Custom, Excise & Service Tax Tribunal
U P Projects Corporation Ltd vs Ce & Cgst Lucknow on 7 August, 2023
CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL
ALLAHABAD
REGIONAL BENCH - COURT NO.I
Service Tax Appeal No.70023 of 2020
(Arising out of Order-in-Appeal No.542-ST/APPL/LKO/2019 dated 11/11/2019
passed by Commissioner (Appeals) Customs, Central Excise & Service Tax,
Lucknow)
M/s U.P. Projects Corporation Ltd. .....Appellant
(Head Office, Gomti Bairaz, Left Bank,
Gomti Nagar, Lucknow-226010)
VERSUS
Commissioner of Central Excise &
CGST, Lucknow ....Respondent
(3/194, Vishal Khan-3, Gomti Nagar, Lucknow-226010) APPEARANCE:
Shri Dharmendra Srivastava, Chartered Accountant for the Appellant Shri Manish Raj, Authorised Representative for the Respondent CORAM: HON'BLE MR. SANJIV SRIVASTAVA, MEMBER (TECHNICAL) FINAL ORDER NO.70059/2023 DATE OF HEARING : 07 August, 2023 DATE OF DECISION : 07 August, 2023 SANJIV SRIVASTAVA:
This appeal is directed against Order-in-Appeal No.542- ST/APPL/LKO/2019 dated 11/11/2019 passed by Commissioner (Appeals) Customs, Central Excise & CGST, Lucknow. By the impugned order Commissioner (Appeals) has upheld the order of Original Authority by rejecting the refund claim filed by the appellant.
2.1 Appellant has filed a refund claim amounting to Rs.13,10,411/- on 03/05/2018. The proposed refund claim as per the appellant has been filed in terms of exemption 2 Service Tax Appeal No.70023 of 2020 Notification No.25/2012-ST dated 20/06/2012 as amended by Notification No.09/2016-ST dated 01.03.2016 read along with Section 102 of the Finance Act, 1994 (inserted by Finance Act, 2016).
2.2 On the receipt of refund claim authorities were of the view that in terms of the said notification the refund claim should have been filed as provided by Section 102 of Finance Act, 2016 by 14 November, 2016. This refund claim filed on 03/05/2018 is clearly time-barred.
2.3 Accordingly, a notice was issued to the appellant for rejection of the refund claim. Original Authority rejected the refund claim vide his Order-in-Original No.59(R)/JC/UPPCL-LKO/ 2019 dated 17/05/2019, this order has been upheld by the Commissioner (Appeals) by the impugned order.
2.4 Aggrieved by the impugned order appellant has filed this appeal.
3.1 I have heard Shri Dharmendra Srivastava Chartered Accountant appearing for the appellant and Shri Manish Raj, Authorized Representative appearing for the revenue.
3.2 Arguing for the appellant Learned Counsel submits that-
● Appellant has filed this refund claim for the amount paid inadvertently during the month of January, 2017 for a period prior to 01/03/2016. Since the Notification No.09/2016-ST dated 01/03/2016 read with Section 102 of Finance Act, 1994 exempts the services provided retrospectively for the period prior to 01/03/2016.
● He further submits that strictly this refund claim cannot be in terms of Section 102 of Finance Act, 1994 as the amount claimed as refund was paid after 14 November, 2016 i.e. the expiry period of limitation as provided by Section 102 of Finance Act, 1994.
3Service Tax Appeal No.70023 of 2020 ● Accordingly, the rejection of refund claim by Commissioner (Appeals) holding that the refund is barred by limitation as per Section 102 of Finance Act, 1994 is bad in law.
● In case SBW Udyog Ltd [Final Order No 75622- 75623/2023 dated 18.05.2023 of Kolkata Bench] it has been held that service tax paid under mistake of law needs to be allowed without referring to limitation as per Section 11 B of Central Excise Act,1944:
● Appeal should be allowed.
3.3 Arguing for the revenue learned Authorized Representative submits that the refund claim has been filed beyond the prescribed period of limitation as per Section 102 (3) of the said Act and also beyond the period of limitation as per Section 83 of the Finance Act, 1994 read with Section 11B of Central Excise Act, 1944. The rejection of the refund claim accordingly cannot be faulted with. He submits that appeal should be rejected.
4.1 I have considered the impugned order along with the submissions made in appeal and during the course of arguments.
4.2 I find that while upholding the order of Original Authority and rejecting the refund claim filed by the appellant Commissioner (Appeals) has observed as follows:-
―5. I have gone through the case record. The refund claim was filed under section 102 of the said Act. Section 102 (3) of the said Act reads as under:
"(3) Notwithstanding anything contained in this Chapter, an application for the claim of refund of service tax shall be made within a period of six months from the date on which the Finance Bill, 2016 receives the assent of the President."
As the Finance Bill 2016 got the assent of the President on 14.5.2016, the refund claim should have been 4 Service Tax Appeal No.70023 of 2020 filed by 14.11.2016 but the refund claim was filed on 03.05.2018. Hence, the refund claim has been correctly rejected by the adjudicating authority. The appeal is, therefore, dismissed.‖ 4.3 Original Authority by rejecting the refund claim has observed as follows:-
―5.2 The Party was registered with the Department with Service Tax Registration No.AAACU3393FSD038 for providing taxable services. They had filed refund claim for Rs.13,10,411/- on dated 03.05.2018 in terms of Mega exemption Notification No.25/2012-ST dated 20.06.2012 read with Notification No.09/2016-ST dated 01.03.2016.
5.3 On going through the show cause notice, I observe that the same was issued basically on the grounds of time barred in terms of sub section 3 of Section 102 of the Finance Act,2016; non-submission of documentary evidence showing that the amount of service tax paid was in relation to the amount received by them against specific G.O.s. and doctrine of unjust enrichment.
5.4 In the instant case, I find that as per sub section 3 of Section 102 of the Finance Act, 2016 the application for claim of refund of service tax shall be made within a period of six months from the date on which the Finance Bill, 2016 received the assent of the President. As the Finance Act, 2016 got the assent of the President on 14th May, 2016, the refund claim should have been filed before 14th Nov, 2016. But the instant refund claim is not filed within the prescribed time limit. The instant refund claim was filed on 03.05.2018 and therefore I find that the same is hit bar of time limitation.
5.5 Further, I find that the party has not provided any documentary evidence to correlate the amount of refund claimed by them was paid by them against specific G.O.s. I also find that the party has not provided any supporting 5 Service Tax Appeal No.70023 of 2020 documents which may confirm that they had not charged/realised service tax from any other person. Therefore, it could not be established by the party that duty liability has not been passed on and the clause of unjust enrichment satisfied.
5.6 In these backdrops, I find that the party is not eligible for exemption from Service Tax in terms of Notification No.09/2016-ST dated 01.03.2016, vide which the Govt. of India had made further amendment in the Notification No.25/2012-ST dated 20.06.2012 read with Section 102 inserted vide Finance Act, 2016 which provide special retrospective exemption in certain cases relating to services provided to the Government, Local Authority or a Governmental Authority. Hence, I hold that the party is not eligible for the refund of Rs.13,10,411/- in terms of provisions given above.‖ 4.4 Undisputedly, appellant is providing construction services which were exempted as per Entry No.12 of Notification No.25/2012-ST dated 20 June, 2012. The said entry read as follows:
12. Services provided to the Government or local authority by way of erection, construction, maintenance, repair, alteration,renovation or restoration of -
(a) a civil structure or any other original works meant predominantly for a non-industrial or non-commercial use;
(b) a historical monument, archaeological site or remains of national importance, archaeological excavation, or antiquity specified under Ancient Monuments and Archaeological Sites and Remains Act, 1958 (24 of 1958);
(c) a structure meant predominantly for use as (i) an educational, (ii) a clinical, or (iii) an art or cultural establishment;
(d) canal, dam or other irrigation works;6
Service Tax Appeal No.70023 of 2020
(e) pipeline, conduit or plant for (i) drinking water supply (ii) water treatment (iii)sewerage treatment or disposal; or
(f) a residential complex predominantly meant for self-use or the use of their employees or other persons specified in theExplanation 1 to clause 44 of section 65 B of the said Finance Act 4.6 Vide Notification No.06/2015-ST dated 01/03/2015 amendments were made in the Notification No.25/2012-ST dated 20/06/2012 by omitting items (a), (c) & (f). Accordingly, for the period from 01/03/2015 the said exemption was not available to the appellant.
4.7 By Notification No.09/2016-ST dated 01/03/2016 amendments were further made and following entries were introduced:-
―12A. Services provided to the Government, a local authority or a governmental authority by way of construction, erection, commissioning, installation, completion, fitting out, repair, maintenance, renovation, or alteration of -
(a) a civil structure or any other original works meant predominantly for use other than for commerce, industry, or any other business or profession;
(b) a structure meant predominantly for use as (i) an educational, (ii) a clinical, or(iii) an art or cultural establishment; or
(c) a residential complex predominantly meant for self-use or the use of their employees or other persons specified in the Explanation 1 to clause (44) of section 65 B of the said Act;
under a contract which had been entered into prior to the 1st March, 2015 and on which appropriate stamp duty, where applicable, had been paid prior to such date:
7Service Tax Appeal No.70023 of 2020 provided that nothing contained in this entry shall apply on or after the 1st April, 2020;‖ Simultaneously, Finance Act, 2016 inserted a new Section 102 in the Finance Act, 1994 which reads as follows:-
(1) Notwithstanding anything contained in section 66B, no service tax shall be levied or collected during the period commencing from the 1st day of April, 2015 and ending with the 29th day of February, 2016 (both days inclusive), in respect of taxable services provided to the Government, a local authority or a Governmental authority, by way of construction, erection, commissioning, installation, completion, fitting out, repair, maintenance, renovation or alteration of--
a) a civil structure or any other original works meant predominantly for use other than for commerce, industry or any other business or profession;
b) a structure meant predominantly for use as--
(i) an educational establishment;
(ii) a clinical establishment; or
(iii) an art or cultural establishment;
c) a residential complex predominantly meant for self-use or for the use of their employees or other persons specified in Explanation 1 to clause (44) of section 65B of the said Act, under a contract entered into before the 1st day of March, 2015 and on which appropriate stamp duty, where applicable, had been paid before that date.
2) Refund shall be made of all such service tax which has been collected but which would not have been so collected had sub-section (1) been in force at all the material times.
(3) Notwithstanding anything contained in this Chapter, an application for the claim of refund of service tax shall be 8 Service Tax Appeal No.70023 of 2020 made within a period of six months from the date on which the Finance Bill, 2016 receives the assent of the President.‖ The benefit of exemption under Notification No.09/2016-ST dated 01/03/2016 was extended retrospectively for the period from 01 April, 2015 to 29 February, 2016.
4.7 Limitation was prescribed by the said Section that any tax paid during this period can be claimed as refund within 6 months from the date of assent of the Finance Bill, 2016 by the President. Commissioner (Appeals) has observed that as per the provisions of this Section the refund claim was to be filed by 14 November, 2016 and appellant have failed to do so, the refund claim is barred by limitation.
4.8 It is observed that the appellant has claimed that they have paid this tax inadvertently during the month of January, 2017 and not during the period April, 2015 to February, 2016. Accordingly, this refund claim would not be covered by the provisions of Section 102 of the Finance Act. It is by Section 102 of Finance Act, 1994 inserted by Finance Act, 2016, that the Notification No 09/2016-ST dated 01.03.2016 has been given retrospective effect. This Section not only provides for the retrospective exemption to the said service for the period from 01.04.2015 to 28.02.2016, but also provides for the method of operation of the retrospective exemption granted. By sub-section 3 it has been provided that the refund claims in respect of the amounts paid during this period as service tax against these services can be claimed as refund. The period of limitation has been provided to be six months from the date when the Finance Bill, 2016 received the assent of the President of India i.e. 14.05.2016. Section 102 of Finance Act, 1994 is a special provision which has been introduced to overcome certain difficulties and provide for the manner of operation of the said provision. The refund claim made by the appellant on 03.05.2018 (revised claim filed on 14.05.2018) cannot be entertained by the revenue under the said Section without doing serious violence to the express language of the said section.
9Service Tax Appeal No.70023 of 2020 4.9 It is the claim of the appellant that they have paid this amount as service tax during the month of January 2017. On perusal of ST-3 return filed by the appellant during the said period it is observed that there is nothing in ST-3 return to show that amount claiming as refund was paid for the period for which Section 102 of Finance Act, 1994 gave retrospective effects to Notification No.09/2016-ST dated 01/03/2016. It is also not reflected as paid as the arrear. I also do not find anything in the return filed by the appellant to support the contention of the appellant that this amount has been inadvertently paid under mistake of law.
4.10 The appellant is paying service tax on the following services either as provider of service or as recipient of service under reverse charge mechanism:
➢ Legal consultancy Service ➢ Manpower Recruitment/ Supply Agency Service ➢ Rent a cab scheme operator service.
➢ Transportation of Goods by Road/ Goods Transport Agency Service ➢ Work Contract Services Admittedly the issue in respect which the refund claim has been filed is for "Work Contracts Services''. The excerpt of the service tax return (ST-3) filed by the appellant for the month January 2017 for this service is reproduced below:
A9 Taxable Service (s) for which tax is being paid Work Contract Service A10 Assessee is liable to pay service tax on this taxable service as .....
A11 Exemptions
A11.1 Has the assessee availed benefit of any Y
exemption notification ('Y/N')
10
Service Tax Appeal No.70023 of 2020
A11.2 If reply to column A11.1 is 'Y' please furnish 25/2012-ST - 12 (b)
notifications No and S No in the notification 25/2012-ST - 12 A (a)
under which such exemption is availed. 25/2012-ST -12 A (b)
25/2012-ST - 13 (a)
25/2012-ST -13 (b)
30/2012-ST - 9
A12
A12.1 Has abatement from the value of services Y
been claimed ('Y/N')
A12.2 If reply to column A12.1 is 'Y' please furnish 24/2012-ST - 1
notifications No and S No in the notification under which such abatement is availed.
A13 Provisional Assessment ....
B1 For Service Provider
Month Jan
B1.1 Gross amount (excluding amounts received in 904151979
advance, amounts taxable on receipt basis, for which bills/invoices/challans or any other document may not have been issued) for which bills/invoices/challans or any other documentare issued relating to service provided or to be provided (including export of service and exempted service) B1.2 Amount received in advance for services for Nil which bills/invoices/challans or any other document may not have been issued B1.3 Amount taxable on receipt basis under third Nil proviso to rule 6 91) of Service tax Rules, 1994 for which bills/invoices/challans or any other document may not have been issued B1.4 Amount taxable for service provided for Nil which bills/invoices/challans or any other document may not have been issued B1.5 Money equivalent of consideration charged, if Nil any, in a form other than money.
B1.6 Amount on which service payable under Nil partial reverse charge.
B1.7 Gross Taxable Amount 904151979
B1.7=B1.1+B1.2+B1.3+B1.4+B1.5+B1.6
B1.8 Amount charged against export of service Nil
provided or to be provided
B1.9 Amount charged for exempted service 113018503
provided or to be provided (other than export of service given at B1.8 above) B1.10 Amount charged as pure agent Nil B1.11 Amount claimed as abatement 473107919 11 Service Tax Appeal No.70023 of 2020 B1.12 Any other amount claimed as deduction Nil please specify B1.13 Total Amount claimed as deduction 586126422 B1.13= B1.8+B1.9+B1.10+B1.11+B1.12 B1.14 NET TAXABLE VALUE (B1.14=B1.7-B1.13) 318025557 B1.15 Service tax rate wise break up of NET Taxable Value TAXABLE VALUE B1.14; Ad-valorem rate 14% (tax Rate); 0.5% (SBC);0.5% (KKC) 318025557 14% (tax Rate); 0.5% (SBC); Nil B1.16 Specific rate (applicable as per rule 6 of STR) Nil B1.17 Service tax payable 44523578 B1.18 Less R & D cess payable Nil B1.19 Net Service tax payable B1.19=B1.17- 44523578 B1.18 B1.20 Education Cess payable Nil B1.21 Higher Education Cess payable Nil B1.22 Swachh Bharat Cess payable based on 1590128 entries in serial number B1.15 B1.23 Swachh Bharat Cess payable based on Nil entries in serial number B1.16 B1.24 Total Swachh Bharat Cess payable 1590128 B1.24=B1.22+B1.23 B1.25 Krishi Kalyan Cess payable based on 1590128 entries in serial number B1.15 B1.26 Krishi Kalyan Cess payable based on entries Nil in serial number B1.16 B1.27 Total Krishi Kalyan Cess payable 1590128 B1.24=B1.22+B1.23 B2 For Service Receiver Month Jan B2.1 Gross amount (excluding amounts paid in 207079448 advance, amounts taxable on payment basis, for which bills/invoices/challans or any other document may not have been issued) for which bills/invoices/challans or any other document are issued relating to service received or to be received B2.2 Amount paid in advance for services for Nil which bills/invoices/challans or any other document may not have been issued 12 Service Tax Appeal No.70023 of 2020 B2.3 Amount taxable on receipt basis under third Nil proviso to rule 6 91) of Service tax Rules, 1994 for which bills/invoices/challans or any other document may not have been issued B2.4 Money equivalent of other consideration paid, Nil if any, in a form other than money.
B2.5 Amount paid for service received from Non Nil Taxable territory - Imports B2.6 Amount paid for service received from Non Nil Taxable territory - Other than imports B2.7 Amount on which service payable under 129968459 partial reverse charge.
B2.8 Gross Taxable Amount 337047907
B2.7=B2.1+B2.2+B2.3+B2.4+B2.5+B2.6
B2.9 Amount paid for exempted service received 207079448
or to be received
B2.10 Amount paid as pure agent Nil
B2.11 Amount claimed as abatement 77441957
B2.12 Any other amount claimed as deduction Nil
please specify
B2.13 Total Amount claimed as deduction 284521405
B2.13= B2.8+B2.9+B2.10+B2.11+B2.12
B2.14 NET TAXABLE VALUE (B1.14=B1.7-B1.13) 52526502
B2.15 Service tax rate wise break up of NET Taxable value
TAXABLE VALUE B1.14; Ad-valorem rate
14% (tax Rate); 0.5% (SBC);0.5% (KKC) 52526502
B2.16 Specific rate (applicable as per rule 6 of STR) Nil
B2.17 Service tax payable 7353710
B2.18 Less R & D cess payable Nil
B2.19 Net Service tax payable B2.19=B2.17- 7353710
B2.18
B2.20 Education Cess payable Nil
B2.21 Higher Education Cess payable Nil
B2.22 Swachh Bharat Cess payable based on 262633
entries in serial number B2.15
B2.23 Swachh Bharat Cess payable based on Nil
entries in serial number B2.16
B2.24 Total Swachh Bharat Cess payable 262633
B2.24=B2.22+B2.23
B2.25 Krishi Kalyan Cess payable based on 262633
entries in serial number B2.15
13
Service Tax Appeal No.70023 of 2020
B2.26 Krishi Kalyan Cess payable based on entries Nil
in serial number B2.16
B2.27 Total Krishi Kalyan Cess payable 262633
B2.24=B2.22+B1.23
In respect of other services provided or received by the appellant as per the ST-3 Return for month of Jan 17 Service tax Payable is shown as follows As Service Tax Swachh Krishi Kalyan Bharat Cess Cess Legal consultancy Service Provider 0 0 0 Recipient 6318 226 226 Manpower Recruitment/ Supply Agency Service Provider 0 0 0 Recipient 860127 30719 30719 Rent a cab scheme operator service Provider 0 0 0 Recipient 232922 8319 8319 Transportation of Goods by Road/ Goods Transport Agency Service Provider 0 0 0 Recipient 0 0 0 Work Contract Services Provider 44523578 1590128 1590128 Recipient 7353710 262633 262633 Total 52976655 1892025 1892025 In part D of ST-3 Return for Jan 17, appellant has indicated as follows:
PART-D SERVICE TAX PAID IN CASH AND THROUGH CENVAT CREDIT Service Tax, Education Cess, Secondary & Higher Education Cess and Other Amounts Paid.
14
Service Tax Appeal No.70023 of 2020
Month Jan
D1 In Cash 23360454
D2 By CENVAT credit (not applicable where the service 29616201
tax is liable to be paid by the recipient of service) D3 By adjustment of amounts paid as service tax in Nil advance under Rule 6 (1A) of the ST Rules.
D4 By adjustment of excess amount paid earlier as Nil service tax adjusted, by taking credit of such excess service tax paid, in this period under Rule 6 (3) of ST Rules D5 By adjustment of excess amount paid earlier as Nil service tax adjusted in this period under Rule 6 (4A) of ST Rules D6 By adjustment of excess amount paid earlier as Nil service tax in respect of renting of immovable Property, on account of non-availment of deduction of property tax paid and adjusted in this period under Rule 6 (4C) of ST Rules D7 By book adjustment in the case of specified Nil Government departments.
D8 Total tax paid D8=D1+D2+D3+D4+D5+D6+D7 52976655 Part DA SWACHH BHARAT CESS (SBC) PAID IN CASH AND THROUGH ADJUSTMENTS DA1 Swachh Bharat Cess paid in cash 1892488 DA2 By adjustment of amounts paid as SBC in advance Nil under Rule 6 (1A) of the ST Rules.
DA3 By adjustment of excess amount paid earlier as SBC Nil adjusted, by taking credit of such excess service tax paid, in this period under Rule 6 (3) of ST Rules DA4 By adjustment of excess amount paid earlier as SBC Nil adjusted in this period under Rule 6 (4A) of ST Rules DA4.1 By adjustment of excess amount paid earlier as SBC Nil in respect of renting of immovable Property, on account of non-availment of deduction of property tax paid and adjusted in this period under Rule 6 (4C) of ST Rules DA5 By book adjustment in the case of specified Nil Government departments.
DA6 Total Swachh Bharat Cess paid 1892488 D6=DA1+DA2+DA3+DA4+DA4.1+DA5 PART-DB KRISHI KALYAN CESS (KKC) PAID IN CASH AND THROUGH ADJUSTMENTS DB1 Krishi Kalyan Cess paid in cash 1332653 DB2 By CENVAT Credit 559372 15 Service Tax Appeal No.70023 of 2020 DB3 By adjustment of amounts paid as KKC in advance Nil under Rule 6 (1A) of the ST Rules.
DB4 By adjustment of excess amount paid earlier as KKC Nil adjusted, by taking credit of such excess service tax paid, in this period under Rule 6 (3) of ST Rules DB5 By adjustment of excess amount paid earlier as KKC Nil adjusted in this period under Rule 6 (4A) of ST Rules DB6 By adjustment of excess amount paid earlier as KKC Nil in respect of renting of immovable Property, on account of non-availment of deduction of property tax paid and adjusted in this period under Rule 6 (4C) of ST Rules DB7 By book adjustment in the case of specified Nil Government departments.
DB8 Total Krishi Kalyan Cess paid 1892025 DB8=DB1+DB2+DB3+DB4+DB5+DB6+DB7 PART-E EDUCATION CESS PAID IN CASH AND THROUGH CENVAT CREDIT E8 Total Education Cess Paid Nil E8=E1+E2+E3+E4+E5+E6+E7 PART-F SECONDARY & HIGHER EDUCATION CESS PAID IN CASH AND THROUGH CENVAT CREDIT F8 Total Secondary & Higher Education Cess Paid Nil F8=F1+F2+F3+F4+F5+F6+F7 Part-G ARREARS, INTEREST, PENALTY ANY OTHER AMOUNT ETC PAID G1 Arrears of revenue (tax amount) paid in cash Nil G2 Arrears of revenue (tax amount) paid by utilizing Nil CENVAT credit G3 Arrears of Education Cess paid in cash Nil G4 Arrears of Education Cess paid by utilizing CENVAT Nil credit G5 Arrears of Secondary & Higher Education Cess paid in Nil cash G6 Arrears of Secondary & HigherEducation Cess paid by Nil utilizing CENVAT credit G7 Amount paid in terms of Section 73A of Finance Act, Nil 1994 G8 Interest paid (in cash only) 7385 G9 Penalty paid (in cash only) Nil G10 Amount of late fee paid if any Nil G11 Any other amount paid (please specify) Nil G12 Total payment of arrears, interest, penalty any 7385 other amount etc made 16 Service Tax Appeal No.70023 of 2020 G13 Arrears of Swachh Bharat Cess paid in cash Nil G14 Interest on SBC paid in cash Nil G15 Penalty on SBC paid in cash Nil G16 Total payment of arrears, interest, penalty on Nil Swachh Bharat Cess G16=G13+G14+G15 G17 Arrears of Krishi Kalyan Cess paid in cash Nil G18 Arrears of Krishi Kalyan Cess paid by utilizing Nil CENVAT credit G19 Interest on KKC paid in cash Nil G20 Penalty on KKC paid in cash Nil G21 Total payment of arrears, interest, penalty on Nil Krishi Kalyan Cess G21=G17+G18+G19+G20 From the above self assessed return filed by the appellant it is evident that appellant has paid the service tax computed by him in the return and has paid the same accordingly. The computation ahs been made in respect of tax liability for the month of January 2017. They have not indicated any amount paid as arrears of revenue for the past period for which they are claiming the refund. This return is self declaration of liability of service tax for the month and payment made thereof.
4.11 The return self assessed has been filed by the appellant showing this as the tax liability for the month of January, 2017 in the month of April 2015. Service Tax rules provide for revision of the return appellant has not filed any revised tax return to show that this was not current liability but for the past period the self assessed return becomes final and the refund could not have been granted without appropriate amendments to the said refund claim as have been held by the Hon'ble Supreme Court in the case of ITC Ltd. [2019 (368) ELT 216 (SC)] holding as follows:-
―43. As the order of self-assessment is nonetheless an assessment order passed under the Act, obviously it would be appealable by any person aggrieved thereby. The expression ‗Any person' is of wider amplitude. The revenue, as well as assessee, can also prefer an appeal aggrieved by an order of 17 Service Tax Appeal No.70023 of 2020 assessment. It is not only the order of re-assessment which is appealable but the provisions of Section 128 make appealable any decision or order under the Act including that of self- assessment. The order of self-assessment is an order of assessment as per Section 2(2), as such, it is appealable in case any person is aggrieved by it. There is a specific provision made in Section 17 to pass a reasoned/speaking order in the situation in case on verification, self-assessment is not found to be satisfactory, an order of re-assessment has to be passed under Section 17(4). Section 128 has not provided for an appeal against a speaking order but against ―any order‖ which is of wide amplitude. The reasoning employed by the High Court is that since there is no lis, no speaking order is passed, as such an appeal would not lie, is not sustainable in law, is contrary to what has been held by this Court in Escorts (supra).
44. The provisions under Section 27 cannot be invoked in the absence of amendment or modification having been made in the bill of entry on the basis of which self-assessment has been made. In other words, the order of self-assessment is required to be followed unless modified before the claim for refund is entertained under Section 27. The refund proceedings are in the nature of execution for refunding amount. It is not assessment or re-assessment proceedings at all. Apart from that, there are other conditions which are to be satisfied for claiming exemption, as provided in the exemption notification. Existence of those exigencies is also to be proved which cannot be adjudicated within the scope of provisions as to refund. While processing a refund application, re-assessment is not permitted nor conditions of exemption can be adjudicated. Re-assessment is permitted only under Section 17(3)(4) and (5) of the amended provisions.
Similar was the position prior to the amendment. It will virtually amount to an order of assessment or re-assessment in case the Assistant Commissioner or Deputy Commissioner of Customs while dealing with refund application is permitted to adjudicate upon the entire issue which cannot be done in the ken of the 18 Service Tax Appeal No.70023 of 2020 refund provisions under Section 27. In Hero Cycles Ltd. v. Union of India - 2009 (240) E.L.T. 490 (Bom.) though the High Court interfered to direct the entertainment of refund application of the duty paid under the mistake of law. However, it was observed that amendment to the original order of assessment is necessary as the relief for a refund of claim is not available as held by this Court in Priya Blue Industries Ltd. (supra).
45. Reliance was also placed on a decision of Rajasthan High Court with respect to service tax in Central Office Mewar Palace Org. v. Union of India - 2008 (12) S.T.R. 545 (Raj.). In view of the aforesaid discussion, we are not inclined to accept the reasoning adopted by the High Court, that too is also not under the provisions of the Customs Act.
46. The decision in Intex Technologies (India) Ltd. v. Union of India has followed Micromax (supra). The reasoning employed by the High Courts of Delhi and Madras does not appear to be sound. The scope of the provisions of refund under Section 27 cannot be enlarged. It has to be read with the provisions of Sections 17, 18, 28 and 128.
47. When we consider the overall effect of the provisions prior to amendment and post-amendment under Finance Act, 2011, we are of the opinion that the claim for refund cannot be entertained unless the order of assessment or self-assessment is modified in accordance with law by taking recourse to the appropriate proceedings and it would not be within the ken of Section 27 to set aside the order of self-assessment and reassess the duty for making refund; and in case any person is aggrieved by any order which would include self-assessment, he has to get the order modified under Section 128 or under other relevant provisions of the Act.‖ 4.12 I am also of the view that in case this refund was to be allowed but it was to be filed within the statutory time limit prescribed as per Section 83 of the Finance Act, 1994 read with Section 11B of the Central Excise Act. Appellant has claimed on 19 Service Tax Appeal No.70023 of 2020 the basis of certain decisions of High courts and tribunal that in case of service tax paid under mistake of law will not be governed by the provisions of Section 11 B of the Central Excise Act, 1944. However there is nothing on record to show that any tax has been paid by the appellant under mistake of law. There has to be an authoritative pronouncement made by the competent authority that the tax has been paid under mistake of law. In the present case I do not find anything on record by which the claim that the tax has been paid under the mistake of law can be substantiated. Refund claim filed beyond one year from the date of deposit from the date of payment of tax even under mistake of law will be hit by bar of limitation, as has been held by Hon'ble Supreme Court in the case of Mafatlal Industries Ltd vs Union of India [1997 (89) ELT 247 (SC)].
―67. The first question that has to be answered herein is whether Kanhaiyalal has been rightly decided insofar as it says (1) that where the taxes are paid under a mistake of law, the person paying it is entitled to recover the same from the State on establishing a mistake and that this consequence flows from Section 72 of the Contract Act; (2) that it is open to an assessee to claim refund of tax paid by him under orders which have become final - or to reopen the orders which have become final in his own case - on the basis of discovery of a mistake of law based upon the decision of a court in the case of another assessee, regardless of the time-lapse involved and regardless of the fact that the relevant enactment does not provide for such refund or reopening; (3) whether equitable considerations have no place in situations where Section 72 of the Contract Act is applicable; and (4) whether the spending away of the taxes collected by the State is not a good defence to a claim for refund of taxes collected contrary to law.
68. Re. : (I) : Hereinbefore, we have referred to the provisions relating to refund obtaining from time to time under the Central Excises and Salt Act. Whether it is Rule 11 (as it stood from time to time) or Section 11B (as it obtained before 1991 or 20 Service Tax Appeal No.70023 of 2020 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 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 21 Service Tax Appeal No.70023 of 2020 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 22 Service Tax Appeal No.70023 of 2020 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 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 23 Service Tax Appeal No.70023 of 2020 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. The Act does not contemplate any of its provisions being declared unconstitutional and therefore it does not provide for its consequences. Rule 11/Section 11B are premised upon the supposition that the provisions of the Act are good and valid. But where any provision under which duty is levied is found to be 24 Service Tax Appeal No.70023 of 2020 unconstitutional, Article 265 steps in. In other words, the person who paid the tax is entitled to claim refund and such a claim cannot be governed by the provisions in Rule 11/Section 11B. The very collection and/or retention of tax without the authority of law entitles the person, from whom it is collected, to claim its refund. A corresponding obligation upon the State to refund it can also be said to flow from it. This can be called the right to refund arising under and by virtue of the Constitutional provisions, viz., Article 265. But, it does not follow from this that refund follows automatically. Article 265 cannot be read in isolation. It must be read in the light of the concepts of economic and social justice envisaged in the Preamble and the guiding principles of State Policy adumbrated in Articles 38 and 39 - an aspect dealt with at some length at a later stage. The very concept of economic justice means and demands that unless the claimant (for refund) establishes that he has not passed on the burden of the duty/tax to others, he has no just claim for refund. It would be a parody of economic justice to refund the duty to a claimant who has already collected the said amount from his buyers. The refund should really be made to the persons who have actually borne its burden - that would be economic justice. Conferring an unwarranted and unmerited monetary benefit upon an individual is the very anti-thesis of the concept of economic justice and the principles underlying Articles 38 and
39. Now, the right to refund arising as a result of declaration of unconstitutionality of a provision of the enactment can also be looked at as a statutory right of restitution. It can be said in such a case that the tax paid has been paid under a mistake of law which mistake of law was discovered by the manufacturer/assessee on the declaration of invalidity of the provision by the court. Section 72 of the Contract Act may be attracted to such a case and a claim for refund of tax on this score can be maintained with reference to Section 72. This too, however, does not mean that the taxes paid under an unconstitutional provision of law are automatically refundable under Section 72. Section 72 contains a rule of equity and once 25 Service Tax Appeal No.70023 of 2020 it is a rule of equity, it necessarily follows that equitable considerations are relevant in applying the said rule - an aspect which we shall deal with a little later. Thus, whether the right to refund of taxes paid under an unconstitutional provision of law is treated as a constitutional right flowing from Article 265 or as a statutory right/equitable right affirmed by Section 72 of the Contract Act, the result is the same - there is no automatic or unconditional right to refund.
70. Re : (II) : We may now consider a situation where a manufacturer pays a duty unquestioningly - or he questions the levy but fails before the original authority and keeps quiet. It may also be a case where he files an appeal, the appeal goes against him and he keeps quiet. It may also be a case where he files a second appeal/revision, fails and then keeps quiet. The orders in any of the situations have become final against him. Then what happens is that after an year, five years, ten years, twenty years or even much later, a decision is rendered by a High Court or the Supreme Court in the case of another person holding that duty was not payable or was payable at a lesser rate in such a case. (We must reiterate and emphasise that while dealing with this situation we are keeping out the situation where the provision under which the duty is levied is declared unconstitutional by a court; that is a separate category and the discussion in this paragraph does not include that situation. In other words, we are dealing with a case where the duty was paid on account of mis-construction, mis-application or wrong interpretation of a provision of law, rule, notification or regulation, as the case may be.) Is it open to the manufacturer to say that the decision of a High Court or the Supreme Court, as the ease may be, in the case of another person has made him aware of the mistake of law and, therefore, he is entitled to refund of the duty paid by him? Can he invoke Section 72 of the Contract Act in such a case and claim refund and whether in such a case, it can be held that reading Section 72 of the Contract Act along with Section 17(1)(c) of the Limitation Act, 26 Service Tax Appeal No.70023 of 2020 1963, the period of limitation for making such a claim for refund, whether by way of a suit or by way of a writ petition, is three years from the date of discovery of such mistake of law? Kanhaiyalal is understood as saying that such a course is permissible. Later decisions commencing from Bhailal Bhai have held that the period of limitation in such cases is three years from the date of discovery of the mistake of law. With the greatest respect to the learned Judges who said so, we find ourselves unable to agree with the said proposition. Acceptance of the said proposition would do violence to several well- accepted concepts of law. One of the important principles of law, based upon public policy, is the sanctity attaching to the finality of any proceeding, be it a suit or any other proceeding. Where a duty has been collected under a particular order which has become final, the refund of that duty cannot be claimed unless the order (whether it is an order of assessment, adjudication or any other order under which the duty is paid) is set aside according to law.
So long as that order stands, the duty cannot be recovered back nor can any claim for its refund be entertained. But what is happening now is that the duty which has been paid under a proceeding which has become final long ago - may be an year back, ten years back or even twenty or more years back - is sought to be recovered on the ground of alleged discovery of mistake of law on the basis of a decision of a High Court or the Supreme Court. It is necessary to point out in this behalf that for filing an appeal or for adopting a remedy provided by the Act, the limitation generally prescribed is about three months (little more or less does not matter). But according to the present practice, writs and suits are being filed after lapse of a long number of years and the rule of limitation applicable in that behalf is said to be three years from the date of discovery of mistake of law : The incongruity of the situation needs no emphasis. And all this because another manufacturer or assessee has obtained a decision favourable to him. What has 27 Service Tax Appeal No.70023 of 2020 indeed been happening all these years is that just because one or a few of the assessees succeed in having their interpretation or contention accepted by a High Court or the Supreme Court, all the manufacturers/Assessees all over the country are filing refund claims within three years of such decision, irrespective of the fact that they may have paid the duty, say thirty years back, under similar provisions - and their claims are being allowed by courts. All this is said to be flowing from Article 265 which basis, as we have explained hereinbefore, is totally unsustainable for the reason that the Central Excise Act and the Rules made thereunder including Section 11B/Rule 11 too constitute ―law‖ within the meaning of Article 265 and that in the face of the said provisions - which are exclusive in their nature - no claim for refund is maintainable except under and in accordance therewith. The second basic concept of law which is violated by permitting the above situation is the sanctity of the provisions of the Central Excises and Salt Act itself. The Act provides for levy, assessment, recovery, refund, appeals and all incidental/ancillary matters. Rule 11 and Section 11B, in particular, provide for refund of taxes which have been collected contrary to law, i.e., on account of a mis-interpretation or mis- construction of a provision of law, rule, notification or regulation. The Act provides for both the situations represented by Sections 11A and 11B. As held by a seven - Judge Bench in Kamala Mills, following the principles enunciated in Firm & Illuri Subbaiya Chetty, the words ―any assessment made under this Act‖ are wide enough to cover all assessments made by the appropriate authorities under the Act whether the assessments are correct or not and that the words ―an assessment made‖ cannot mean an assessment properly and correctly made. It was also pointed out in the said decision that the provisions of the Bombay Sales Tax Act clearly indicate that all questions pertaining to the liability of the dealer to pay assessment in respect of their transactions are expressly left to be decided by the appropriate authorities under the Act as matters falling within their jurisdiction. Whether or not a return is correct and whether a transaction is exigible to tax or 28 Service Tax Appeal No.70023 of 2020 not are all matters to be determined by the authorities under the Act. The argument that the finding of the authority that a particular transaction is taxable under the Act is a finding on a collateral fact and, therefore, resort to civil court is open, was expressly rejected and it was affirmed that the whole activity of assessment beginning with the filing of the return and ending with the order of assessment falls within the jurisdiction of the authorities under the Act and no part of it can be said to constitute a collateral activity not specifically or expressly included in the jurisdiction of the authorities under the Act. It was clarified that even if the authority under the Act holds erroneously, while exercising its jurisdiction and powers under the Act that a transaction is taxable, it cannot be said that the decision of the authority is without jurisdiction. We respectfully agree with the above propositions and hold that the said principles apply with equal force in the case of both the Central Excises and Salt Act and the Customs Act. Once this is so, it is un-understandable how an assessment/adjudication made under the Act levying or affirming the duty can be ignored because some years later another view of law is taken by another court in another person's case. Nor is there any provision in the Act for re-opening the concluded proceedings on the aforesaid basis. We must reiterate that the provisions of the Central Excise Act also constitute ―law‖ within the meaning of Article 265 and any collection or retention of tax in accordance or pursuant to the said provisions is collection or retention under ―the authority of law‖ within the meaning of the said article.
In short, no claim for refund is permissible except under and in accordance with Rule 11 and Section 11B. An order or decree of a court does not become ineffective or unenforceable simply because at a later point of time, a different view of law is taken. If this theory is applied universally, it will lead to unimaginable chaos. It is, however, suggested that this result follows only in tax matters because of Article 265. The explanation offered is untenable as demonstrated hereinbefore. As a matter of fact, the 29 Service Tax Appeal No.70023 of 2020 situation today is chaotic because of the principles supposedly emerging from Kanhaiyalal and other decisions following it. Every decision of this Court and of the High Courts on a question of law in favour of the assessee is giving rise to a wave of refund claims all over the country in respect of matters which have become final and are closed long number of years ago. We are not shown that such a thing is happening anywhere else in the world. Article 265 surely could not have been meant to provide for this. We are, therefore, of the clear and considered opinion that the theory of mistake of law and the consequent period of limitation of three years from the date of discovery of such mistake of law cannot be invoked by an assessee taking advantage of the decision in another assessee's case. All claims for refund ought to be, and ought to have been, filed only under and in accordance with Rule 11/Section 11B and under no other provision and in no other forum. An assessee must succeed or fail in his own proceedings and the finality of the proceedings in his own case cannot be ignored and refund ordered in his favour just because in another assessee's case, a similar point is decided in favour of the manufacturer/assessee. (See the pertinent observations of Hidayatullah, CJ. in Tilokchand Motichand extracted in Para 37). The decisions of this Court saying to the contrary must be held to have been decided wrongly and are accordingly overruled herewith.‖ 4.13 Explaining the above Hon'ble High Court of madras has in case of M.G.M. International Exports Ltd[2022 (61) G.S.T.L. 565 (Mad)] held as follows:
―11. The Hon'ble Supreme Court in UOI v. Mafatlal India Ltd., 1997 (89) E.L.T. 247, while dealing with refund of tax, classified refunds into two categories. The first one on account of unconstitutional levy and second one on account of illegal levy.
12. Former was on account of the provision under which the collection was made is declared as unconstitutional subsequently and the latter on account tax collected by the authorities under the Act by misconstruction or wrong interpretation of the 30 Service Tax Appeal No.70023 of 2020 provisions of the Act, Rules and Notifications or by an erroneous determination of the relevant facts, i.e., an erroneous finding of fact. In the latter class of cases, the claim for refund it has been held to arise under the provisions of the Act and governed by the situations contemplated by, and provided for by, the Act and the Rules.
13. Explaining the second category of refund, the Court also held that where a duty of tax has been collected under a particular order which has become final, the refund of that duty cannot be claimed unless the order (whether it is an order of assessment, adjudication or any other order under which the duty is paid) is set aside according to law. So long as that order stands, the duty cannot be recovered back nor can any claim for its refund be entertained.
14. It was held that it was ununderstandable how an assessment/adjudication made under the Act levying or affirming the duty can be ignored because some years later another view of law is taken by another Court in another person's case. Nor is there any provision in the Act for re-opening the concluded proceedings on the aforesaid basis. In short, no claim for refund is permissible except under and in accordance with Rule 11 and Section 11B. An order or decree of a Court does not become ineffective or unenforceable simply because at a later point of time, a different view of law is taken. It observed that if this theory is applied universally, it will lead to unimaginable chaos.
15. Therefore, the theory of mistake of law and the consequent period of limitation of three years from the date of discovery of such mistake of law cannot be invoked by an assessee taking advantage of the decision in another assessee's case. All claims for refund ought to be, and ought to have been, filed only under and in accordance with Rule 11/Section 11B and under no other provision and in no other forum. An assessee must succeed or fail in his own proceedings and the finality of the proceedings in his own case cannot be ignored and refund ordered in his favour just because in another assessee's case, a similar point is 31 Service Tax Appeal No.70023 of 2020 decided in favour of the manufacturer/assessee. (See the pertinent observations of Hidayatullah, CJ in Tilokchand Motichand extracted in Para 37). The decisions of the Court saying to the contrary was held to have been decided wrongly and were accordingly overruled herewith. [AIR 1959 SC 135 and 1968 (3) SCR 662 overruled; 1969 (2) SCR 824 followed].
[paras 70, 99]
16. It has also held that the very collection and/or retention of tax without the authority of law entitles the person, from whom it is collected, to claim its refund. It also observed that a corresponding obligation is cast upon the State to refund it can also be said to flow from it. This can be called the right to refund arising under and by virtue of the constitutional provisions, viz., Article 265 of the Constitution of India.
17. At the same time, it held that it does not follow from this that refund follows automatically. Article 265 of Constitution of India cannot be read in isolation. It must be read in the light of the concepts of economic and social justice envisaged in the preamble and the guiding principles of State Policy adumbrated in Articles 38 and 39 of the Constitution, an aspect dealt with at some length at a later stage. The very concept of economic justice means and demands that unless the claimant (for refund) establishes that he has not passed on the burden of the duty/tax to others, he has no just claim for refund. It observed that it would be a parody of economic justice to refund the duty to a claimant who has already collected the said amount from his buyers. The refund should really be made to the persons who have actually borne its burden that would be economic justice. Section 72 of the Contract Act may be attracted to such a case and a claim for refund of tax on this score can be maintained with reference to Section 72. This Section contains a rule of equity and once it is a rule of equity, it necessarily follows that equitable considerations are relevant in applying the said rule. Thus, whether the right to refund of taxes paid under an unconstitutional provision of law is treated as a constitutional 32 Service Tax Appeal No.70023 of 2020 right flowing from Article 265 or as a statutory right/equitable right affirmed by Section 72 of the Contract Act, the result is the same and there is no automatic or unconditional right to refund. [paras 20, 69]
18. Pursuant to the directions given in Mafatlal Industries v. Union of India, 1997 (89) E.L.T. 247 (S.C.), the Hon'ble Supreme Court has laid down the following guidelines in Assistant Collr. of Cus. v. Anam Electrical Manufacturing Co., 1997 (90) E.L.T. 260 (S.C.) :-
(1) Where a refund application was filed by the manufacturer/purchaser beyond the period prescribed by the Central Excise Act/Customs Act in that behalf, such petition must be held to be untenable in law. Even if in any appeal, suit or writ petition, direction has been given that the refund application shall be considered with reference to the period of limitation prescribed in the Central Excise Act/Customs Act - or that the period of limitation shall be taken as three years - such a direction of the Appellant Court/Civil Court/High Court shall be deemed to be unsustainable in law and such direction shall be set aside. The period prescribed by the Central Excise Act/Customs Act for filing a refund application in the case of ―illegal levy‖ cannot be extended by any Authority or Court.
(2) Where, however, a refund application was filed within the period prescribed by the Central Excise Act/Customs Act but has been dismissed wholly or partly on any ground and the said order is questioned by way of a writ petition or a suit or any appeal arising therefrom the manufacturer/purchaser shall be entitled to withdraw the writ petition, suit or an appeal arising therefrom, as the case may be, and file an appeal before the appropriate appellate authority within sixty days from today. It is clarified herewith that even in a case where such writ petition has been allowed and an appeal filed by the Revenue is pending, the writ petitioner shall be entitled to withdraw the writ petition, in which event, the Revenue appeal shall be disposed of permitting the writ petitioner to withdraw the writ petition to 33 Service Tax Appeal No.70023 of 2020 pursue the remedy proposed hereby. If such an appeal is filed, it shall be entertained without raising an objection on the ground of limitation and shall be dealt with in accordance with law. This direction shall apply even in cases where the High Court or Civil Court is approached after exhausting the remedy of appeal to Collector (Appeals). He can file an Appeal to C.E.G.A.T. within sixty days from today, after withdrawing the writ petition or the suit, as the case may be.
(3) Where, however, a writ petition or suit claiming refund was filed directly in the High Court/Civil Court (i.e., without filing a refund application), the petitioner/plaintiff shall be entitled to withdraw such writ petition/suit or any appeal arising therefrom and prefer a refund claim under Section 11B within sixty days from today provided the writ petition or suit was filed within the period prescribed by the Central Excise Act/Customs Act for filing the refund application. It is clarified herewith that even in a case where such writ petition has been allowed and an appeal filed by the Revenue is pending, the writ petitioner shall be entitled to withdraw the writ petition, in which event, the Revenue appeal shall be disposed of permitting the writ petitioner to withdraw the writ petition to pursue the remedy proposed hereby.
(4) The above rules, however, do not apply in the case of a claim for refund of duty levied and recovered under an unconstitutional provision. In such a case, the period of limitation shall be prescribed in Mafatlal Industries. The duty to allege and prove that the duty has not been passed on to another person, of course, remains even in such a case.
(5) Where a person challenges the constitutionality of a provision in the Central Excise Act/Customs Act in a High Court or the Supreme Court but fails in his challenge to constitutionality, he cannot take advantage of the decision in the case of another person striking down the said provision, as explained in the judgment. This rule is evolved in the particular context of refund claims under these two enactments and has to be observed.34
Service Tax Appeal No.70023 of 2020 (6) Where a refund application or an appeal is preferred under and in accordance with the directions (1), (2), (3) and (4) above, the same shall be entertained only if the applicant for refund/appellant files affidavit stating that he has not passed on the burden of the duty, which is claimed by way of refund, to another person. In case the applicant for refund is a company or a society, the affidavit shall be sworn by the Managing Director of the Principal Officer of the Company or the Society, as the case may be. Such an affidavit shall be treated as an averment/assertion which an applicant for refund has to make in terms of the judgment in Mafatlal.
7(a) Where the refund claim is rejected by this Court, the assessee who has already obtained any amount by way of refund shall be liable to pay back the same to the Department and the Department shall be entitled to recover the same in accordance with law (7)(b) If the refund claim is rejected by an authority under the Act and where the assessee has already obtained the refund he shall be liable to pay back the said amount to the Department according to law and the Department shall be entitled to recover back the said amount, subject to orders, if any, by an Appellate Authority.
19. There is no dispute that the amount was collected and paid to the Department by IMC Ltd. contrary to the law as has been clarified by the Central Board of Excise and Customs by its clarification bearing reference Order No. 2/1/2002-S.T., dated 24-4-2002 when it has been clarified that storage and warehousing services for goods including liquids and gases was proposed to be made liable to service tax in Finance Bill, 2002. Therefore, as and when the Circular dated 24-4-2002 containing Section 65(87) was passed as a Finance Act, service tax become payable under ―storage and warehousing‖.
20. Admittedly, collection of service tax by IMC Ltd. during the material period in dispute was contrary to law as was clarified by 35 Service Tax Appeal No.70023 of 2020 the Central Board of Excise and Customs vide its Circular dated 24-4-2002. Thus, the collection of the amount was contrary to Article 265 of Constitution of India and therefore, the amount collected ought to have been refunded back, if a refund claim was filed in time from the date of payment under Section 11B of the Central Excise Act, 1944.
21. Thus, collection of tax by IMC Ltd. was not only contrary to the provisions of the Finance Act, 1994 but also the appropriation of such amount by the service tax department contrary to Article 265 of the Constitution of India. However, payment of tax by IMC Ltd. and appropriation and collection by service tax department at best was on account of misconstruction of the provisions of the Finance Act, 1994 as it stood and therefore, any refund of such tax paid on borne by any person would be governed by the provisions of the Central Excise Act, 1944 as made applicable to refund under Finance Act, 1994 by virtue of Section 83 of the Finance Act, 1994.
22. Therefore, refund of tax if any borne by the petitioner had to be made only within a period of limitation prescribed under Section 11B of the Central Excise Act, 1944 notwithstanding the fact that the petitioner became aware of the wrong payment of tax only after the Central Board of Excise and Customs issued clarification bearing reference Order No. 2/1/2002-S.T., dated 24-4-2002. Thus, the period prescribed under Section 11B of the Central Excise Act, 1944 had expired long before the above were clarification was issued.
23. The Hon'ble Supreme Court in Commissioner v. Allied Photographics India (P.) Ltd., 2004 (166) E.L.T. 3 (S.C.) considered the case of distributor who had borne the incidence of tax and posed the following question :-
―The point which still remains to be decided is whether the respondent herein was entitled to refund without complying with Section 11B of the Act on the ground that it had stepped into the 36 Service Tax Appeal No.70023 of 2020 shoes of NIL (manufacturer) which had paid the duty under protest?‖
24. The Hon'ble Supreme Court in para 15 has answered the issue as follows :-
15. Mr. Ganesh, Learned Senior Counsel appearing on behalf of the respondent vehemently urged that the issue arising in the present matter is squarely covered by the decision of Division Bench of this Court in the case of National Winder v.
Commissioner of Central Excise, Allahabad [2003 (154) E.L.T. 350] in which it has been held that if duty is paid by a manufacturer under protest then limitation of six months will not apply to a claim of refund by a purchaser. For the reasons given hereinabove, we hold that the said judgment is per incuriam. At this stage, it is important to note that the Division Bench judgment [Hon'ble S.N. Variava and B.P. Singh, JJ.] in the case of National Winder (supra) was delivered on 11-3-2003. However, on 13-11-2003, the Division Bench [Hon'ble S.N. Variava and H.K. Sema, JJ.], has referred the matter as stated above to the Larger Bench in the light of conflict which the Division Bench noticed between the earlier judgments of this Court on one hand and Paragraph 104 of the judgment of the Constitution Bench of nine-Judges in the case of Mafatlal Industries Ltd. (supra). Hence, by this judgment, we have clarified the position in law.
25. Though the Learned Counsel for the petitioner has cited few decisions of the Andhra Pradesh High Court, Punjab and Haryana High Court and that of the Karnataka High Court, I am afraid that these decisions have either not considered the decision of the Supreme Court in Mafatlal Industries Ltd. v. Union of India, 1997 (89) E.L.T. 247 in its proper perspective or have ignored the same altogether. The decision of the Hon'ble Supreme Court in Commissioner v. Allied Photographics India (P) Ltd., 2004 (166) E.L.T. 3 (S.C.) sealed the fate of the refund claim and put the last nail in the coffin and has thereby destroyed all the hopes of the petitioner.
37Service Tax Appeal No.70023 of 2020
26. Therefore, I unable to persuade myself to grant any relief to the petitioner even though the petitioner has been wrongly made to pay and suffer tax. Therefore, I dismiss this writ petition with liberty to the petitioner to implead itself in the writ petition if any that may have been filed by IMC Ltd.
27. In case the Court there independently finds that the refund filed by IMC Ltd. was in time, the issue may be considered independently as to whether the petitioner was entitled for refund.‖ 4.14 Hon'ble Kerala High Court has in case of Uniroyal Marine Exports Ltd. [2021 (54) G.S.T.L. 156 (Ker.)] held as follows:
―5. The Learned Standing Counsel, however, relied on the Constitution Bench decision of the Hon'ble Supreme Court reported in Mafatlal Industries Ltd. v. Union of India [(1997) 5 SCC 536 = 1997 (89) E.L.T. 247 (S.C.)] and a decision of this Court reported in Southern Surface Finishers and Another v. Assistant Commissioner of Central Excise [2019 KHC 47 = 2019 (28) G.S.T.L. 202 (Ker.)].
6. This Court in Southern Surface Finishers considered the Constitution Bench decision and found that the mistake if committed by the assessee, whether it be on law or facts; the remedy would be only under the statute. If that be so, the questions of law have to be answered in favour of the Revenue and against the assessee. But, however, we notice that the amounts have been refunded to the assessee as per the order of the original authority. In such circumstances, the Revenue would have to recover the amounts from the assessee, in which event we would be directing recovery of an amount which cannot be treated as tax due under Article 265 of the Constitution of India.‖ 4.15 Hon'ble Bombay High Court has in case of Vijay Kumar Bhatia (HUF) [1997 (91) E.L.T. 574 (Bom.)] held as follows:
―2. The Petitioners submit that the limitation prescribed by the Customs Act will not apply where the duty has been paid under a 38 Service Tax Appeal No.70023 of 2020 mistake of law or the duty has been recovered without the authority of law. This is disputed by learned Counsel for Respondents who contended that the refund applications were barred by time as they were filed beyond 6 months in view of Section 27 of Customs Act, 1962.
3. It is not possible to accept the contention of learned Advocate for Petitioners. The Division Bench of this Court in Writ Petition No. 1656/87 and Ors., decided on 6th/7th March, 1996 reported in 1996 (65) ECR 155 (Bom.) (Pfizer Ltd. & Ors.) considered the question whether refund of excise duty paid because of erroneous interpretation of Tariff item or exemption notification or ignorance of such notification, despite the fact that such applications were filed before the authority beyond the prescribed period of six months as provided under Section 11B of the Central Excises and Salt Act, 1944 can be granted or not.
It was held that it cannot be granted since 20th September, 1991 in view of amending Act 40 of 1991. Section 27 of Customs Act is pari mataria same as Section 11B of the Central Excises and Salt Act, 1944.
4. It was inter alia held by the Division Bench in Pfizer Ltd. & Ors. case that for getting benefit of the exemption Notification it is for the assessee to establish that the goods manufactured by him come within the ambit of the said exemption Notification. Further, it is also held that assessee to establish that the conditions which are stipulated in the exemption Notification are compiled with by him and there is no question of any liberal construction to extend the terms and the scope of the exemption Notification, as the Notification is required to be strictly construed and the assessee has to bring himself within the ambit of a Notification.
5. It was further held that :
―24. The Petitioner's claim would clearly be barred by delay and laches as it was the duty of the assessee to approach and apply to the authority for grant of exemption by showing that the 39 Service Tax Appeal No.70023 of 2020 Petitioners were satisfying all the conditions precedent and have followed the procedure prescribed therein.
25. It is to be borne in mind that issuance of an exemption Notification in respect of a particular item does not render that item non-excisable. It only enables the manufacturer to claim exemption on the conditions specified therein being satisfied. [Re : Ves Kavan Industries, Batala v. Collector of Central Excise, Chandigarh - 1995 Supp. (3) Supreme Court Cases, 605]. So the levy and payment of excise duty in such cases are under the provisions of the law and cannot be said to be without authority of law or illegal.
26. Further, the Assistant Collector has rightly refused to consider the said application for refund as it was filed beyond the period prescribed under Section 11B of the Act. This aspect is also covered by the decision of the Supreme Court in the case of Paros Electronics (P) Ltd. v. Union of India and Another - 1995 Supp. (3) Supreme Court Cases, 578. In that case, while dealing with the applications under Section 27 of the Customs Act, 1962 the Court held that in the proceeding which emanated for levy of duty the order became final and without having that order set aside by a competent court there would be no question of grant of refund, merely on the ground that in some other cases a different view was taken, even if the payment is made under mistake of law. As long as the order which became final stands, the authority cannot grant refund. The court further held that if the application is under Section 27 of the Customs Act, then the authority, being a creation of the statute, must act within the ambit of that provision and if the application is delayed he has no alternative but to reject it as barred by limitation."
6. Further, the question is also concluded by recent decision rendered by Supreme Court in case of Union of India v. Kirloskar Pneumatic Company reported in 1996 (84) E.L.T. 401 (SC), wherein the Court after considering the provisions of Section 27(3) and (4) of the Customs Act, 1962 has held that it is not permissible for the High Court to direct the authorities under the 40 Service Tax Appeal No.70023 of 2020 Act to act contrary to the aforesaid statutory provision. It is held that power conferred by Article 226/227 is designed to effectuate the law, to enforce the Rule of law and to ensure that the several authorities and organs of the state act in accordance with law. It cannot be invoked for directing the authorities to act contrary to law.‖ 4.16 In view of discussions as above I do not see any merits in this appeal filed against the impugned order upholding the rejection of refund claim filed by the appellant 5.1 Appeal is dismissed.
(Dictated and pronounced in open court) Sd/-
(SANJIV SRIVASTAVA) MEMBER (TECHNICAL) akp