Custom, Excise & Service Tax Tribunal
Patel Engineering Ltd vs Commisssioner Of Central Excise & ... on 24 March, 2025
CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL
MUMBAI
WEST ZONAL BENCH
SERVICE TAX APPEAL NO: 86361 OF 2018
[Arising out of Order-in-Appeal No: NA/GST A-III/MUM/350/17-18 dated 20th
January 2018 passed by the Commissioner of GST & Central Excise (Appeals-
III), Mumbai.]
Patel Engineering Ltd
Patel Estate Road, Jogeshwari West, Mumbai - 400102 ... Appellant
versus
Commissioner of GST & Central Excise
Mumbai West
Mahavir Jain Vidyalaya, CD Burfiwala Lane
Andheri (E), Mumbai - 400058 ...Respondent
APPEARANCE:
Shri Suyog Bhave, Advocate for the appellant Shri Shashank Kumar Yadav, Additional Commissioner (AR) for the respondent CORAM:
HON'BLE MR C J MATHEW, MEMBER (TECHNICAL) HON'BLE MR AJAY SHARMA, MEMBER (JUDICIAL) FINAL ORDER NO: 85468/2025 DATE OF HEARING: 13/01/2025 DATE OF DECISION: 24/03/2025 PER: C J MATHEW M/s Patel Engineering Ltd is before us with the grievance that their claim for refund of ₹ 7,19,51,563, preferred on 16th April 2015, ST/86361/2018 2 which had been sanctioned to the extent of ₹ 7,15,16,457 by the competent authority was, on appeal of jurisdictional Commissioner of Service Tax, set aside on erroneous grounds of tax having been paid in accordance with law and that, with the liability having been discharged on 5th August 2013, of claim having traversed beyond the period of limitation prescribed in section 11B of Central Excise Act, 1944 as made applicable to service tax under the auspices of section 83 of Finance Act, 1994.
2. The appellant had contracted with M/s Terra Land Developers Ltd for 'engineering procurement construction (EPC)' of a fifteen storied building in the Bandra-Kurla Complex (BKC) and with payment of ₹ 100,00,00,000 received for work done before the piling and ₹ 144,00,00,000 as mobilization advance. Tax liability of ₹ 4,24,86,205 was discharged on the first of the amounts on 1 st February 2013 and in relation to which running bills for ₹ 105,37,30,369 were raised on 31st March 2012 culminating in discharge of differential tax liability of ₹ 3,42,463 on 23rd March 2013. The 'mobilization advance' remaining after adjustment towards additional dues of ₹ 5,37,30,369 above, with interest thereon of ₹ 1,59,38,424 as on 5th August, 2013, was returned to the principal in accordance with deed of cancellation and settlement dated 25th September 2014. The tax of ₹ 7,19,51,563 paid on this amount, except ₹ 4,35,106 that had been rejected in dispute over the claim for refund, is the bone of contention in this appeal.
ST/86361/2018 3
3. According to Learned Counsel for the appellant, Commissioner of GST and Central Excise (Appeals-II), Mumbai had negated the sanction solely by allowing the contention of the jurisdictional Commissioner of Service Tax that the decision of the Tribunal in Commissioner of Central Excise & Service Tax, Bhavnagar v. Madhvi Procon Pvt Ltd[2015 (38) STR 74 (Tri.-Ahmd)], which had been relied upon for sanction of the refund over the objection that limitation under section 11B of Central Excise Act, 1944 did apply to such claims, was in appeal before the Hon'ble High Court of Gujarat and, hence, not correct law to be followed. The first appellate authority, according to Learned Counsel, had held that the disputed amount could not be considered as deposit in view of chargeability to tax under section 66B of Finance Act, 1994 on 'services' agreed to be provided read with Point of Taxation Rules, 2011 crystalizing liability on earlier of date of either payment or date of invoice and that, consequently, the claim was bound to be tested for bar of limitation. He submitted that the first appellate authority, therefore, held that this legal stance, having been approved by the Tribunal in Benzy Tours & Travels Pvt Ltd v. Commissioner of Service Tax, Mumbai-I [2016 (43) STR 625 (Tri. - Mumbai)] as well as by adjurment of the Hon'ble Supreme Court in Collector of Central Excise, Chandigarh v. Doaba Co-Operative Sugar Mills [988 (37) ELT 478 (SC)], should have prevailed with the original authority for retention of the amount paid ST/86361/2018 4 as tax not refundable.
4. Learned Counsel for the appellant submitted that, on the admitted fact of the amount in dispute as pertaining to 'mobilization advance' which the Tribunal, in Thermax Instrumentation Ltd v. Commissioner of Central Excise, Pune - I [2016 (42) STR 19 (Tri.- Mumbai)], SMS Infrastructure Ltd v. Commissioner of Central Excise & Customs, Nagpur [2017 (47) STR 17 (Tri.-Mumbai)] and in Gammon India Ltd v. Commissioner of Service Tax-V, Mumbai [2021 (44) GSTL 373 (Tri.-Mumbai)], had held to be not liable to tax, the taxability thereof could no longer be ground for invoking bar of limitation in disposal of claim for refund.
5. According to Learned Counsel, even the taxability, tentative as it turned out to be, had been relied upon in the impugned order solely for the purpose of demonstrating that the disputed amount was paid as tax and thereby, liable to be refunded only upon conformity with the requirement set out in section 11B of Central Excise Act, 1944 as the sole provisioning for claiming and for sanction of refund of tax. He submitted that the decision of the Tribunal, in re Madhavi Procon Pvt Ltd, holding that '4. Heard both sides and perused the case records. The issue involved in the present proceedings is as to whether amount of Rs. 19,11,331/- paid by the Respondent should be considered as payment of 'duty' or an amount paid as ST/86361/2018 5 'deposit'. From the facts available on records Service Tax was paid on the amount of advances received by the Respondent but ultimately no service could be provided as the said works contract got terminated. In the case of Addition Advertising v. UOI (supra) jurisdictional Gujarat High Court has, inter-alia, held that if no service is provided then there is no Service Tax. It means that once service is not rendered then no Service Tax is payable. Similarly Karnataka High Court in the case of CCE, Bangalore v. Motorola Private Limited (supra) held that any duty paid by mistake cannot be termed as 'duty'. Similar view has been taken in the other case laws relied upon by the Respondent. In view of the above, it has to be held that the amounts paid by the Respondent cannot be termed as payment of duty but has to be considered as a 'deposit' to which provisions of Section 11B of the Central Excise Act, 1944 will not be applicable. Accordingly, there is no reason to interfere with the order dated 23-7-2013 passed by the first appellate authority.', settles the issue once and for all on the superfluity of procedural conformity in claiming refund of service tax. It was further contended by him that the Tribunal, in Oil India Ltd v. Commissioner of Central Excise & Service Tax, Dibrugarh [2023 (3) TMI 740- CESTAT KOLKATA], had held that '31. In view of the aforesaid analysis, it is concluded that the statutory limitation period prescribed under section 11B is not applicable to the refund claimed by the Appellant since the amount paid by the Appellant is not a tax.'
6. Furthermore, he pointed out that the decision of the Tribunal in Credible Engineering Construction Projects Ltd v. Commissioner of ST/86361/2018 6 Customs & Central Excise (Appeals), Hyderabad, disposing off appeal1 against order2 of Commissioner of Customs & Central Excise, (Appeals-I), Hyderabad, determined finally on intercession of third member following difference of opinion in the division bench thus '39. The reference is accordingly, answered in the following manner:
"The limitation prescribed under section 11B of the Excise Act would not be applicable if an amount is paid under a mistaken notion as it was not required to be paid towards any duty/tax."
had examined all the existing decisions on the subject and affirmed by the Hon'ble High Court of Telangana in Commissioner of Customs & Central Excise v. Credible Engineering Construction Projects Ltd [2024 (4) TMI 1041 - TELANGANA HIGH COURT] thus '9. We have heard the matter at length. It is seen that the single question raised by Mr. Dominic Fernandes, learned counsel is no more res integra. In the manner proposed question is framed, it is not in dispute that service tax was not payable by the assessee. This question came up for consideration before the Delhi High Court in Hind Agro Industries Limited v. Commissioner of Customs [2012 (26) STR 195 (Kar)]. After considering the judgment of the Hon'ble Supreme Court in case of Mafatlal Industries Ltd. (supra 1), the Delhi High Court held that the judgment of Mafatlal Industries Ltd. (supra 1) nowhere talks of a situation where the refund of a tax paid under the relevant Act albeit 1 [service tax appeal no. 30781 of 2018] 2 [order-in-appeal no. HYD-SVTAX-HYC-APP-127/17-18 (APP-I) dated 28th February 2018] ST/86361/2018 7 erroneously was required to be made under the Excise Act or the Customs Act and under no other enactment. It was clearly held that judgment of Mafatlal Industries Ltd. (supra 1) is of no assistance in a case where tax is erroneously paid as a mistake of law.' He contended that Tribunal holding, in Larsen & Toubro Ltd v. Commissioner of Service Tax, Delhi [2013 (32) STR 410 (Tri. - Del.)], that '14. On principle and in the light of the observations of the Delhi High Court in Puri (P.C.), we are of the considered view that wherever pursuant to a conflict opinion in a decision by a Division Bench, the conflict is referred to a Third Member of this Tribunal for resolution, the resultant judgment must be considered the judgment of a Full Bench, as if it were a judgment of a Larger Bench (three ld. Member) sitting en banc.' lent the decision of the Tribunal in re Credible Engineering Construction Projects Ltd force of ruling by Larger Bench.
7. Learned Authorised Representative submitted that the liability to be taxed on 'mobilization advance' could not be disputed as Point of Taxation Rules, 2011 specifically fastened tax liability on date of receipt and that the payment having been made without protest precluded any claim for refund, even on the ground of non-completion of the contracted service, from being considered if beyond the limitation of one year from the 'relevant date' as set out in section 11B of Central Excise Act, 1944.
ST/86361/2018 8
8. The decisions of the Tribunal, in re Thermax Instrumentation Ltd and in re SMS Infrastructure Ltd, settled the law on tax liability not arising on 'mobilization advance' with the decision in re Gammon India Ltd elaborating thus '6. Much emphasis has been placed by the adjudicating authority, as well as by Learned Authorized Representative, on the unarguable implications of amendment to Sections 65 and 67 of Finance Act, 1994. The first of such was the incorporating of 'or to be provided' in Section 67 to enlarge the reach of the taxable services and the insertion of Explanation 3 below by Finance Act, 2005. The second, effected in 2004, is the incorporation of Explanation below the proviso in Rule 6(1) of Service Tax Rules, 1994. The combined consequence, in the finding of the adjudicating authority, is that 'advance' is payment of consideration for taxable services to be provided and, hence, liable to tax upon receipt. The explanation offered by the appellant of discharge of tax liability on the entire contractual value did not find favour with the adjudicating authority in the absence of details pertaining to the payment. On the other hand, we also do not find any evidence, that is on record in the impugned order, of any tax liability remaining unpaid on the contracted value and the only finding that emanates from the impugned order is that the liability was not discharged on receipt. The consequence of such delayed discharge could only have been liability to interest. To that extent, the impugned order is flawed and tangential.
7. With the notification of Point of Taxation Rules, 2011, effective from 1 April, 2011, there can be no doubt about the intention to collect tax on payment, received in advance of performance of service for which that, in part or wholly, is ST/86361/2018 9 consideration, being made manifest. In the context of this dispute, in which the appellant claims to be compliant with the said Rules, the liability to tax on advance payment is the first issue for consideration. Undoubtedly, the definition of 'taxable service' and the value to be adopted for assessment, in accordance with Section 67 of Finance Act, 1994, incorporate 'to be provided' and is not restricted to 'provided' or 'rendered'. Therefore, it can be construed that Point of Taxation Rules, 2011, though envisaging tax liability on consideration received an advance, cannot be perceived as the original expression of legislative intent as any comprehensive statutory instrument is bound to encompass the existing provisions; this is particularly so, as, till the notification of the said Rules, tax was levied on 'receipt' basis and not on 'accrual' basis. The recognition of this principle did not derogate from the inclusion of 'advance' payments in the grouping of 'receipts' that were always liable to tax. We are not convinced by the arguments, put forth on behalf of Revenue, that the amendment to Rule 6(1) of Service Tax Rules, 1994 or the incorporation effected in Section 67 of Finance Act, 1994 were intended to tax all payments at the time of receipt. From a plain reading of the newly inserted Explanation in the Service Tax Rules, 1994, it would appear that intent was to ensure the distribution of the said advances to the month, quarter or such other period to which the rendering of service could be attributed. The Explanation in Section 67 of Finance Act, 1994, doubtlessly, qualified the inclusions in 'gross amount' which, owing to subsequent judicial pronouncements can only be assigned a very restricted frame and to which we shall turn our attention presently. The decision in re Sunil Hi-Tech Engineers Ltd. was not called upon to determine this issue but to decide if the proceedings could continue in the light of prompt payment of computed liability; mere acceptance of a proposition of ST/86361/2018 10 Revenue by one or more assessees is no measure of the sanctity of interpretation by the tax administration. In re Central Power Research Institute, the taxability of the service for which payment was received in advance was not in dispute; therein, the security deposit sought from clients before undertaking the service to be rendered, presented as a business model, and the claim of the appellant of the issue being limited to delayed payment of tax to be ascertained by the tax authority was.
8. The Hon'ble Supreme Court in Union of India v. Intercontinental Consultants and Technocrats Pvt Ltd [2018 (10) GSTL 401 (SC)], has held that the latitude available in the commodity tax statutes pertaining to manufacture of goods or import of goods for construing the valuation provision on its own is not extended to Finance Act, 1994 in which the charging provision controls Section 67 of Finance Act, 1994; consequently 'gross amount' therein is not the entirety of receipts but only as is relatable to the service rendered. Impliedly, a monetary transaction between two persons does not purport to be for 'taxable services' alone and, to the extent of attribution to a service that is not taxable, is not liable for inclusion in the computation of tax liability. Hence, the consideration that is not attributable to 'taxable service' cannot be presumed to be inclusive of tax element and, thereby, to be subject to tax, whether received an advance or subsequently.
9. The several contracts provide for the payment to be made at different, pre-determined stages of performance and are, generally, subject to evaluation of the work undertaken. It is also seen that such appraisal, as a prelude to making payments, is not undertaken until after the execution of the work in relation to the taxable service has commenced and ST/86361/2018 11 that all the contracts, while linking such measurable stages, provide for payment of only 90% of contracted amount for the entirety of the work. The 'mobilization advance' is adjusted against the final payment due and is not linked to the work but as a pledge of the contract between the appellant and principal. It is also subject to furnishing of prescribed 'bank guarantee'; there is no connection with the performance of the contract. It is not in dispute that the 'mobilization advance', carrying interest, is granted to enable the contractor to prepare for undertaking the contracted work. The subsequent adjustment with the final payment due does not suffice to construe this as an advance payment for the work to be done merely because the recipient and payee happened to be the provider of service. The payment of 'mobilisation advance' is but a separate financial transaction within the contract for providing of service and, within the limits laid down by the Hon'ble Supreme Court in re Intercontinental Consultants and Technocrats Ltd., is not permitted to be included in the 'gross amount' envisaged in Section 67 of Finance Act, 1994. We may also like to emphasise here that the issue of 'mobilisation advance', especially in the examination of its nature, has not been considered in the decisions cited by Learned Authorised Representative.'
9. On the facts of the present dispute, it is seen that the contract was entered into for the purpose of executing a particular work and the service would have been rendered in full only upon the work being executed. The purported recipient of the service, such as it was, had terminated relationship with the provider of service by mutual consent thus curtailing the rendition of the service itself prematurely. Concurrent restitution of the balance amount in the 'mobilization advance' erased the activity and truncated the consideration to limit the 'service' to that already undertaken ST/86361/2018 12 and, thereby, the 'taxable service' too.
10. Discharge of tax in consonance with the Point of Taxation Rules, 2011, which was a machinery provision for collection and determination of applicable rate of tax, cannot, of itself, render the amount paid as tax or tax liability arising therefrom. Time of collection of tax is determined by convenience while chargeability to tax is to be determined in terms of section 66 of Finance Act, 1994. On the facts and circumstances of the case, the tax liability could not subsist beyond the last work executed in pursuance of the contract which, in the matrix of the dispute, ended with the two running bills of 31st March 2012. The discharge of tax liability on 5 th August 2013 on the amount returned to the principal was sought to be claimed as refund on 16th April 2015 which, according to Learned Counsel, was within one year from the time that 'intended service' transformed as 'non-service' on cancellation of agreement to provide service. The contention of Learned Authorised Representative is that, notwithstanding doubts on the legality of the tax paid, refund may be granted only within the framework of section 11B of Central Excise Act, 1944 and that the period of limitation therein stipulated as one year from the date of payment of tax disbarred processing of the claim for refund. The decision of the Tribunal in re Credible Engineering Construction Projects Ltd, and referred to in the decision in re Oil India Ltd, having held that the period of limitation prescribed in ST/86361/2018 13 section 11B of Central Excise Act, 1944 would not apply to amount paid under mistake of law as it was not required to be paid towards duty/tax, would escape the restriction of limitation in section 11B of Central Excise Act, 1944 was approved by the Hon'ble High Court of Telangana in disposing off appeal of Revenue in re Credible Engineering Construction Projects Ltd. The decision of the Tribunal in re Benzy Tours & Travels Pvt Ltd, and relied upon by the first appellate authority, though holding that period of limitation prescribed in section 11B of Central Excise Act, 1944 would apply even to refund of service tax paid by mistake of law, was, in re Oil India Limited, held by the Tribunal to be inconsistent with the decision of the jurisdictional High Court in Parijat Constructions v. Commissioner of Central Excise, Nashik [2018 (9) GSTL 8 (Bom)]. In re Parijat Constructions, the decision of the Hon'ble High Court in Hindustan Cocoa Products v. Union of India [1994 (74) ELT 525 (Bom.)] and in Commissioner Central Excise, Nagpur v. M/s. SGR Infratech Ltd3 were relied upon besides drawing support from the decision of the Hon'ble Supreme Court in Collector of Central Excise, Chandigarh v. Doaba Co-Operative Sugar Mills [1988 (37) ELT 478 (SC)] acknowledging exception to general prescription of confines of section 11B of Central Excise Act, 1944 for duty paid by mistake of law. In Guardian Landmarks LLP v. Commissioner of Central Excise & Service Tax, Pune II [(2023) 8 3 [central excise appeal no. 26 of 2014 dated 28th October 2015] ST/86361/2018 14 Centax 271 (Tri.-Bom)], it was held that '5. In view of the peculiar facts of this case, the appellant cannot be said to be liable to pay service tax as no service has been provided and the amount paid by them would not take the character of tax. The provisions of Section 11B ibid would, therefore, not be applicable to such applications and the question of applying the limitation prescribed u/s.11B ibid would not arise. A similar view has already been taken by this Tribunal in the matter of Service Tax Appeal No. 85076 of 2021, Final Order No. A/86159/2022 dated 8-12- 2022 [2023] 4 Centax 229 (Tri.-Mum.)], the relevant paragraphs of which are reproduced hereunder:-
"7. In view of series of decisions it is clear that the appellant cannot be said to be liable to pay service tax in any manner whatsoever inasmuch as what was paid by the appellant was not tax as envisaged under the Finance Act, 1994. Thus, the amount paid by the Appellant would not take the character of tax but is simply an amount paid under a mistake of law. The provisions of Section 11B ibid would, therefore, not be applicable to an application seeking refund thereof. Moreover, since the retention of the amount in issue by the department is without authority of law, the question of applying the limitation prescribed under section 11B ibid would not arise. Even in case where any amount is paid by way of self assessment, if it has been paid by mistake or through ignorance, it is always open to the assessee to bring it to the notice of the authority concerned and claim refund of the amount wrongly paid. For a service to be taxable, it is necessary that the service has to be rendered by one person to another and without a perceived service money contribution cannot be held to be a consideration which is liable to tax. The authority concerned is duty bound to refund such amount as retention of such amount would be hit by Article 265 of the Constitution of India which mandates that no tax shall be levied or collected except by authority of law. Since Service Tax received by the concerned authority is not backed by any authority of law, in view of the provisions of Article 265 of the Constitution, the authority concerned has no right to retain the same. A similar view has been taken by the Hon'ble High Court of Judicature at Bombay in the matter of Parijat Construction v. Commissioner Excise, Nashik, reported in 2018 (359) ELT 113 (Bom.) by holding that limitation prescribed under Section 11B of Central Excise Act, 1944 not applicable to ST/86361/2018 15 refund claims for Service Tax paid under mistake of law. The relevant paragraphs of the said decision are reproduced as under:-
"5. We are of the view that the issue as to whether limitation prescribed under Section 11B of the said Act applies to a refund claimed in respect of service tax paid under a mistake of law is no longer res integra. The two decisions of the Division Bench of this Court in Hindustan Cocoa (supra) and Commissioner of Central Excise, Nagpur v. M/s. SGR Infratech Ltd. (supra) are squarely applicable to the facts of the present case.
6. Both decisions have held the limitation prescribed under section 11B of the said Act to be not applicable to refund claims for service tax paid under a mistake of law. The decision of the Supreme Court in the case of Collector of C.E., Chandigarh v. Doaba Co-Operative Sugar Mills (supra) relied upon by the Appellate Tribunal has in applying Section 11B, limitation made an exception in case of refund claims where the payment of duty was under a mistake of law. We are of the view that the impugned order is erroneous in that it applies the limitation prescribed under section 11B of the Act to the present case were admittedly appellant had paid a Service Tax on Commercial or Industrial Construction Service even though such service is not leviable to service tax. We are of the view that the decisions relied upon by the Appellate Tribunal do not support the case of the respondent in rejecting the refund claim on the ground that it was barred by limitation. We are, therefore, of the view that the impugned order is unsustainable."
8. Hon'ble High Court of Judicature at Madras in the matter of 3E Infotech v. CESTAT, Chennai; 2018 (18) GSTL 410 (Mad.) also took similar view on identical issue and held 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. The relevant paragraphs of the said decision are reproduced as under:-
"12. Further, the claim of the respondent in refusing to return the amount would go against the mandate of Article 265 of the Constitution of India, which provides that no tax shall be levied or collected except by authority of law.
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 ST/86361/2018 16 hesitation in holding that the claim of the Assessee for a sum of Rs. 4,39,683/- cannot be barred by limitation, and ought to be refunded.
14. There is no doubt in our minds, that if the Revenue is allowed to keep the excess service tax paid, it would not be proper, and against the tenets of Article 265 of the Constitution of India. On the facts and circumstances of this case, we deem it appropriate to pass the following directions:-
(a) The Application under section 11B cannot be rejected on the ground that is barred by limitation, provided for under Section.
(b) The claim for return of money must be considered by the authorities."
9. On similar lines, this Tribunal also in the matter of Javed Akhtar v. CGST, Mumbai West; [2021] 132 taxmann.com 166 (Mumbai - CESTAT) in Service Tax Appeal No. 85611 of 2019, vide order dated 9-11-2021 has held that retention of any amount by the department which was paid by the appellant therein without any liability or in excess of the liability violates Article 265 of the Constitution of India."
11. This consistent view of the Tribunal flows from the nature of tax liability intended to be levied under Finance Act, 1994 and the manner in which section 11B of Central Excise Act, 1944 has been made applicable thus 'Section 83. Application of certain provisions of Act 1 of 1944.-- The provisions of the following sections of the Central Excise Act, 1944, as in force from time to time, shall apply, so far as may be, in relation to service tax as they apply in relation to a duty of excise :- sub-section (2A) of section 5A, sub-section(2) of section 9A, 9AA, 9B, 9C, 9D, 9E, 11B, 11BB, 11C, 12, 12A, 12B, 12C, 12D, 12E, 14, 15, 15A, 15B, 31, 32, 32A to 32P, 33A, 35EE, 34A, 35F, 35FF, to 35O (both inclusive), 35Q, 35R, 36, 36A, 36B, 37A, 37B, 37C, 37D, 38A and 40.' ST/86361/2018 17
12. In disputes over refund of duties of central excise, it has been consistently held that any claim of refund would have to pass through the sieve of section 11B of Central Excise Act, 1944 as, even with leviability arising upon manufacture, the tax liability would be discharged only upon clearance of goods which not only offers corporeal ascertainment of taxable event but also as a consequence of assessment - whether by self or in terms of section 11A of Central Excise Act, 1944. Per contra, the taxability under section 66 of Finance Act, 1994 would arise only upon 'taxable service' being rendered; 'service' is not discernable except with satisfaction of recipient manifested by transfer of consideration and creating liability only then. Consequently, any tax collected upon rendering of service would necessarily have to comply with the law of limitation set out in section 11B of Central Excise Act, 1944 and not in dispute any more than clearance of the goods under Central Excise Act, 1944 would be. On the other hand, tax collected in accordance with a machinery provision, and by the deeming threshold in Point of Taxation Rules, 2011, would indicate the stage at which the tax has become leviable on the presumption that service would be rendered. Therefore, inasmuch as 'taxable service' did not exist, tax may not be acknowledged as leviable or having been collected as tax and in much the same way as topping up of the erstwhile 'personal ledger account (PLA)' to enable debits upon clearance of the goods under Central ST/86361/2018 18 Excise Act, 1944. In much the same way as such payments were advance deposit and not liable to be scrutinized within the template of section 11B of Central Excise Act, 1944, the remittance of amount towards an 'intended service' which never happened would not have to go through the restrictions imposed under section 11B of Central Excise Act, 1944 for effecting the sanction.
13. In the light of the finding that the tax liability did not arise and, in the light of the negation of the sanction of the refund solely on the ground of issue of limitation having been in jeopardy owing to appeal of Revenue against contrary stance having been admitted by the Hon'ble High Court of Gujarat, the facts stand substantially distinguished. Furthermore, in the light of elaboration of the provisions of section 11B of Central Excise Act, 1944, as well as the several decisions of the Hon'ble High Court of Bombay supra and of the Tribunal supra, the impugned order was incorrect in allowing the appeal of jurisdictional Commissioner of Service Tax.
14. Accordingly, we set aside the impugned order and restore the sanction granted by the original authority to allow this appeal.
(Order pronounced in the open court on 24/03/2025) (AJAY SHARMA) (C J MATHEW) Member (Judicial) Member (Technical) */as