 600 002.
Vs.
Commissioner of GST & Central Excise Respondent
Chennai North Commissionerate
26/1, Mahatma Gandhi Road
Nungambakkam, Chennai - 600 034.
APPEARANCE:
Shri Harish Bindumadhavan, Advocate and
Ms. Vijayalakshmi R, Advocate for the Appellant
Shri Sanjay Kakkar, Authorised Representative for the Respondent
CORAM
Hon'ble Shri M. Ajit Kumar, Member (Technical)
Hon'ble Shri Ajayan T.V., Member (Judicial)
FINAL ORDER NOS. 41250-41259/2025
Date of Hearing: 29.10.2025
Date of Decision: 07.11.2025
Per M. Ajit Kumar,
All these appeals arise out of the rejection of refund of service
tax statedly paid by the appellant, M/s Mahindra Holidays and Resorts
India Ltd. (MHR), and hence they are taken up together for disposal
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by this common order. The period of dispute and the refund amount
involved are tabulated as under:-
S. No. Appeal No. Period of Dispute Amount of Refund
1. ST/40011/2021 July 2017 Rs.22,08,252.00
2. ST/40012/2021 August 2017 to Dec. Rs.1,12,96,065.00
2017
3. ST/40013/2021 Jan. 2018 to March 2018 Rs.92,51,952.00
4. ST/40014/2021 April 2018 to Sept. 2018 Rs.89,53,797.00
5. ST/40482/2021 July 2017to March 2018 Rs.97,74,741.00
6. ST/40483/2021 Oct. 2018 to March 2019 Rs.1,05,64,294.00
7. ST/40484/2021 April 2019 to Sept. 2019 Rs.36,88,752.00
8. ST/40485/2021 Oct. 2019 to March 2020 Rs.47,11,938.00
9. ST/40890/2023 April 2018 to March 2019 Rs.21,59,463.00
10. ST/40891/2023 April 2020 to March 2021 Rs.8,16,766.00
2. Brief facts of the case is that MHR is a public limited company
engaged in timeshare business. They provide holiday and leisure
services under the flagship brand 'Club Mahindra Holidays' in resorts
to their club members by collecting one-time membership fees (Time
share fees), the service tax on membership fee is stated to be paid
on collection basis. The subscriber is also required to pay an Annual
Subscription Fees (ASF) every year. ASF invoices to members are
raised every year on accrual basis and applicable service tax is paid
by the company on accrual basis, irrespective of whether the amount
is collected from members or not. However, when any member
defaults in their payment of ASF or the EMI towards the membership
fees, for two or more years, MHR in terms of the Agreement with the
subscriber, cancels the subscription contract. Thus, the appellant
claims that they are eligible for refund of the service tax that was
paid on accrual basis on the cancelled ASF invoices / membership
contracts for which service was not rendered but tax paid. The
appellant therefore filed the impugned 10 refund claims under section
11B(2) of the Central Excise Act, 1944 read with Sec. 142(5) of the
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CGST Act, 2017. However, the said claims were rejected as being hit
by the limitation of time in terms of the provisions to section 11B of
Central Excise Act, 1944 inasmuch as all the claims were filed beyond
the prescribed period of one year from the payment of service tax.
The appeals preferred by the appellant were also rejected by the Ld.
Commissioner (Appeals). Hence these present appeals.
3. The Ld. Advocate Shri Harish Bindumadhavan appeared for the
appellant and Ld. Authorized Representative Shri Sanjay Kakkar
appeared for the respondent.
3.1 Shri Harish Bindumadhavan Ld. Counsel for the appellant
submitted that in case of cancellation of membership, the manner in
which refund of fee is granted in different scenarios is as below:
i) If the member has requested for the withdrawal of
application within 10 days from the date of realization of the
down payment of Timeshare fees, the member receives the
full refund of amount paid along with the service tax.
ii) In all other cases, the Appellant refunds back only 40% of
Entitlement fee [i.e., Onetime membership fee (time-share
fees) or EMI] paid towards membership fee by the member,
along with the service tax collected. Refund is calculated on
a pro-rata basis from the date of membership to the date of
termination of the membership.
iii) If the members default in payment of ASF for two or more
consecutive years, the member's access to utilize the
accommodation facility will be restricted till the time the
dues are paid. The Company either cancels the ASF invoices
or the membership contract for those members who default
in payment of dues by issuing a credit note.
The Ld. Counsel stated that prior to the introduction of GST, in the
event of cancellation of membership for the reasons mentioned
above, the appellant was allowed to adjust the service tax paid on
services which were cancelled towards the service tax liability in
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subsequent month/quarter liability per the provisions of Rule 6(4A) of
the Service Tax Rules 1994 read with Rule 6(3) the Service Tax Rules
1994. However, post introduction of the GST Law in India, in the
event of cancellation of membership for the above-mentioned
reasons, the appellant has no option to adjust the excess service tax
paid against the tax liability in subsequent period. Therefore, post
July 2017, the appellant has been filing refund of service tax paid on
the services which were cancelled under Section 142(5) of the GST
Act, 2017, which provides for refund of tax paid under the pre-GST
regime in respect of services which were not provided. In this regard,
the Ld. Counsel made the following submissions.
A) Refund Claim under Section 142(5) of the CGST Act cannot be
rejected as time barred.
B) There is no unjust enrichment by the appellant.
C) Tax paid on services which were not rendered shall be treated
as a "Deposit".
D) Lack of Consistency in passing orders.
(Details of the submissions made in the appeal memorandum, written
and oral submissions shall be referred to, during discussions below).
He hence prayed that the appeals may be allowed.
3.2 The Ld. Authorized Representative Shri Sanjay Kakkar made a
spirited and comprehensive submission on behalf of revenue,
addressing all major issues raised by the appellant supported by
relevant case laws. He stated that the refund claimed by MHR was
examined by the Proper Officer mainly on the grounds of time-bar
and was not verified on its own merits. Hence the issue involved in
this appeal relates to time-bar only. The impugned Orders passed by
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the Commissioner (Appeals), rightly holds that the relevant date is
the date of tax payment, as per Section 11B, and rejects the
appellant's reliance on the date of cancellation. It notes that the tax
was self-assessed and paid on ASF invoices, and the subsequent
cancellation does not alter the statutory requirement. The detailed
submissions made shall be referred to at the appropriate stages of
the discussion below. The Ld. A.R prayed that the appeals may be
rejected.
4. We have gone carefully through the written and oral
submissions made by the rival parties. We examine the issues as
raised by the appellant below.
5. Refund Claim under Section 142(5) of the CGST Act cannot
be rejected as time barred.
5.1 Before taking up the submissions the provisions of Section
142(5) of the CGST Act is extracted below for ease of reference
during the discussion to follow.
"Every claim filed by a person after the appointed day for refund of
tax paid under the existing law in respect of services not provided
shall be disposed of in accordance with the provisions of existing
law and any amount eventually accruing to him shall be paid in
cash, notwithstanding anything to the contrary contained under the
provisions of existing law other than the provisions of sub-section
(2) of section 11B of the Central Excise Act, 1944."
(emphasis added)
5.1 Submissions made by MHR
5.2 Section 142(5) of the CGST Act under which the refund claim
has been filed provides that any amount of tax paid towards the
services which were subsequently not provided, shall be refunded in
cash notwithstanding anything to the contrary contained under the
provisions of the existing law other than the provisions of sub-section
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(2) of Section 11(B) of the Central Excise, 1944. A bare reading of
the provision would go to show that it is worded in such a way that it
frees the refund claims arising in the said circumstances from the
fetters of limitation which is provided under sub-section (1) of Section
11B. The only thing that is not overridden is the requirement of
fulfillment of unjust enrichment clause as provided under sub-section
(2) of Section 11B. Reliance was placed on the following case laws in
support of their stand:
(a) M/s. Lifecell International Pvt Ltd Vs. Commissioner of
GST & Central Excise, Chennai - 2022 (6) TMI 1134 - CESTAT,
Chennai.
(b) M/s. Chalet Hotels Ltd Vs. Commissioner of Central Tax
Bengaluru - 2022 (8) TMI 640 - Karnataka High Court
(c) M/s. Wave One Private Limited Vs. Commissioner, Office
of the Commissioner (Appeals-I), Central Goods and Service
Tax and Central Excise, Delhi - 2023 (11) TMI 1078 - CESTAT
New Delhi.
(d) M/s. Welldone Infrastructure Pvt Ltd. Vs. Commissioner
of Customs, GST & Central Excise, Lucknow - 2024 (3) TMI 501
- CESTAT Allahabad.
5.3 Submissions made by Revenue
5.4 The appellant's interpretation of Section 142(5) of the CGST Act
appears incorrect and contrary to the plain language of the statute.
The phrase "shall be disposed of in accordance with the provisions of
existing law" appearing in Section 142(5), means that the refund
claim must comply with all provisions of the existing law, which
includes the Central Excise Act, 1944 (made applicable to Service Tax
7
via Section 83 of the Finance Act, 1994). Section 11B of the Central
Excise Act is the sole provision governing refunds of service tax under
the pre-GST regime, and it mandates that a refund claim must be
filed within one year from the relevant date (i.e. the date of payment
of the tax, which, in the instant case is between September 2012 and
June 2017). It is submitted that the latter part of Section 142(5) --
"notwithstanding anything to the contrary... other than the provisions
of sub-section (2) of section 11B" only means that if a refund claim is
found eligible under the existing law (including the time limit under
Section 11B(1) of CEA), the same shall be subject to the unjust
enrichment check under Section 11B(2) of CEA. It does not exempt
the claim from the time limit under Section 11B(1) of CEA. To
interpret otherwise would render the phrase "in accordance with the
provisions of existing law" meaningless, violating the principle of
harmonious construction. The Ld. A.R submitted that the appellant's
contention before the Commissioner (Appeals) that the provision
starts with a non-obstante clause appears flawed since the said non-
obstante clause appears only in the later part of Section 142(5) of
CGST Act, after the payment in cash had eventually accrued. It is
further submitted that in the erstwhile regime of Service Tax refunds
towards payments of tax made from the Credit Ledger were re-
credited to the same ledger. However, with the enactment of the new
law, transitional provisions were put into place where, a refund in
cash for payments made from Credit Ledger were permitted. The
reference to compliance of Section 11B(2) of CEA in Section 142(5) of
the CGST Act was made only as a matter of abundant caution to
emphasize that the aspect of Unjust Enrichment should not get
8
overlooked when payments from Credit Ledger were being processed
for a refund in cash, which was not permitted in the earlier regime.
This caution however does not negate the application of other aspects
of Section 11B of the CEA, specifically the time-limitation under
Section 11B(1) of the CEA in any manner. The Ld. A.R. further stated
that the words, 'disposed of' and 'eventually' appearing in Section
142(5) of the CGST Act are not meaningless and carry significance.
He submitted that the word, 'disposed of' is integrally connected and
embedded with the 'provisions of existing law'. Also, the word
"eventually" refers to the final outcome of the process of
adjudicating or disposing of a refund claim. The term signifies that
any amount determined to be refundable to a claimant, after the
claim has been processed and scrutinized in accordance with the
provisions of the existing law will be paid in cash. However, only the
amount that is legitimately refundable, after all checks and balances,
will be paid in cash, overriding any conflicting provisions in the
existing law. This includes:
a) Verification of the claim for time-limitation;
b) Verification of the claim for requisite documentation.
c) Scrutiny for compliance with the relevant existing law(s).
d) Ensuring the claimant meets conditions, such as proving
that the tax was paid and the service was not provided or
proving that it was a case of payment under 'mistake of
law', etc.
Thus, the word, 'eventually' highlights the conditional nature of the
refund, ensuring that only valid claims are honoured and indicates
that only the amount that is deemed payable after the process be
disbursed in cash. The Ld. A.R. submitted that from a harmonious
9
reading of Section 142(5) of the CGST Act the mandate of Section
11B is fully honoured.
5.5 Discussions on the submissions made.
5.6 The dispute before us pertains to time limit. The refund claim
filed on 21.02.2020 relates to the Service Tax payments stated to
have been made on ASF invoices raised during the period from
September 2012 to June 2017 and cancelled. It is accepted by the
parties, during the hearing, that the refund claim has been filed
beyond the period of one year of paying the service tax and
also one year after the credit notes were reported to have
been raised by the appellant. [See Table at para 1 of the OIO]. It
is revenue's view that the time limit prescribed under section 11B will
be applicable to any refund claim filed under the Service tax law.
[Provisions of Central Excise Act 1944 as made applicable to the
Finance Act 1994]. The appellant on the other hand is of the view
that because of the non-obstante clause in section 142(5) of the
CGST Act, no time limit will apply.
5.7 We find that the issue of time bar revolves on the interpretation
of section 142(5) of the CGST Act. The section contains a non-
obstante clause "notwithstanding anything to the contrary",
appearing in the middle of a section, whose interpretation has
become a bone of contention between the parties. A non-obstante
clause is a legislative device mainly seeking to confer overriding
effect upon a particular provision/ enactment over other conflicting
provisions/ enactment. It helps remove obstructions which may arise
out of the provisions of any other law and is not a repealing clause.
A three Judge Bench of the Hon'ble Supreme Court in Chief
10
Information Commissioner Vs High Court Of Gujarat [AIR 2020
SUPREME COURT 4333 / AIRONLINE 2020 SC 336], examined
Section 22 of the RTI Act which specifically provides that the
provisions of the RTI Act will have an overriding effect over other
laws for the time being in force. It was submitted by the appellant
that in the event of any conflict between the provisions of the RTI Act
and any other laws made by the Parliament or a State Legislature or
any other authority, the provisions of the RTI Act must prevail and
therefore, the RTI Act would prevail over the rules framed by the
High Court. The Hon'ble Court held that the non-obstante clause of
the RTI Act does not mean an implied repeal of the High Court Rules
and Orders framed under Article 225 of the Constitution of India; but
only has an overriding effect in case of inconsistency. A special
enactment or rule cannot be held to be overridden by a later general
enactment simply because the latter opens up with a non-obstante
clause, unless there is clear inconsistency between the two
legislations. Hence non obstante clauses apply only in the event of
inconsistency where the issue arises with respect to giving
overarching status to one of the conflicting provisions. [See:
Synergy Fertichem Pvt. Ltd Vs State of Gujarat (Gujarat High
Court) - 2019 SCC OnLine Guj 6127 / 2019-TIOL-2950-HC-AHM-
GST; KAMAL ENVIROTECH PVT LTD Vs COMMISSIONER OF GST
AND ANR - 2025-TIOL-130-HC-DEL-GST]
5.8 Moreover a non obstante clause does not only mean that it is
meant to allow a provision of law to prevail over other conflicting
provisions/ law. The Hon'ble Supreme Court in Dominion of India
Vs Shrinbai A. Irani [AIR 1954 SC 596, para 11], recognised that
11
even a non obstante clause can "be read as clarifying the whole
position and must be understood to have been incorporated in the
enactment by the legislature by way of abundant caution and not
by way of limiting the ambit and scope of the operative part of the
enactment". [Also see: Jindal Stainless Ltd. Vs State of Haryana
- (2017) 12 SCC 1]
5.9 The Supreme Court in Central Bank of India Vs State of
Kerala [(2009) 4 SCC 94, para 103], opined that while interpreting a
non obstante clause, the Court is required to find out the extent to
which the legislature intended to do so and the context in which the
non obstante clause is used. In Indra Kumar Patodia Vs Reliance
Industries Ltd [(2012) 13 SCC 1], the Apex Court held:
"18. It is clear that the non obstante clause has to be given restricted
meaning and when the section containing the said clause does not refer
to any particular provisions which it intends to override but refers to the
provisions of the statute generally, it is not permissible to hold that it
excludes the whole Act and stands all alone by itself." (emphasis added)
5.10 Hence what comes out from the above judgments is that the
clause has to be given a restricted meaning. There should be a clear
inconsistency between the two provisions before giving an overriding
effect to one provision over the other in the light of the non obstante
clause. Hence there is no automatic repeal or a complete superseding
of all the other provisions of law.
5.11 We find that section 142(5) of the CGST Act does not start
with the non obstante clause. The section is broken down into
segments below for easy understanding:
(a) Every claim filed by a person
(b) after the appointed day for refund of tax paid
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(c) under the existing law in respect of services not provided
(d) shall be disposed of in accordance with the provisions of
existing law
(e) and any amount eventually accruing to him shall be paid in
cash,
(f) notwithstanding anything to the contrary contained under
the provisions of existing law
(g) other than the provisions of sub-section (2) of section 11B
of the Central Excise Act, 1944."
No conflict has been raised by the rival parties to the provisions
contained in segments (a) to (d) above. The segment (e) states that
any amount eventually accruing to him (claimant) shall be paid in
cash. The non obstante clause makes its appearance immediately
after, in segment (f). The issue raised at this stage by revenue is that
this clause is by way of an abundant caution and pertains to the
payment of refund in cash, since under the earlier law payment of
refund of duty paid through credit was to be paid as re-credit in the
ledger only and not as cash. The appellant on the other hand reads
the clause with segment (d) and is of the opinion that the clause
overrides all other provisions of the erstwhile law in as much as it
pertains to their refund claim and the benefit of the said segment i.e.
'other than the provisions of sub-section (2) of section 11B of the
Central Excise Act, 1944', removes the element of time limit provided
for in sub-section (1) of section 11B.
5.12 We find that section 142(5) does not refer to overriding any
particular provision and hence the non obstante clause has to be
examined and given a restricted meaning limited to the context in
13
which it is used. Further unlike in cases where the protection of the
non obstante clause is sought to be made all encompassing and the
section itself starts with the non obstante clause, the clause in this
case is embedded immediately after a specific reference is made to
payment of amount in cash. This then appears, as stated by the Ld.
A.R., in the context of the conflict between the previous provision and
the present provision for payment of refund. Under the erstwhile
regime of Service Tax, in cases of refunds for payments made from
the Credit Ledger, the same were re-credited to the same ledger.
However, with the enactment of the new law, transitional provisions
were put into place where, a refund in cash for payments made from
Credit Ledger were permitted. We agree with revenue that the
reference to compliance of Section 11B(2) of CEA in Section 142(5) of
the CGST Act was made as a matter of abundant caution to
emphasize that the aspect of Unjust Enrichment should not get
overlooked when payments from Credit Ledger were being processed
for a refund in cash, which was not permitted in the earlier regime.
This view is strengthened since in the case of time bar there is no
inconsistency or conflict between the provisions, as the new provision
does not explicitly attempt to do away, alter or set any new time limit
that clashes with the erst while law. This is in line with the principle
gathered from the above judgments. Our view is also fortified by the
settled principle that legislature is deemed to know the existing law
when it enacts the new provisions and as such will not enact a law
that does violence to the existing provision, which in this case would
be the time limit which already stood prescribed under the existing
law in Section 11B.
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5.13 The issue can be stated differently. When the erstwhile law had
provided for a time limit in filing a refund claim, the transition
provision cannot be stated to have done away with that provision
without explicitly having stated so.
5.14 The appellant has also submitted that the refund claimed under
section 142(5) cannot be bound by the time limit under section
11B(1), as the relevant provision of the "existing law" applicable to
the case of the appellant is Rule 6(3) of the Service Tax Rules read
with section 142(5) of the CGST Act. Per contra revenue has stated
that the appellant filed a refund claim citing Section 11B, the only
provision under the CEA for claiming a refund of tax in cash, but has
now sought to invoke Rule-6(3) to escape the compliance of
mandatory timelines prescribed under Section 11(B). Further Rule
6(3) does not govern cash refunds from the government; it pertains
to self-adjustment of tax liability. However in the case of the
appellant the refund claim of the appellant is hit by laches as per
their own making. The ASF Invoices were raised in 09/2012 and in
case of non-payment by Members of the Time-Share Agreement, the
Agreements were to be terminated after default in payment in full or
part for two consecutive years. However, Credit Notes for the said
Invoices came to be issued much later as late as 01/2018. Further
the Refund claims were filed as late as on 21.02.2020.
5.15 We find that the term 'existing law' pertains to the law under
which the tax has been charged and paid i.e. Finance Act 1994 and
not the Service Tax Rules, which is part of a sub-ordinate legislation
and is procedural in nature. Rule 6(3) was a procedural facility which
ceased to be law by the time the refund claim was filed by the
15
appellant and cannot be revived without a specific enabling provision.
The Hon'ble Supreme Court in M/S. Ispat Industries Ltd Vs
Commissioner Of Customs, Mumbai [AIRONLINE 2006 SC 69 /
(2006) 202 ELT 561 (SC)] held as under:
"28. In our country this hierarchy is as follows:
(1) The Constitution of India;
(2) The Statutory Law, which may be either Parliamentary Law or Law
made by the State Legislature;
(3) Delegated or subordinate legislation, which may be in the form of
rules made under the Act, regulations made under the Act, etc.;
(4) Administrative orders or executive instructions without any
statutory backing.
29. The Customs Act falls in the second layer in this hierarchy whereas
the rules made under the Act fall in the third layer. Hence, if there is any
conflict between the provisions of the Act and the provisions of the Rules,
the former will prevail."
Hence the 'existing law' refers to the Finance Act, 1994 as its
provision will override the Rules in the case of a conflict over time
limit and the appellant's claim for refund has to be examined under
section 142(5) of the CGST Act which in itself also invokes the
provision of section 11B of the Central Excise Act only.
5.16 As regards the delay of the appellant in filing the claims, it is
seen that they have not shown sufficient cause and have not
satisfactorily explained the reasons for delay in filing the claim, when
time lines for cancellation etc. were built into the agreement with
their subscribers. The doctrine of laches is based on the Latin maxim
'Vigilantibus Non Dormientibus Aequitas Subvenit' is an essential
doctrine of constitutional law, which means that "Equity aids the
vigilant, not the ones who sleep over their rights". It states that the
16
Courts will not help people who sleep over their rights and help only
those who are aware and vigilant about their rights. However, with
the time limit built into section 11B, the same has to be strictly
adhere to and even sufficient cause will not help their claim filed after
a long delay.
5.17 We may now examine the judgments cited by the appellant in
support of their stand:
In M/s. Lifecell International (supra) passed by a Single Member,
the appellant sought a refund of tax on the grounds that no service
was provided by the foreign company to them. The order after
examining section 142(5) of the CGST Act, came to a finding that the
said section "expressly states that the limitation provided in sub-
section (1) of section 11B is not applicable". This categorical legal
terminology on time limit is not found from a plain reading of the
section. Judgments and orders interpret the provisions of law and
cannot add anything to it. A Constitution Bench of the Supreme
Court in the case of Commissioner of Sales Tax, U.P. Vs Modi
Sugar Mills Ltd., AIR 1961 SC 1047 observed thus:
"In interpreting a taxing statute, equitable consideration are entirely out of
place. Nor can taxing statutes be interpreted on any presumptions or
assumptions. The court must look squarely at the words of the statute
and interpret them. It must interpret a taxing statute in the light of which is
clearly expressed; it cannot imply anything which is not expressed it
cannot import provisions in the statute so as to supply any assumed
deficiency." (emphasis added)
Further the judgments of Constitutional Court on the principles
involved in applying the non obstante clause, some of which are
discussed above, were not placed before the Bench nor were they
independently perceived and discussed; hence the Order came to be
17
passed sub-silentio. Moreover, the decision of a Single Member Bench
is not binding on a Bench of larger quorum. This being so the Order
does not have any precedential value.
(b) The Hon'ble Karnataka High Court in M/s. Chalet Hotels Ltd
(supra), examined the question whether the Tribunal was correct in
law in rejecting the claim for refund of Service Tax paid against
service to be provided which was not so provided when the advances
were returned to the customers, the appellant was eligible to take
credit of the said amount in terms of rule 6(3) of the Service Tax
Rules 1944 and was eligible for refund of such credit in cash in terms
of the transitional provision contained in section 142(3) and (5) of
the CST Act 2017? All other questions of law were not pressed. No
specific question of time bar was involved. The Hon'ble Court stated
that the provisions of section 142(5) make it clear that the claim for
refund must be processed notwithstanding anything contrary
contained in section 11B of the Central Excise Act. The judgment
does not help the appellant's specific cause related to time bar.
(c) The Single Member Order in the case of M/s. Wave One
(supra) also relied on M/s. Lifecell International and stated that
section, 142(5) of the CGST Act "expressly states that the limitation
provided in sub-section (1) of section 11B is not applicable", which as
seen is not supported by a plain reading of the section and hence just
like in the case of M/s. Lifecell International does not bind us.
(d) The Single Member Order in the case of M/s. Welldone
Infrastructure relies on M/s. Wave One to hold that the time limit
prescribed under section 11B of the Central Excise Act 1944 cannot
18
be invoked to reject a refund claim filed under section 142(5) of the
CGST Act 2017. The Order accordingly cannot be relied upon.
5.18 For the reasons discussed we find that the averment of the
appellant that their refund claim under Section 142(5) of the CGST
Act cannot be rejected as time barred, merits rejection.
6. There is no unjust enrichment by the Appellant.
6.1 Submissions made by MHR
It is submitted that as per Section 142(5) of the CGST Act, the only
restriction imposed for refund of tax paid on services not provided is
the restriction under Section 11B(2) of the Central Excise, 1944,
which is that there should be no unjust enrichment. The appellant
pursuant to the cancellation of membership, issued credit notes to
the customers along with proportional service tax amount. In support
of this, the appellant submitted ST Return, Copy of invoices and
credit notes, bank statements/remittance details on sample basis
evidencing refund to customers. The appellant's customers could not
availed Cenvat Credit on the membership of the club as the club
membership has been clearly excluded from the definition of "input
services" under Rule 2(l)(c) of the Cenvat Credit Rules, 2004.
6.2 Submissions made by revenue
6.3 Reliance is placed on the 7-Member Larger Bench Hon'ble
Supreme Court judgement - Mafatlal Industries Vs Union of India
[1997 (89) E.L.T. 247 (S.C.)] which held that all refund claims,
except where the levy is unconstitutional, must be filed and
adjudicated under Section 11B, subject to its time limit and unjust
enrichment provisions. The appellant's claim does not challenge the
19
constitutionality of the levy but seeks a refund due to subsequent
cancellations, which falls squarely within Section 11B's ambit.
6.4 Discussion on the submissions
6.5 The issue of unjust enrichment is a mixed question of fact and
law. The question of limitation involves a question of jurisdiction
[See: Simplex Infrastructure Ltd. Vs Commissioner of Service
Tax, Kolkata [(2016) 42 STR 634 (Calcutta)]. Further the ultimate
incidence of an indirect tax generally does not lie on the person who
collects and pays the tax but is on the ultimate consumer of the good
or service on whom the tax comes to rest. As per section 12B of the
Central Excise Act 1944, the presumption is that the incidence of duty
has been passed on to the final buyer. The said section has been
made applicable to Service Tax from 01.07.1994. Both parties agree
that the refund is subject to the provisions of section 11B and that
the question of unjust enrichment needs to be verified. The appellant
has sought to justify their claim stating that no unjust enrichment
was involved in the light of the credit notes issued to the customers
along with proportional service tax amount. Their customers could
not have availed Cenvat Credit on the membership of the club as the
club membership has been clearly excluded from the definition of
"input services" under Rule 2(l)(c) of the Cenvat Credit Rules, 2004.
We find that the refund claim was not verified for unjust enrichment
by the Original Authority since at the thresh hold the claim appeared
time barred. The Hon'ble Supreme Court has in a catena of cases
held that once it is held that the demand is time barred, there would
be no occasion for the Tribunal to enquire into the merits of the
issues. [See: State Bank of India Vs. B.S. Agricultural
20
Industries - AIR 2009 SUPREME COURT 2210; Commissioner Of
Customs, Mumbai vs M/S B.V. Jewels And Ors - AIR 2005
SUPREME COURT 1231]. Further the presumption in law is that every
businessman will arrange his affairs in his best interest and pass on
costs which are not his to bear. No prudent businessman will repay to
the customer and absorb a tax which he is not required, in the
ordinary course to do, only to seek a refund from government later.
This is a rebuttable presumption. Hence the claim of the appellant to
have promptly issued credit notes to the customers, including the tax
element on the cancellation of the subscription cannot be taken at
face value. It may require sample verification from the credit note
recipients, by the Original Authority and may not be passed based on
documents alone, if such an occasion arises. We hence refrain from
examining this point involving fact and law at this stage when the
matter is not a core issue of the impugned orders.
7. Tax paid on services which were not rendered shall be
treated as a "Deposit".
7.1 Submissions made by MHR
7.2 As an alternate submission, MHR has submitted that the service
tax paid on services which are eventually not rendered is only a
"deposit" collected without any authority of law. It is outside the
ambit of the Statute and as such the limitations imposed (such as
time-limit and unjust enrichment) for claiming the refund of tax
under the Statute will not be applicable. They have drawn reference
to the decision of the Hon'ble Madras High Court in the case of M/s.
3E Infotech Vs. Customs, Excise & Service Tax Appellate
21
Tribunal, Commissioner of Central Excise (Appeals-I) 2018 (7)
TMI 276 - Madras High Court, wherein it has been held that:
"13. 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. 4,39,683.00/- cannot be barred by
limitation and ought to be refunded."
7.3 Submissions made by revenue
7.4 The following submissions were made by the Ld. A.R.:
i) Service tax was paid by the appellant on accrual basis for ASF
invoices as per the self-assessment provisions of the Finance Act,
1994. The appellant treated the amount as "service tax" and paid it
under the appropriate head of account, as admitted by them in the
Statement of Facts.
ii) In the present case, the appellant's timeshare services were
taxable under the Finance Act, 1994, and the tax was paid on accrual
basis as required by the law at the time. The subsequent cancellation
arises from a business decision and does not render the initial
payment "without authority of law." It is not a case of any tax
collected without any enabling legal provision.
iii) The appellant has not challenged the constitutionality of the
levy but seeks a refund due to subsequent cancellations, which falls
squarely within Section 11B's ambit.
iv) The 'relevant date' for a refund claim as per Section 11B of the
CEA is the date of payment of the tax, not any subsequent event
such as any date for issue of Credit Notes, as claimed by the
Appellant-claimant. Even so, even if the date of Credit Notes is
22
reckoned, the claim is hit by the time-limitation provided under
Section 11B of CEA.
v) The appellant's argument that retaining the amount would
violate Article 265 of the Constitution is without merit. The service
tax was levied and collected under the authority of the Finance Act,
1994, at the time of payment. The Hon'ble Supreme Court in
Mafatlal Industries case clarified that Article 265 is not violated
when tax is paid under a valid law, even if a refund is later sought
due to subsequent events.
vi) From the foregoing, it emerges that the amount paid by the
appellant was "service tax" under the Finance Act, 1994, at the time
of payment was tax and not a "deposit."
vii) Hon'ble Supreme Court decision in the case of UoI & Ors. Vs
VKC Footsteps India Pvt Ltd. [2021 (9) TMI 626 - Supreme Court]
wherein it was held that refund is not a constitutional right but a
statutory right and therefore, the legislature, in its wisdom, and
through statute, can decide how the refund is to be granted
7.5 Discussions on the submissions
7.6 The alternate plea taken by the appellant is that the amount
paid is not duty but a 'deposit'. It is the appellant's view that once tax
is paid but the service was not rendered it amounts to tax having
been collected without the authority of law and is hence only a
'deposit'. Per contra revenue is of the opinion that Service tax was
paid by the appellant on accrual basis for ASF invoices as per the
self-assessment provisions of the Finance Act, 1994. The appellant
treated the amount as "service tax" and paid it under the appropriate
head of account, as admitted by them in the Statement of Facts.
23
7.7 The authority to tax, is traceable to the Constitution. As stated
by a 9 Judge Bench of the Apex court in Mafatlal Industries Ltd.
(supra), Article 265 does not itself lay down any criteria for testing
the validity of a statute, when it speaks of 'law', it refers to a
valid law but the validity has to be determined with reference
to other provisions of the Constitution. For an understanding of
the issue, some of the Articles of the Constitution where a reference
to 'law' has been made are listed below:
Article 265. Taxes not to be imposed save by
authority of law - No tax shall be levied or collected
except by authority of law.
+++++
Article 13. Laws inconsistent with or in derogation of
the fundamental rights
*****. *****. *****
(3) In this article, unless the context otherwise requires,-
(a)"law" includes any Ordinance, order, bye-
law, rule, regulation, notification, custom or
usage having in the territory of India the force
of law;
(b)"laws in force" includes laws passed or
made by Legislature or other competent
authority in the territory of India before the
commencement of this Constitution and not
previously repealed, notwithstanding that any such
law or any part thereof may not be then in operation
either at all or in particular areas.
+++++
Article 366. Definitions.
*****. *****. *****
(10) "existing law" means any law, Ordinance, order,
bye-law, rule or regulation passed or made before the
commencement of this Constitution by any Legislature,
authority or person having power to make such a law,
Ordinance, order, bye-law, rule or regulation;
24
7.8 Hence the concept of law is quite wide and is not limited to
Constitution or statute law. A tax collected under a statute by
misconstruction or wrong interpretation of the provisions of the Act,
Rules or Notifications or by an erroneous determination of the
relevant facts cannot be held to be a collection of tax without the
authority of law. A seven judge Constitutional Bench of the Supreme
Court in Smt. Ujjam Bai v. State of Uttar Pradesh, [1962 AIR
1621/ 1963 SCR (1) 778/ 1961 1 SCR 778] had an occasion to
examine the binding force of a decision which is arrived at by a taxing
authority by misconstruction or wrong interpretation of law. It held as
under;
"..A taxing authority, which has the power to make a decision on
matters falling within the purview of the law under which it is
functioning is undoubtedly under an obligation to arrive at a right
decision. But the liability of a tribunal to err is an accepted
phenomenon. The binding force of a decision which is arrived at by
a taxing authority acting within the limits of the jurisdiction conferred
upon it by law cannot be made dependent upon the question
whether its decision is correct or erroneous. For, that would create
an impossible situation. Therefore, though erroneous, its decision
must bind the assessee. Further, if the taxing law is a valid
restriction the liability to be bound by the decision of the taxing
authority is a burden imposed upon a person's right to carry on
trade or business. This burden is not lessened or lifted merely
because the decision proceeds upon a misconstruction of a
provision of the law, which the taxing authority has to construe.
Therefore, it makes no difference whether the decision is right or
wrong so long as the error does not pertain to jurisdiction."
(emphasis added)
Thus any refund arising out of a wrong assessment made has to be
dealt with under section 11B of the Central Excise Act only.
7.9 As held by Constitutional Courts while the power to levy taxes
is an attribute of sovereignty, exercise of that power is controlled by
the Constitution. The collection of tax by the authority of law must
hence be understood to mean by a valid law. A 7 Judge Bench of the
Apex Couret in JINDAL STAINLESS LTD.& ANR. VS. STATE OF
25
HARYANA & ORS. NEW DELHI, [CIVIL APPEAL NO. 3453/2002,
Dated: 11/11/2016], examined the power to levy taxes. The Court
held:
Power to Tax : an Attribute of sovereignty
14. Power to levy taxes has been universally acknowledged as an
essential attribute of sovereignty. Cooley in his Book on Taxation -
Volume-1 (4th Edn.) in Chapter-2 recognises the power of taxation
to be inherent in a sovereign State. The power, says the author, is
inherent in the people and is meant to recover a contribution of
money or other property in accordance with some reasonable rule
or apportionment for the purpose of defraying public expenses. The
following passage from the book is apposite:
"57. Power to tax as an inherent attribute of sovereignty. The
power of taxation is an essential and inherent attribute of
sovereignty, belonging as a matter of right to every
independent government. It is possessed by the government
without being expressly conferred by the people. The power
is inherent in the people because the sustenance of the
government requires contributions from them. In fact the
power of taxation may be defined as "the power inherent in
the sovereign state to recover a contribution of money or
other property, in accordance with some reasonable rule or
apportionment, from the property or occupations within its
jurisdiction for the purpose of defraying the public expenses."
Constitutional provisions relating to the power of taxation do
not operate as grants of the power of taxation to the
government but instead merely constitute limitations upon a
power which would otherwise be practically without limit.
This inherent power to tax extends to everything over which
the sovereign power extends, but not to anything beyond its
sovereign power. Even the federal government's power of
taxation does not include things beyond its sovereign
power." (emphasis added)
7.10 The dispute in this case pertains to an order of self-assessment
made by the appellant under an intra vires statute and not under a
statute which is held ultra vires the Constitution. Hence the
assessment has the protection of law, having being done under the
authority of a valid law. The fact that the appellant paid the Service
Tax first and subsequently did not offer any service will not make the
26
taxes paid to the exchequer a 'deposit'. In fact, as per Section 73A of
the Finance Act 1994, reproduced below, any amount collected as
Service Tax, in any manner shall forthwith be paid to the credit of
the Central Government. Hence excess collection of tax is also
governed by the Act and is as per the authority of law.
73A. Service Tax Collected from any person to be deposited with
Central Government
(1) Any person who is liable to pay service tax under the provisions
of this Chapter or the rules made thereunder, and has collected any
amount in excess of the service tax assessed or determined and
paid on any taxable service under the provisions of this Chapter or
the rules made thereunder from the recipient of taxable service in
any manner as representing service tax, shall forthwith pay the
amount so collected to the credit of the Central Government.
(2) Where any person who has collected any amount, which is not
required to be collected, from any other person, in any manner as
representing service tax, such person shall forthwith pay the
amount so collected to the credit of the Central Government.
(emphasis added)
Once the amount is collected as Service Tax as per the authority of
law and is deposited to Government any refund can be claimed only
as per the provisions of the said Act. As stated in the Mafatlal
industries judgment (supra), even a finding regarding the invalidity
of a levy need not automatically result in a direction for a refund of
all collections thereof made earlier. It further stated:
"Section 11B of Central Excises and Salt Act and Section 27 of the
Customs Act do constitute "law" within the meaning of Article 265 of the
Constitution of India and hence, any tax collected, retained or not
refunded in accordance with the said provisions must be held to be
collected, retained or not refunded, as the case may be, under the
authority of law."
(emphasis added)
The Finance Act 1994, as per the provisions of which the tax was
collected from their subscribers/ customers and paid to the
exchequer, is a valid law. The claim of the appellant that the payment
27
was a 'deposit' collected without any authority of law and outside the
ambit of the particular statute, hence must be rejected. Any excess
paid duty has to be claimed as a refund under section 11B only.
7.11 The refund of taxes arising from an 'unconstitutional levy' and
'illegal levy', under the indirect tax laws came to be examined by the
Hon'ble Supreme Court in Mafatlal Industries (supra), decided by a
majority of 8:1. Hon'ble Justice B.P. Jeevan Reddy, J. speaking for
himself and on behalf of four other judges delivered the main
majority opinion. The passage relevant to the issue under discussion,
though referred to in parts, merits being reproduced in extenso
below;
"68. Re. : (I) : Herein before, 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 the claimant makes an
application for such refund under his signature and lodges it to the
proper officers within three months from the date of such payment
or adjustment, as the case may be". Rule 11, as in force between
August 6, 1977 and November 17, 1980 contained sub-rule (4)
which expressly declared: "(4) Save as otherwise provided by or
under this rule, no claim of refund of any duty shall be entertained".
Section 11B, as in force prior to April, 1991 contained sub-section
(4) in identical words. It said:
"(4) Save as otherwise provided by or under this Act, no claim for
refund of any duty of excise shall be entertained". Sub-section (5)
was more specific and emphatic. It said: "Notwithstanding anything
contained in any other law, the provisions of this section shall also
apply to a claim for refund of any amount collected as duty of excise
made on the ground that the goods in respect of which such amount
was collected were not excisable or were entitled to exemption from
duty and no court shall have any jurisdiction in respect of such
claim." It started with a non-obstante clause; it took in every kind of
refund and every claim for refund and it expressly barred the
jurisdiction of courts in respect of such claim. Sub-section (3) of
Section 11B, as it now stands, is to the same effect - indeed, more
comprehensive and all-encompassing. It says, "(3) Notwithstanding
anything to the contrary contained in any judgment, decree, order or
direction of the Appellate Tribunal or any court or in any other
provision of this Act or the rules made thereunder or in any law for
28
the time being in force, no refund shall be made except as provided
in sub-section".
The language could not have been more specific and emphatic.
The exclusivity of the provision relating to refund is not only express
and unambiguous but is in addition to the general bar arising from
the fact that the Act creates new rights and liabilities and also
provides forums and procedures for ascertaining and adjudicating
those rights and liabilities and all other incidental and ancillary
matters, as will be pointed out presently. This is a bar upon a bar -
an aspect emphasised in Para 14, and has to be respected so long
as it stands. The validity of these provisions has never been
seriously doubted. Even though in certain writ petitions now before
us, validity of the 1991 (Amendment) Act including 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 be
remembered that Central Excises and Salt Act is a special
enactment creating new and special obligations and rights, which at
the same time prescribes the procedure for levy, assessment,
collection, refund and all other incidental and ancillary provisions.
As pointed out in the Statement of Objects and Reasons appended
to the Bill which became the Act, the Act along with the Rules was
intended to "form a complete central excise code". The idea was "to
consolidate in a single enactment all the laws relating to central
duties of excise". The Act is a self-contained enactment. It contains
provisions for collecting the taxes which are due according to law
but have not been collected and also for refunding the taxes which
have been collected contrary to law, viz., Sections 11A and 11B
and its allied provisions. Both provisions contain a uniform rule of
limitation, viz., six months, with an exception in each case. Sections
11 and 11B are complimentary to each other.
To such a situation, Proposition No. 3 enunciated in Kamala Mills
becomes applicable, viz., where a statute creates a special right or
a liability and also provides the procedure for the determination of
the right or liability by the Tribunals constituted in that behalf and
provides further that all questions about the said right and liability
shall be determined by the Tribunals so constituted, the resort to
civil court is not available - except to the limited extent pointed out
therein. Central Excise Act specifically provides for refund. It
expressly declares that no refund shall be made except in
accordance therewith. The Jurisdiction of a civil court is expressly
29
barred - vide sub-section (5) of Section 11B, prior to its amendment
in 1991, and sub-section (3) of Section 11B, as amended in 1991. It
is relevant to notice that the Act provides for more than one appeal
against the orders made under Section 11B/Rule 11. Since 1981,
an appeal is provided to this Court also from the orders of the
Tribunal. While Tribunal is not a departmental organ, this court is a
civil court. In this view of the matter and the express and additional
bar and exclusivity contained in Rule 11/Section 11B, at all points of
time, it must be held that any and every ground including the
violation of the principles of natural justice and infraction of
fundamental principles of judicial procedure can be urged in these
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
that any and every claim for refund of excise duty can be made only
under and in accordance with Rule 11 or Section 11B, as the case
may be, in the forums provided by the Act. No suit can be filed for
refund of duty invoking Section 72 of the Contract Act. So far as the
jurisdiction of the High Court under Article 226 - or for that matter,
the jurisdiction of this court under Article 32 - is concerned, it is
obvious that the provisions of the Act cannot bar and curtail these
remedies. It is, however, equally obvious that while exercising the
power under Article 226/Article 32, the Court would certainly take
note of the legislative intent manifested in the provisions of the Act
and would exercise their jurisdiction consistent with the provisions
of the enactment.
69. There is, however, one exception to the above proposition, i.e.,
where a provision of the Act whereunder the duty has been levied is
found to be unconstitutional for violation of any of the constitutional
limitations. This is a situation not contemplated by the Act. . . . . ."
*********
"PART - IV
99. The discussion in 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.
30(i) 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 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 Court under Article 32 - cannot be circumscribed by the provisions of the said enactments, they will certainly have due regard to the legislative intent evidenced by the provisions of the said Acts and would exercise their jurisdiction consistent with the provisions of the Act. The writ petition will 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 rule of law and not for abrogating it.
The said enactments including Section 11B of Central Excises and Salt Act and Section 27 of the Customs Act do constitute "law" within the meaning of Article 265 of the Constitution of India and hence, any tax collected, retained or not refunded in accordance with the said provisions must be held to be collected, retained or not refunded, as the case may be, under the authority of law. Both the enactments are self-contained enactments providing for levy, assessment, recovery and refund of duties, imposed thereunder. Section 11B of the Central Excises and Salt Act and Section 27 of the Customs Act, both before and after the 1991 (Amendment) 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.
ii) Where, however, a refund is claimed on the ground that the provision of the Act under which it was levied is or has been held to be unconstitutional, such a claim, being a claim outside the purview of the enactment, can be made either by way of a suit or by way of a writ petition. . . . ."
(emphasis added) As per the judgment, a refund arises on two grounds;
i) where the charging section of a statutory provision ("law") is itself challenged by an assessee for an unconstitutional levy as it is violative of some provision of the Constitution 31 and succeeds then the claim for refund arises outside the provisions of the Act. [See para 17 of judgment]
ii) where the tax is collected by the authorities under a statute by misconstruction or wrong interpretation of the provisions of the Act, Rules or Notifications or by an erroneous determination of the relevant facts, i.e., an illegal levy. In this class of cases, the claim for refund arises under the provisions of the Act. In other words these are situations contemplated by and provided for by the Act and the Rules. [See para 18 of judgment] As per the judgment tax collected under an illegal levy are also collected under the authority of law and are situations contemplated by and provided for by the Act and the Rules. Hence, all refund claims except that of an unconstitutional levy must be filed and adjudicated under the refund provisions of the Central Excises and Salt Act 1944 or the Customs Act 1962, as the case may be. 7.12 We shall now examine some of the judgments cited by the appellant. They appellant has drawn reference to the decision of the Hon'ble Madras High Court in the case of M/s. 3E Infotech (supra), wherein it was held that when service tax is paid by mistake a claim for refund cannot be barred by limitation.
However as pointed out by the Ld. A.R. the Hon'ble Madras High Court in Natraj and Venkat Associates [2015 (40) S.T.R. 31 (Mad.)] a later day judgment, held that -
From the materials available on record, it is seen that the amounts were credited to the Revenue under the Head of Account "0044- Service Tax" through TR-6 challans, which are purported for payment of Service Tax only and as such, the claim of the respondent that the payment was only deposit and not Service Tax, cannot be sustained. Further, a tax, be it, direct or indirect, is intended for immediate expenditure for the common good of the state and it would be unjust to require its repayment after it has been in whole or in part expended, which would often be the case in most payment of such sort. Therefore, it is impracticable for the authorities to refund applications that are filed beyond time even it is paid under a mistake of law. Therefore, the authorities have 32 rightly rejected the claim of the respondent and this aspect has not been taken note of by the learned single Judge.
The court noted that taxes are intended for immediate expenditure for the common good, and it would be unjust to require repayment after such funds have been expended. It was thus emphasized by the jurisdictional High Court that amounts paid as service tax, even if later found to be not payable, remain subject to Section 11B's time limit for purposes of refund. Further the Constitutional Courts judgment in Mafatlal Industries (supra), itself lays down the law in this matter that all refunds of Central Excise duty, (as made applicable to the Finance Act 1994, in this case), except that of an unconstitutional levy has to be dealt with under the provisions of section 11B only. The law declared by the Hon'ble Supreme Court is binding on all courts and judicial bodies. Hence we do not propose to discuss individually the judgements cited by the appellant. Moreover as stated by the Apex Court in UoI & Ors. Vs VKC Footsteps India Pvt Ltd. [2021 (9) TMI 626 - Supreme Court], refund is not a constitutional right but a statutory right and therefore, the legislature, in its wisdom, and through statute, can decide how the refund is to be granted. Further this is a case where the appellant has self-assessed the duty but has failed to file the refund claim in time.
Hence this is not a situation where the refund is sought to be denied to them. While they may (after verification of the claim) be found to have a right to the refund, the remedy of processing the refund is not available because of their own negligence in not claiming the refund in time. It is trite law that limitation bars the judicial remedy, while it does not extinguish the right.
338. Lack of Consistency in passing orders 8.1 Submissions by MHR 8.2 The appellant submits that although all the refund claims pertain to the same issue, in certain cases, the Respondent held that the Refund claim is hit by time-limit whereas in certain other cases, the Respondent held that the Refund claim is hit by unjust enrichment as well as time-limit. The appellant relied on the following decision of the Supreme Court stating that the Courts upholding the doctrine of consistency have held that Revenue cannot take a different stand when facts are almost identical:
A) Birla Corporation Ltd. Versus Commissioner Of Central Excise - 2005 (7) TMI 104 - Supreme Court B) Indian Oil Corporation Ltd. Versus Collector Of C. Ex., Baroda - 2006 (8) TMI 8 - Supreme Court C) Bharat Sanchar Nigam Ltd. And Anr. v. Union of India and others reported in (2006) 3 SCC 1 8.3 Discussions on submissions 8.4 We find that the appeal in this case pertains to multiple refund claims over a period of time, resulting in multiple SCN's. Minor inconsistencies or additional grounds taken in the orders over a period of time which are not of a diametrically opposite nature and are only in addition to the core question of time bar cannot be held to be a case of inconsistency. Government cannot be held to be bound in perpetuity by the stray decision of one of its officers. Further the Apex Court in State of Bihar Versus Upendra Narayansingh [CIVIL APPEAL NO.1741 OF 2009, (Arising out of S.L.P. (C) 16871 of 2007)] held as under:34
"34.. . . By now it is settled that the guarantee of equality before law enshrined in Article 14 is a positive concept and it cannot be enforced by a citizen or court in a negative manner. If an illegality or irregularity has been committed in favour of any individual or a group of individuals or a wrong order has been passed by a judicial forum, others cannot invoke the jurisdiction of the higher or superior Court for repeating or multiplying the same irregularity or illegality or for passing wrong order - Chandigarh Administration and another v. Jagjit Singh and another [(1995) 1 SCC 745], Secretary, Jaipur Development Authority, Jaipur v. Daulat Mal Jain and others [(1997)1 SCC 35], Union of India [Railway Board] and others v. J.V. Subhaiah and others [(1996) 2 SCC 258], Gursharan Singh v. New Delhi Municipal Committee [(1996) 2 SCC 459], State of Haryana v. Ram Kumar Mann [(1997) 1 SCC 35],Faridabad CT Scan Centre v. D.G. Health Services and others [(1997) 7 SCC 752], Style (Dress Land) v. Union Territory, Chandigarh and another[(1999) 7 SCC 89] and State of Bihar and others v. Kameshwar Prasad Singh and another[(2000) 9 SCC 94],Union of India and another v.
International Trading Co. and another[(2003) 5 SCC 437] and Directorate of Film Festivals and others v. Gaurav Ashwin Jain and others [(2007) 4 SCC 737]."
(emphasis added) We hence do not find any substance in the submissions made by the appellant.
9. Based on the discussions above we find that the impugned orders have taken a view which is reasonable, legal and proper. We hence reject the appeals and disposed it of accordingly.
(Order pronounced in open court on 07.11.2025) sd/- sd/-
(AJAYAN T.V.) (M. AJIT KUMAR) Member (Judicial) Member (Technical) Rex