Custom, Excise & Service Tax Tribunal
Oil India Limited vs Visakhapatnam - G S T on 6 May, 2019
(1) Appeal No. ST/31055/2018
CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL
REGIONAL BENCH AT HYDERABAD
Single Member Bench - Court - I
Service Tax APPEAL No. 31055 of 2018
(Arising out of Order-in-Appeal No. VIZ-EXCUS-002-APP-043-18-19, dated 11.05.2018
passed by Commissioner of Customs, Central Excise & Service Tax(Appeals),
Visakhapatnam)
Oil India Limited, .. APPELLANT
rd
11-4-7 (3 floor),
Nookalamma Temple Street,
Ramaraopet,
KAKINADA - 533 004.
Andhra Pradesh
VERSUS
Commissioner of Central Tax, .. RESPONDENT
Visakhapatnam GST
GST Commissionerate,
Port Area,
VISAKHAPATNAM - 530035.
Andhra Pradesh
Appearance
Ms. Priyanka Rathi, , Advocate for the Appellant.
Shri C. Mallikharjun Reddy, Superintendent /AR for the Respondent.
Coram: Hon'ble Mr. P. VENKATA SUBBA RAO, MEMBER (TECHNICAL)
FINAL ORDER No. A/30490/2019
Date of Hearing: 05.04.2019
Date of Decision: 06.05.2019
[ORDER PER: MR. P. VENKATA SUBBA RAO)
1. This appeal is filed against Order-in-Appeal No. VIZ-EXCUS-002-APP-
043-18-19, dated 11.05.2018. After hearing both sides and perusal of
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records, it emerges that the appellant is engaged in the business of
exploration of mineral oil and natural gas. During the relevant period, they
availed services of M/s B.J. Services in relation to drilling of exploratory
wells. M/s BJ Services discharged appropriate service tax to the
department. However, on the same services, the appellant also paid service
tax under reverse charge mechanism to the extent of Rs.20,43,584/- under
various challans dated 07.08.2014, 16.08.2014 and 30.09.2014. Realising
that they have paid service tax wrongly, the appellant informed the
Department on 27.07.2015 and thereafter filed a refund claim under section
11B as made applicable to service tax by Section 83 of the Finance Act,
1994 on 12.07.2016. A show cause notice was issued to the appellant
asking why the refund was filed after one year from the date of payment of
service tax should not be rejected. After due process of law, the lower
authority rejected the refund claim as being time barred. This rejection was
upheld by the first appellate authority vide the impugned order. Hence, this
appeal.
2. Ld. Counsel for the appellant submits that the assessee paid service
tax under mistake of law and therefore the limitation under section 11B
should not apply as has been held by various High Courts and this Bench in
the case of GMR Vemagiri Power Generation Limited [2018(11)TMI 231-
CESTAT-HYD], Karvy Investor Services Limited [2016(43)S.T.R. 610 (Tri.-
Hyd.)] National Institute of Public Finance and Policy [2019(20)G.S.T.L. 330
(Del.)] and 3E Infotech [2018(18)G.S.T.L. 410 (Mad.)]. Ld. Counsel would
argue that what is not due to the Government, cannot be retained by them
and the refund application cannot be rejected on the ground of limitation
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when the amount was paid under mistake of law which is squarely their
case. They were not liable to pay service tax but under mistake they have
paid the same and therefore the department cannot reject refund on the
ground of limitation under Section 11B. He would argue that what was paid
was not service tax at all although it was wrongly paid as service tax. It was
just an amount deposited in the exchequer because no service tax was not
leviable on them. In view of the above and the case laws relied upon, she
would urge that the service tax paid by them may be refunded ignoring the
fact that the refund claim under Section 11B was filed after a period of one
year which is beyond the limitation under that section.
3. Ld. DR would submit that the limitation clause under section 11B
would squarely apply in every case where the refund claim is filed after due
date. He relies on the case laws of Anam Electrical Manufacturing Company
[1997(90)E.L.T. 260 (S.C.)] in which it was held that refund application has
to be filed within the time limit and the statutory time limit cannot be
extended. He also relies on the case law of CMS Info Systems Limited vs.
Union of India [2017 (349) E.L.T. 236 (Bom.)] in which their Lordships held
that any claim of refund must be filed as per the refund application and
within the limitation therein. Ld. DR admits that in some cases the Hon'ble
High Courts as well as this Bench have held that where levy itself is beyond
the scope of the Act, the amounts so collected do not get limited by the
refund restrictions under the Act. However, he submits that in these cases
what was never argued was the jurisdiction of the officials in sanctioning
refund of an amount which is not collected under the Act itself. He submits
that the officers exercise their powers under the Acts and have no
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jurisdiction whatsoever to exercise powers beyond the law. He draws the
attention of the Bench to Section 12E of Central Excise Act, 1944 which
gives the Officers the powers to perform functions under the Act. Section
12E read with section 11B of Central Excise Act, 1944 gives the Asst.
Commissioner or Dy. Commissioner the power to sanction refunds. Both
these sections have also been made applicable to service tax by virtue of
Section 83 of the Finance Act, 1994. Therefore, if what was paid was not
service tax, the Officer had no jurisdiction to entertain any refund claim. His
powers to sanction refund wholly flow from Section 11B and 12E of Central
Excise Act, 1944 as made applicable to Service Tax by Section 83 of the
Finance Act, 1994. Similarly the powers of the Commissioner (Appeal) to
hear and decide the appeals is also subject to the provisions of Central
Excise Act and Finance Act, 1994. Therefore, as far as any amount which
was paid beyond the Finance Act, 1994 itself is concerned, Officers have no
jurisdiction whatsoever and therefore any refund claim under Section 11B
has to be rejected. He would further argue that this issue of jurisdiction was
not discussed or argued in any of the case laws relied upon by the Ld.
Counsel for the appellant. However, this issue was discussed at length and
decided by a nine Member Constitutional Bench of Hon'ble Supreme Court in
the case of Mafatlal Industries Limited vs. Union of India
[1997(89)E.L.T. 247 (S.C.)] of which paras 104 and 105 reads as follows:
"104.In view of these propositions, which have been reiterated by this
Court on several occasions and thus constitute sound law, it is clear that
actions by way of suits or petitions under Article 226 of the Constitution
cannot be completely eliminated. The claims for refund can arise under
three broad classes and the issue of ouster of jurisdiction of civil courts
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can be understood by focussing on the parameters of these classes which
are as follows :
Class I :"Unconstitutional levy" -- where claims for refund are founded
on the ground that the provision of the Excise Act under which the tax
was levied is unconstitutional.
Cases falling within this class are clearly outside the ambit of the Excise
Act. In such cases assessees can either file a suit under Section 72 of the
Contract Act, 1872 (hereinafter called "Contract Act") or invoke the writ
jurisdiction of the High Court under Article 226 of the Constitution.
Class II :"Illegal levy" -- where claims for refund are founded on the
ground that there is mis-interpretation/mis-application/erroneous
interpretation of the Excise Act and the Rules framed thereunder.
Oridinarily, all such claims must be preferred under the provisions of the
Excise Act and the Rules framed thereunder by strictly adhering to the
stipulated procedure. However, in cases where the authorities under the
Excise Act arrogate to themselves jurisdiction even in cases where there
is clear want of jurisdiction, the situation poses some difficulty. Reddy, J.
has held that in all cases, except where unconstitutionality is alleged, the remedy is to be pursued within the framework of the Excise Act. This is a dangerous proposition for it will not cater to situations where the authorities under the Excise Act assume authority in cases where there is an inherent lack of jurisdiction. This is because, if one were to follow Reddy, J.'s reasoning, the authorities under the Act will have the final say over situations in which they totally lack inherent jurisdiction. In such a situation, there is nothing to prevent the authorities from exercising jurisdiction in cases which are ultra vires the Excise Act but intra vires the Constitution. To that extent, I would hold that in cases where the authorities under the Excise Act initiate action though lacking in inherent jurisdiction, the remedy by way of a suit under Section 72 of the Contract Act or a writ under Article 226 of the Constitution, will lie. Such a conclusion will not frustrate the exclusion of jurisdiction of civil courts by the Excise Act because the areas where an authority acting under a statute is said to lack inherent jurisdiction have been clearly demarcated by several decisions of this Court.
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Class III :"Mistake of Law" -- where claims for refund are initiated on
the basis of a decision rendered in favour of another assessee holding the levy to be : (1) unconstitutional; or (2) without inherent jurisdiction. Ordinarily, no assessee can be allowed to reopen proceedings that have been finally concluded against him on the basis of a favourable decision in the case of another assessee. This is because an order which has become final in the case of an assessee will continue to stand until it is specifically recalled or set aside in his own case.
105. In cases where the levy of a tax has been held to be (1) unconstitutional; or (2) void for want of inherent jurisdiction (as explained in Class II), it is open for the assessees to take advantage of the declaration of the law so made and claim refunds on the ground that they paid the tax under a mistake of law. This is because such claims are outside the ambit of the Excise Act. In such cases, the limitation period applicable will be that specified in Section 17(1)(c) of the Limitation Act."
4. Ld. DR would submit that as has been made clear by Hon'ble Apex Court in this case, in every case where a levy was not under the Customs Act, Central Excise Act or Service Tax Act, no provisions of these Acts apply. Therefore, the officers have no jurisdiction to sanction refunds under these Acts. In such a case the proper mechanism for the appellant is to file a Civil Suit under Section 72 of the Contract Act and the limitation as applicable under the Limitation Act would apply in such cases. An alternative mechanism provided for by Hon'ble Apex Court is that the jurisdiction under Article 226 before Supreme Court. Therefore, if the Bench is of the opinion that what is paid is not service tax, then the refund cannot be sanctioned under Section11B. The appellant is free to pursue the alternative remedies provided for under the law as elaborated by Hon'ble Apex Court in the case of Mafatlal Industries Limited (supra).
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5. I have considered the arguments on both sides and perused the records. The facts are not disputed. Of the three elements related to refund claim, (i) merit, (ii) limitation and (iii) unjust enrichment, the only dispute is regarding limitation of time. Clearly the refund application was filed beyond a period of one year. Ld. Counsel for the appellant correctly points out that in the case of GMR Vemagiri Power Generation Limited (supra), this Bench has held that in case of levy beyond the scope of law, the limitation should not apply relying upon various judgments of Hon'ble High Courts. Either in that case or in the cases before Hon'ble High Courts, the question of jurisdiction of the Officers in deciding on the refund applications was not discussed. Ld. DR is correct in pointing out that the appropriate legal remedy in this case was held to be a Civil Suit under section 72 of the Contract Act by Hon'ble Apex Court in the case of Mafatlal Industries Limited (supra). I find the refund jurisdiction of the Officers of Central Excise and Service Tax emanates from Section 12E and Section 11B of Central Excise Act, 1944 and Section 83 of the Finance Act, 1994. The powers of the first appellate authority to decide appeals or such decisions emanates from Section 35 of the Central Excise Act, 1944. Clearly, the Officers have no jurisdiction to decide matters which fall beyond the scope of the law itself. In such cases, the appropriate legal remedy as held by Hon'ble Apex Court is Civil Suit under Section 72 of the Contract Act and the Officers have no jurisdiction to decide on such Civil Suits. In the present case, I find that the contractor has already paid the service tax and the appellant was not liable to pay service tax under reverse charge mechanism but has wrongly paid so. Under these circumstances, I find that payment of the amount as representing service tax is beyond the scope of Finance Act (8) Appeal No. ST/31055/2018 1994 and therefore no provisions of the Acts including Section 11B and the period of limitation therein or the jurisdiction of the Officers to sanction refund claim applies to the present case.
6. In view of the above, the impugned order is upheld and the appeal is rejected as a refund claim under Section 11B of Central Excise Act,1944 read with Section 83 of the Finance Act, 1994 is not maintainable for any amount paid beyond the scope of the Finance Act, 1994 itself. The appellant is free to pursue other remedies as has been held by Hon'ble Supreme Court in the case of Mafatlal Industries Limited (supra) to recover the amount wrongly paid by them beyond the scope of Finance Act, 1994.
( Order pronounced in open court on 06.05.2019) (P. VENKATA SUBBA RAO) MEMBER (TECHNICAL) Vrg