Custom, Excise & Service Tax Tribunal
Oil And Natural Gas Corporation Ltd vs Dibrugarh on 16 April, 2025
IN THE CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL,
KOLKATA
REGIONAL BENCH - COURT NO.1
Excise Appeal No.75720 of 2015
[Arising out of Order-in-Appeal No.42/DIB/CE(A)/GHY/15 dated 31.03.2015 passed
by Commissioner (Appeals) of Customs,Central Excise & Service Tax, Guwahati]
M/s Oil and Natural Gas Commission Limited
(Sales Accounts Section, Finance Department, ONGC Colony,Dist.-Sivasagar,Assam-
785640)
Appellant
VERSUS
Commissioner of Customs,Central Excise & Service
Tax,Dibrugarh
(Milan Nagar, Lane „F‟ Central Revenue Building, Dibrugarh-786003)
Respondent
APPERANCE :
S/Shri B.L.Narsimhan, Deepro Sen & Shovit Betal, All Advocates for the
Appellant
Shri S.K.Dikshit, Authorized Representative for the Respondent
CORAM:
HON'BLE MR.ASHOK JINDAL, MEMBER (JUDICIAL)
HON'BLE MR.K.ANPAZHAKAN, MEMBER (TECHNICAL)
FINAL ORDER NO.75892/2025
DATE OF HEARING : 06 MARCH 2025
DATE OF PRONOUNCEMENT : 16 APRIL 2025
Per Ashok Jindal :
The appellant is in appeal against the impugned order.
2. The facts of the case are that the Appellant is engaged in
exploration and production of petroleum crude oil falling under CTH
2709 of the Central Excise Tariff Act, 1985 and is registered with the
department holding registration No.AAACO1598AXM014.
2.1 The crude oil produced by the Appellant is chargeable to NIL rate
of excise duty. Thus, no excise duty was payable by the Appellant.
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Excise Appeal No.75720/2015
However, the Appellant paid Natural Calamity Contingent Duty (NCCD)
in terms of Section 136 read with 7th Schedule of the Finance Act, 2001.
Section 91 read with Section 93 of the Finance Act, 2004 and Section
136 read with 138 of the Finance Act, 2007 provided for levy of
Education Cess (EC) and Secondary & Higher Education Cess (SHEC) on
all excisable goods specified in the 1st Schedule to the Central Excise
Tariff Act, 1985.
2.2 The Appellant was also required to pay Oil Industries
Development (OID) Cess which levied under Section 15(1) of the Oil
Industry (Development) Act, 1974 on the crude oil produced by the
Appellant.
2.3 The Appellant was of the view that OID Cess is a duty of excise
and that EC and SHEC is required to be paid on such Cess, thus, the
Appellant paid EC w.e.f. 09-07-2004 and SHEC w.e.f. 01-03-2007 on
OID Cess. Based on circular bearing M.F.(D.R.) Letter F.No.
345/2/2004-TRU (Pt.) dated 10.08.2004, it was the Appellant‟s
understanding that EC and SHEC should be paid on OID Cess.
2.4 Thereafter, Circular No. 978/2/2014-CX dated 07-01-2014 was
issued by the CBIC clarifying that EC and SHEC can be levied only on
those duties of excise which are both levied and collected by the
department of Revenue. A cess levied under an Act which is not
administered by the Ministry of Finance (Dept. of Revenue) but only
collected by the department of revenue under the provisions of the Act
cannot be treated as a duty which is both levied and collected by the
Department of Revenue.
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Excise Appeal No.75720/2015
2.5 It was clarified that EC and SHEC are not to be calculated on
cesses which are levied under Acts administered by the
Department/Ministries other than Ministry of Finance (Dept. of
Revenue) but are only collected by the department of revenue in terms
of those Acts.
2.6 On the basis of the above clarification, the Appellant filed a
refund claim of Rs.88,55,98,692/- on 05-02-2014 (later amount
corrected to Rs.88,60,46,658/-) with the department seeking refund of
EC and SHEC paid on OID Cess during the period July 2004 to
December 2013.
2.7 SCN dated 16-05-2014 was issued to the Appellant proposing to
reject the entire refund claim, inter alia on the following grounds:
(i) Major portion of the refund claim is time barred as the
refund claim has been filed much beyond the permissible time
limit of 1 year from the date of payment of EC and SHEC per
Section 11B of the Central Excise Act, 1944,
(ii) Claim is hit by the principles of "unjust enrichment" since
the Appellant failed to establish whether burden of EC and SHEC
was passed on or not.
2.8 The Appellant replied to such SCN on 24-09-2014 and on that
date itself, personal hearing in the matter took place before the Ld.
Adjudicating Authority.
2.9 Vide the OIO dated 31-10-2014, the entire claim of the Appellant
of Rs.88,60,46,658/- was rejected on the following grounds :
(a) failure to satisfy the requirement of unjust enrichment and
(b) the refund claim was time barred.
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Excise Appeal No.75720/2015
2.10 Being aggrieved with such order, the Appellant preferred an
appeal before the Ld. Commissioner of Central Excise & Customs
(Appeals), Guwahati. Vide the impugned Order-in-Appeal dated 31-03-
2015, the appellate authority partly allowed the appeal in favour of the
Appellant wherein it was held as follows:
(i) The EC and SHEC was not payable on OID Cess as
per Circular No. 978/2/2014-CX dated 07-01-2014
(ii) On the aspect of unjust enrichment, it was held that
the Appellant had discharged its burden of proof that EC
and SHEC has not been passed on
(iii) It was held that Section 11B will be applicable in the
instant case, therefore, major portion of claim will be
time barred.
2.11 Accordingly, refund was allowed to the Appellant for the period
which was within the period of limitation (January 2013 to December
2013) only and the balance claim was rejected as time barred.
2.12 Being aggrieved by the Order-in-Appeal, the appellant has
preferred the present appeal before us.
3. The ld.Counsel for the appellant submits that the instant dispute
before this Tribunal relates to the period July 2004 to December 2012
for an amount of Rs.72,49,62,142/- and the only question to be decided
is whether the instant claim of refund is hit by limitation period under
Section 11B of the Central Excise Act, 1944 when EC and SHEC has
been paid by the Appellant under mistaken interpretation of law. He
submits that the issue is no longer res-integra and the limitation period
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Excise Appeal No.75720/2015
prescribed under Section 11B of the Central Excise Act, 1944, is not
applicable to the instant facts of this case.
3.1 He submitted that the exact same issue arising in the instant case
i.e., whether the claim of refund of EC and SHEC paid on OID Cess
based on Circular No.978/2/2014-CX dated 07-01-2014 is hit by
limitation period under Section 11B of the Central Excise Act, 1944, has
already been decided by the Hon‟ble Gujarat High Court in Joshi
Technologies vs. Union of India 2016 (339) ELT 21 (Guj). The Hon‟ble
Court after analyzing all the relevant authorities on this point held that
EC and SHEC on OID Cess was paid under mistake of law and limitation
period prescribed under Section 11B will not be applicable. The High
Court also went ahead to hold that period of limitation will begin to run
after the mistake was discovered by the assessee after issuance of
Circular No.978/2/2014-CX dated 07-01-2014.
3.2 The aforesaid ruling was followed by the Hon‟ble High Court in its
own case reported as Oil and Natural Gas Corporation Ltd. vs UOI :
2017 (354) ELT 577 (Guj).
3.3 In light of the above, the issue arising the instant appeal is
squarely covered by the aforesaid ruling and the instant appeal is liable
to be allowed on this basis itself. Section 11B is not applicable where
duty has been paid under mistake of law.
3.4 He also submitted that payment of EC and SHEC on OID Cess will
not constitute payment of duty as the levy itself is inapplicable. It is
submitted that Section 11B of Central Excise Act, 1944 governs refund
of duty of excise only.
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Excise Appeal No.75720/2015
3.5 In the instant case, the payment of EC and SHEC during the
disputed period is only a deposit with the Government. Such amount is
collected without authority of law and will not partake the character of
duty. Therefore, the limitation prescribed under Section 11B of the CEA
is not applicable.
3.6 In this regard, reliance is placed on the Hon‟ble Calcutta High
Court ruling in the case of Commissioner of Service Tax, Kolkata vs.
M/s. Electrosteel Castings Limited, 2025-TIOL-88-HC-KOL-ST.
3.7 It is further submitted that the Hon‟ble High Court in the said
case was considering a claim for refund of an assessee who had
deposited service tax, basis its understanding that services of
construction provided to Kerala Water Authority will fall under Works
Contract Services.
3.8 He further submitted that in Collector of Central Excise,
Chandigarh vs. Kashmir Conductors, 1997 (96) ETL 257 (Tribunal), the
Larger Bench of this Tribunal held that the law declared by the highest
Court in the State, is binding on authorities or Tribunals under its
superintendence. In the instant case, the instant appeal is liable to be
allowed by following the ruling of the Hon‟ble Calcutta High Court by
holding that Section 11B will not be applicable to the facts and
circumstances of the instant case and the entire refund amount claimed
should be sanctioned to the petitioner.
3.9 Further, reliance is placed on the following judgements of the
High Courts across various jurisdictions wherein it has been held that
for refund of tax/duty paid mistakenly, when the levy itself is not
applicable, the time limit under Section 11B of Central Excise Act, 1944
7
Excise Appeal No.75720/2015
will not apply and such amount will not partake the character of
duty/tax :
(i) Commr. of C. Ex. (Appeals), Bangalore vs. KVR
Construction, 2012 (26) STR 195 (Kar), SLP dismissed reported
at 2018 (14) GSTL J70 (SC)
(ii) Way2wealth Brokers Pvt.Ltd vs. Comm. of C.T., Bengaluru,
2022 (61) GSTL 349 (Kar)
(iii) Hind Agro Industries Limited vs. Commissioner of Customs,
2008 (221) ELT 336 (Del),
(iv) Alar Infrastructures Pvt. Ltd vs. Commissioner of. C. Ex.,
Delhi-I, 2015 (40) STR 1066 (Del),
(v) National Institute of Public Finance and Policy vs.
Commissioner of Service Tax, 2019 (20) GSTL 330
(Del), and
(vi) Commissioner of Central Excise and Service Tax v. Oriental
Insurance Company Limited, 2023-TIOL-1252-HC-DEL-
ST,
(vii) Parijat Construction vs. Commissioner of Central Excise,
Nashik, 2018 (359) ELT 113 (Bom)
(viii) 3E Infotech vs. CESTAT, Chennai, 2018 (18) GSTL 410
(Mad),
(ix) G.B. Engineers vs. Union of India 2016 (43) STR 345 (Jhar)
(x) Vasudha Bommireddy vs. Assistant Commissioner of Service
Tax, Hyderabad 2020(35) GSTL52(Telangana),
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Excise Appeal No.75720/2015
(xi) Commissioner of Customs & C.Ex., vs. M/s. Credible
Engineering Construction Projects Ltd, 2024 (4) TMI
1041 - Telangana High Court
3.10 It would thus appear that the courts have consistently held that
where once it is found that the assessee was not liable to be subjected
to tax, it would not be bound by the limitation as prescribed under
Section 11B of the Act. Therefore, in light of the above decisions, the
time limit prescribed under Section 11B of Central Excise Act, 1944 is
not applicable for refund of EC and SHEC paid by the Appellant on OID
Cess and the instant appeal is to be allowed on this ground directing
refund for the period July 2004 to December 2012.
3.11 Without prejudice, the period of limitation will only start after the
issue has been clarified vide the Circular dated 01.07.2014.
3.12 He further submitted that the Hon‟ble Gujarat High Court in M/s
Aculife Health Care Pvt. Ltd vs. Union of India, 2025-VIL-87-GUJ, was
considering a case under GST law, wherein the assessee applied for
refund of GST mistakenly paid earlier on the basis of Circular issued by
the CBIC. The claim was rejected as time barred under Section 54 of
the CGST Act, 2017. The Hon‟ble Court held that the period of limitation
will be applicable from the date of the Circular.
3.13 He submitted that the aforesaid ruling is squarely applicable to
the facts and circumstances of the instant case and thus the claim of
the Appellant is well within the limitation period. Further reliance for
this is also placed on Joshi Technologies vs. Union of India (supra).
3.14 He submitted that the amount in the instant case is required to be
refunded to the Appellant along with interest @12% in view of the
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Excise Appeal No.75720/2015
decision of the Hon‟ble Tribunal in Parle Agro Pvt. Ltd. vs.
Commissioner, Central Goods & Service Tax, Noida, 2022 (380) ELT 219
(Tri.-All).
3.15 Finally, he prayed that the present appeal may be allowed by
setting aside the impugned order.
4. On the other hand, the ld.A.R. for the Revenue relied on the
decision of this Tribunal in the Appellant‟s own case vide Final Order
No.40696/2024 dated 20.06.2024, wherein this Tribunal held that the
claim filed under 11B of the Central Excise Act, 1944, is barred by
limitation.
5. Heard both the parties and considered the submissions.
6. We find that the facts, which are not in dispute, are that the
appellant had paid entire NCCD in terms of Section 136 read with 7 th
Schedule of the Finance Act, 2001 and Section 91 read with Section 93
of the Finance Act, 2004 and Section 136 read with 138 of the Finance
Act, 2007 provided for levy of Education Cess (EC) and Secondary &
Higher Education Cess (SHEC) on all excisable goods specified in the 1 st
Schedule to the Central Excise Tariff Act, 1985. The appellant was also
required to pay Oil Industries Development (OID) Cess, which are levied
under Section 15 (1) of the Oil Industry (Development) Act, 1974 on
the crude oil produced by the appellant. The appellant paid EC w.e.f.
09.07.2004 and SHEC w.e.f. 01.03.2007 on OID Cess. Based on the
Circular dated 10.08.2004 and as per the appellant‟s understanding, the
EC and SHEC should be paid on OID Cess. Thereafter, vide Circular
No.978/2/2014-CX dated 07.01.2014, a clarification was issued by CBIC
clarifying that EC and SHEC can be levied only on those duties of
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Excise Appeal No.75720/2015
Excise which are both levied and collected by the Department of
Revenue. A Cess levied under an Act, which is not administered by the
Ministry of Finance (Dept. of Revenue), but only collected by the
Department of Revenue under the provisions of the Act cannot be
treated as a duty which is both levied and collected by the Department
of Revenue.
7. On the basis of the said clarification, the appellant filed refund
claim of EC and SHEC paid on OID Cess during the period July, 2004 to
December, 2013 on 05.02.2014 and the said refund claim was rejected
as barred by limitation in terms of 11B of the Act.
8. Therefore, the issue arises that in the instant case when EC and
SHEC have been paid by the appellant under mistake of law, the
provision of the time limit prescribed under Section 11B of the Central
Excise Act, 1944, is applicable or not ?
9. In support of this, the appellant relied on the decision of the
Hon‟ble Delhi High Court in the case of National Institute of Public
Finance & Policy (supra), wherein the Hon‟ble High Court has observed
as under :
"7. This court is of the opinion that the CESTAT clearly fell
into error. Krishna Carbon Paper Co. (supra) was a case where
principal duty was payable; excess amount had been paid on a
mistaken notion with respect to the liability for excess production
under a notification which was later discovered to be not correct.
In the present case, levy never applied - a fact conceded by no
less than the authority of CBEC. In these circumstances, the
general principle alluded to in Krishna Carbon Paper Co. (supra)
would apply. Consequently, the appeal has to succeed and is
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Excise Appeal No.75720/2015
therefore allowed. The appellant shall be entitled to refund of
entire amount with proportionate interest."
10. Further, the appellant relied on the decision of this Tribunal in the
case of M/s Credible Engineering Construction Projects Limited wherein
the issue went to the Third Member to decide and the Third Member
Bench of this Tribunal has observed as under :
"34. As noticed above, two learned Members had placed
reliance upon the decision of the Supreme Court in Mafatial
Industries, which decision was subsequently explained by the
Delhi High Court and the Karnataka High Court and the judgment
of the Karnataka High Court was followed by the jurisdictional
Telengana High Court.
35. In any view of the matter, the view expressed by the
Jurisdictional High Court would be binding and in the present case
the Telengana High Court in Vasudha Bommireddy has clearly
held that when refund is claimed of any amount deposited under a
mistake of law, the limitation provided in section 11B of the
Excise Act would not be attracted.
36. The legal position that the view expressed by the
jurisdictional High Court would prevail over the view of other High
Courts has been clearly laid down by a Lager Bench of the
Tribunal consisting of five Hon'ble Members in Collector of Central
Excise Chandigarh vs. Kashmir Conductors and the observations
are:
"10. The question as to how the Tribunal should
proceed in the face of conflicting decisions of High Courts
has been considered in M/s. Atma Steels P. Ltd. and others
v. Collector of Central Excise, Chandigarh reported in 1984
(17) E.L.T. 331 wherein the Larger Bench consisting of five
Members held that, in view of its All India jurisdiction and
peculiar features, the Tribunal cannot be held bound to the
view of any one of the High Courts, but has the judicial
freedom, to consider the conflicting views, reflected by
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Excise Appeal No.75720/2015
different High Courts, and adopt the one considered more
appropriate to the facts of a given case before the Tribunal.
The Tribunal also indicated that this should be so,
irrespective of the fact whether one particular assessee was
within the jurisdiction of a specified High Court or the
original adjudicating authority was located there.
****************
10.2 In a recent decision of the Tribunal in the case of Madura Coats v. CCE, Bangalore reported in 1996 (82) E.L.T. 512, it has been held that the decision of a particular High Court should certainly be followed by all authorities within the territorial jurisdiction of that High Court and that the authorities in another. State are not bound to follow the views taken by a particular High Court in the absence of a decision by the jurisdictional High Court with regard to constitutionality of a provisions. The Tribunal has held that since the adjudication of vires of a provision of a statute or Notification is outside the jurisdiction of the Tribunal and the jurisdictional High Court i.e., the High Court having jurisdiction over the authority and the assessee, has not struck down the provision or Notification as ultra vires, the Tribunal has to follow the same and the assessee is entitled to take the stand that he is entitled to the benefit of the particular provision or Notification since the jurisdictional High Court has not struck it down, even though some other High Court may have done so. In case the conflict of decisions among High Courts does not relate to vires of any provision or Notification, it has been held that the Tribunal has to proceed in accordance with the decision in Atma Steels P. Ltd. in the light of the decision of Supreme Court in the East India Commercial Company case i.e. where the jurisdictional High Court has taken a particular view on interpretation or proposition of law, that view has to be followed in cases within such jurisdiction. If the jurisdictional High Court has not expressed any view in 13 Excise Appeal No.75720/2015 regard to the subject matter and there is conflict of views among other High Courts, then the Tribunal will be free to formulate its own view in the light of Atma Steels P. Ltd. case; however, there is a decision of only one High Court in regard to disputed interpretation or proposition of law, the Tribunal is bound to follow that order since it is not at liberty to disregard the solitary High Court decision."
37. It would be seen from the aforesaid decision of the Larger Bench of the Tribunal that when a jurisdictional High Court has expressed any view in regard to the issue, then that view has to be followed.
38. The inevitable conclusion that follows from the aforesaid discussion is that the limitation contemplated under section 118 of the Excise Act would not be attracted in a case where any amount, even though it is not payable as service tax, is paid under a mistaken notion."
11. The said order of this Tribunal was affirmed by the Hon‟ble Telangana High Court, wherein the Hon‟ble High Court has observed as under :
"9. We have heard the matter at length. It is seen that the single question raised by Mr.Dominic Fernandes, leamed counsel is no more res integra. In the manner proposed question is framed, it is not in dispute that service lax 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 2008 (221) ELT 336 (Del.). 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 erroneously was required to be made under the Excise Act or the Customs Act and under no other enactment. It was clearly 14 Excise Appeal No.75720/2015 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.
10. The Tribunal has also taken note of the judgment of Karnataka High Court in Commr. of C.Ex (Appeals), Bangalore v. KVR Construction 2012 (26) S.T.R. 195 (Kar.). The Karnataka High Court also considered the judgment of Delhi High Court in case of Hind Agro Industries Limited (supra 2) and the judgment of Mafatlal Industries Ltd. (supra 1) and in no certain terms made it clear that where the tax admittedly paid as a mistake of law, the limitation will not come in the way for refund.
11. It is pointed out by both sides that the judgment of Karnataka High Court in case of KVR Construction's (supra 3) was unsuccessfully challenged before the Hon'ble Supreme Court and SLP was dismissed on 11.07.2011 which is taken note of by the Tribunal.
12. The judgment of this Court in Vasudha Bommireddy v. Assistant Commissioner of S.T., Hyderabad 2020 (35) G.S.T.L. 52 (Telangana) was relied upon by other side by contending that the judgment of Kamataka High Court in KVR Construction (supra 3) was considered and this Court also held that when a tax is paid as a mistake of law, the embargo of limitation will not come in the way of claim of refund.
13. We have gone through the aforesaid judgments of the Delhi, Karnataka and the judgment of this Court in case of Vasudha Bommireddy (supra 4). The common string in all the above judgments is that if the contractor was not liable to pay tax, the department cannot retain the amount paid and in that view of the matter, bar of limitation under Section 11B of the Act, 1944 cannot be pressed into service."15 Excise Appeal No.75720/2015
12. The said issue was also examined by this Tribunal in the case of M/s Electrosteel Castings Limited (supra), wherein this Tribunal has observed as under :
"Issue No. (b) Whether the refund claims filed by the appellant of service tax paid, which was not payable by the appellant is hit by the provisions of Section 11B of the Central Excise Act, 1944, or not?
8. Now the issue arises that as the appellant has paid the service tax under mistake of law whether they are under the provisions of Section 11B of the Act, applicable or not ?
9. The ld.A.R. for the Revenue relied on the decision of the Madhya Pradesh High Court in the case of MDP Infra (India) Private Limited (supra), wherein the facts of the case are as under :
"4. The appellant holds service tax registration and paying service tax under the category of "Works Contract Services".
During the period 1-3-2015 to 30-9-2015 the appellant had paid Rs. 25,49,317/- towards Service Tax and interest of Rs. 57,716/- on the following work contracts :-
"(i) Construction of EWS houses for Special Area Development Authority (A Government Authority) vide work order No. 02/SADA/2014-15, Agreement No. 04, dated 22-12-2014.
(ii) Construction of LIG houses (Affordable Housing) for Indore Development Authority vide Four/Accounts/12-13/70006, dated 19-11-2012, Agreement No. 82/2012-13/IDA.
(iii) Construction of Model School Building at Morena for PWD, PIU Division-4 Gwalior (Department of Government of Madhya Pradesh) work order No. : 2/2012-13, dated 15-6-2012, E-tender No. 14204 and office No. 1589.16 Excise Appeal No.75720/2015
(iv) Construction of Model School Building at Sabalgarh for PWD, PIU Division-4 Gwalior (Department of Government of Madhya Pradesh) work order No. 2/2012-13, dated 15-6-2012, E-tender No. 14209 and office No. 1599, dated 2-11-2012.
(v) Construction of Model School Building at Pahadgarh for PWD, PIU Division-4, Gwalior (Department of Government of Madhya Pradesh) work order No. : 2/2012-13, dated 15-6-2012, E-tender No. 14209 and office No. 1601, dated 2-11-2012.
(vi) Construction of Boundary wall at National Law Institute University, a university established by State Legislature of Madhya Pradesh, Bhopal vide ref. no. by act No. 41 of 197, Letter Ref. No. 83/NLIUB, dated 23-1-2015."
5. That prior to 1-4-2015, the appellant was availing exemption for civil works related to State and Union Government establishments used for administrative purpose. The exemption was availed under Notification No. 12/2012 and 25/2012, dated 20-6-2016. As the notification dated 20-6-2012 was withdrawn w.e.f. 1-4-2015, the exemption from service tax on the nature of work the appellant engaged in was not available; therefore, he paid service tax with interest for the period 1-3-2015 to 30-9- 2015.
6. The exemption was later on restored vide Notification No. 9/2016-S.T., dated 1-3-2016 vide Entry Sr. No. 12A(a) for the services provided under a contract which has been entered into prior to 1-3-2015 and whereon appropriate stamp duty, where applicable, has been paid prior to that date. The exemption was restored till 31-3-2020. However, as the effect of exemption vide executive order was prospective; the legislature, vide Finance Bill, 2016 restored the exemption from retrospective effect by incorporating Section 102 as under :-
17 Excise Appeal No.75720/2015"102. Special provision for exemption in certain cases relating to construction of Government buildings. -
(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; © 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 material times.
(3) Notwithstanding anything contained in this Chapter, an application for the claim of refund of service tax shall be made 18 Excise Appeal No.75720/2015 within a period of six months from the date on which the Finance Bill, 2016 receives the assent of the President."
10. In these set of facts, the Hon‟ble High Court has held as under :
"16. As regard to substantial question of law at „B‟, the said question in given facts of present also does not arise for consideration. The appellant was under legal obligation to deposit the service tax in respect of the service rendered qua non- exempted service. The contentions that it was beyond the control of the appellant to deposit the service tax on exempted service is misconceived. Evidently, the Notification No. 12/2012 & 25/2012 ceased to exist w.e.f. 1-4-2015. The exemption was revived by notification dated 1-3-2016. But since it was prospective in effect, the appellant was not entitled for any exemption, which the appellant was aware of and with open mind and eyes deposited the service tax due with interest. It was only by virtue of subsequent legislation the notification was made effective from retrospective date with the stipulations that refund can be claimed within specific time provided. There was thus no ambiguity nor any dispute as would have prevented the appellant from seeking refund within the period of limitation. On these given facts the substantial question at „B‟ also does not arise for consideration."
11. We observe that the Hon‟ble High Court in the case of MDP Infra (India) Private Limited (supra) has examined the issue although the appellant was not liable to pay service tax, which was paid under mistake of law in terms of the Finance Bill, 2016. The appellant is required to file refund claim within a period of six months from the date on which the Finance Bill, 2016 receives the assent of the President. Admittedly, in the said case, the refund claim was filed beyond the time limit maintained under the Finance Bill, 2016, which is not the case in hand. Therefore, the decision of the case MDP Infra (India) Private Limited (supra) is not applicable to the facts and 19 Excise Appeal No.75720/2015 circumstances of this case. However, we find that the issue involved in the present case is where the service tax was paid under mistake of law whether the provisions of Section 11B of the Act are applicable or not ? We find that the said issue has been examined by the Hon‟ble High Court of Telangana in the case of Credible Engineering Construction Projects Limited (supra), wherein the Hon‟ble High Court has observed as under :
"12. The judgement of this Court in Vasudha Bommireddy V. Assistant Commissioner of S.T.. Hyderabad 2020 (35) G.S.T.L. 52 ( Telangana) was relied upon by other side by contending that the judgment of Karnataka High Court in KVR Construction (supra 3) was considered and this Court also held that when a tax is paid as a mistake of law, the embargo of limitation will not come in the way of claim of refund."
12. Following the decision of the Hon‟ble Telangana High Court in the case of Credible Engineering (supra), we hold that the refund claims filed by the appellant, are not hit by the provisions of Section 11B of the Central Excise Act, 1944 as the service tax has been paid by the appellant under mistake of law. Therefore, the Issue No.(b) is also answered in favour of the appellant."
13. The said decision of this Tribunal has been affirmed by the Hon‟ble Calcutta High Court as reported in 2025-TIOL-88-HC-KOL-ST, wherein the Hon‟ble Calcutta High Court in Civil Appeal Nos.CEXA/56/2024 (IA NO.GA/1/2024) & CEXA/57/2024 (IA NO.GA/1/2024), has observed as under :
"17. Thus, we are in full agreement with the view taken by the learned Tribunal holding that the service, which was rendered by the assessee to the Kerala Water Authority, will not be a taxable service under Works Contract Services. Having held so, 20 Excise Appeal No.75720/2015 the question would be as to whether the other issues regarding the applicability of provisions of Section 11B of the Central Excise Act, 1944, is a case of unjust enrichment, has to be considered.
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19. The legal position is loud and clear that once tax is not payable in law, there was no authority for the department to retain such an amount. The decision in KVR Construction was challenged before the Hon‟ble Supreme Court by the revenue and the revenue‟s appeal was dismissed (Commissioner of C.Ex (Appeals) Vs. KVR Construction, reported in 2018 (14) GSTL J70 (SC) = 2010-TIOL-980-HC-KAR-ST. In the decision in M.C.I.Leasing (P) Ltd., the Hon‟ble Division Bench has referred to the decision in KVR Construction to point out the correct legal position.
20. In the light of the above decision, the question of Section 11B of the Central Excise Act, 1944, would not stand attracted to the facts and circumstances of the case."
14. We also take note of the fact that this Tribunal in the appellant‟s own case at Chennai Bench has taken a contrary view to say that the decision of the Hon‟ble High Court in Joshi Technologies‟ case in exercise of jurisdiction under Article 226 cannot be applied by the departmental authorities and Tribunal in the case of refund of "illegal levy" in view of the principle of law laid down by the Larger Bench of this Tribunal in the case of Veer Overseas Limited.
15. We are not in agreement with the observations made by the Chennai Bench of this Tribunal in the appellants‟ own case vide Order dated 20.06.2024 as the decision of the Hon‟ble High Court shall prevail over the decision of the Larger Bench of this Tribunal. Moreover, the jurisdictional Calcutta High Court has examined the issue in detail in the 21 Excise Appeal No.75720/2015 case of M/s Electrosteel Castings Limited (supra) and held that in case the duty is paid by mistake of law, the time limit prescribed under Section 11B of the Central Excise Act, 1944, is not applicable.
15. Moreover, when the matter was referred to the Third Member Bench of this Tribunal in the case of M/s Credible Engineering Construction Projects Limited (supra), the Hon‟ble Third Member Bench, held that the view expressed by the jurisdictional High Court would be binding on this Tribunal and the Hon‟ble High Court has clearly held that when the refund claim of any amount deposited under mistake of law, the limitation provided in Section 11B of the Central Excise Act, 1944, would not be attracted.
16. We further take note of the fact that the limitation period to claim refund shall start from the date of noticing of the mistake based on Circular No.978/2/2014-CX dated 07.01.2014 as held by the Hon‟ble Gujarat High Court in the case of M/s Aculife Health Care Private Limited and Another Vs. Union of India reported in 2025-VIL-87-GUJ, wherein the Hon‟ble Gujarat High Court has observed as under :
""4.2 During July, 2017 to July, 2022, the Petitioner-Company has deposited a total sum of Rs.45,14,300/- as tax on notice pay recovery, in lieu of various employees who left the employment. This amount of tax has been deposited by the Petitioner from its own pockets and the GST on the amount of notice pay recovery was deposited by the Petitioner as and when such recovery was made. The amount deposited as GST, or any part thereof, has not been recovered by the Petitioner-Company from any of the employees leaving the employment.
4.3 The Union Government issued a Circular No.178/10/2022- GST dated 03.08.2022, and clarified that such amount and such recovery was not chargeable to GST. At para 7.5 of this circular, 22 Excise Appeal No.75720/2015 the Government clarified that forfeiture of salary or payment of the bond amount in the event of an employee leaving employment before the minimum agreed period was not taxable. Hence, the amount of Rs.45,14,300/- deposited by the Petitioner-Company as GST were therefore, not "tax".
4.4 Since the Government clarified that the transactions/activities in question were not at all taxable and the Petitioner-Company had borne the entire burden of Rs.45,14,300/- deposited as tax on recoveries made fromoutgoing employees, the Petitioners, on 05.11.2022 filed a refund claim for Rs.13,91,114/- deposited as GST for the period of July 2017 to August 2018 and, on 07.11.2022, filed another refund claim of Rs.31,23,186/- deposited as GST during the period of September 2018 to July 2022.
4.5 On these refund claims, notices proposing to reject the claims were issued by the Respondent No.3 i.e., the Jurisdictional Deputy Commissioner, where two orders were passed by the Respondent No.3 pertaining to the above referred two refund claims, after show cause notices and conducting adjudication. The respondent No.3, accordingly, rejected the first claim of Rs.13,91,114/- entirely as time-barred, but allowed the second claim to the extent of Rs.29,24,012/- and rejected the remaining claim of Rs.1,99,174/- as time-
barred.......................................... 9.1 From the aforesaid Circular, it is clear that the Government of India has clarified that the forfeiture of salary or payment of bond amount in the event of an employee leaving the employment before the minimum agreed period, was not taxable, inasmuch as, there was no supply of service by the employer in this situation and therefore, the recovery of notice pay by the employer was not taxable under the CGST Act. Since the aforesaid Circular came out on 03.08.2022, it has to be said that the petitioners could not have had the opportunity of filing of the refund claims in respect of the GST deposited by the Petitioner-Company, till such date. Therefore, the period of two 23 Excise Appeal No.75720/2015 years, for filing a claim, within the meaning of Section 54 of the CGST Act has to be computed from the date of the Circular i.e. from 03.08.2022. In that view of the matter, the refund claims dated 05.11.2022 and 07.11.2022, for whatever period of tax deposited, cannot be said to be time barred. In other words, the calculation of period of two years will not be from September, 2018 as wrongly held by the authorities below, but from 03.08.2022, i.e the date from which the petitioners were informed by the Government through the aforesaid Circular, that the petitioners need not pay tax on the transaction in question, which was clarified not to be a "Service" under the CGST Act....................................................
10. To sum up, just as citizens have to diligently pay tax which are legally due to the State, equally, as a corollary of the aforesaid statement, the State is not entitled to unjustly enrich itself with amounts collected from citizens which are not sanctioned as "Tax" within the meaning of Article 265 of the Constitution of India."
17. We further take note of the fact that the appellant‟s own case as reported in 2017 (354) ELT 577 (Guj.), again on the same issue , the Hon‟ble Gujarat High Court examined the issue and observed as under :
"8.For the purpose of appreciating the controversy in issue, it may be apposite to refer to the decision of this Court in the case of Joshi Technologies International, INC-India Projects v. Union of India (supra), wherein this Court has held thus :
"Merely because the provisions of the Central Excise Act, 1944 and the rules framed thereunder for collection and refund viz., the machinery provisions have been incorporated in the OID Act for collection and refund of the cess levied thereunder, it cannot be inferred that the Oil Cess imposed under the provisions of the OID Act assumes the character of central excise duty. The finding recorded by the adjudicating authority that the Oil Cess is in the 24 Excise Appeal No.75720/2015 nature of excise duty, is erroneous and contrary to the law laid down by this court in Commissioner v. Sahakari Khand Udyog Mandli Ltd. (supra).
In the Circular dated 7th January, 2014, reference to sugar cess and tea cess levied under the Sugar Cess Act, 1982, and the Tea Act, 1953, respectively, is merely illustrative in nature and what is meant by the circular is that the cesses which are collected by the Department of Revenue, but levied under an Act which is administered by different Department are not chargeable to Education Cess and Secondary and Higher Secondary Cess chargeable under the provisions of the Finance Acts, 2004 and 2007, respectively.
Education Cess and Secondary and Higher Secondary Education Cess being cesses levied at a percentage of the aggregate of all duties of excise, the basic requirement for levy thereof is the existence of excise duty. In the present case Oil Cess is not a duty of excise and hence, the basic requirement for levy of such cesses is not satisfied. Furthermore, for the purpose of levy of Education Cess and Secondary and Higher Secondary Education Cess, two other conditions precedent, are required to be satisfied, viz., (i) that the duty of excise should be levied by the Central Government in the Ministry of Finance (Department of Revenue); and (ii) the duty of excise should be collected by the Central Government in the Ministry of Finance (Department of Revenue). In the present case, since the machinery provisions of the Central Excise Act, 1944 and the rules framed thereunder have been incorporated in the OID Act, the second condition precedent is satisfied, viz. that the cess is collected by the Central Government in the Ministry of Finance (Department of Revenue); however, the first condition with regard to levy of such duty of excise by the Central Government in the Ministry of Finance (Department of Revenue) is not satisfied inasmuch as the Oil Cess under the OID Act is levied by the Ministry of Petroleum and 25 Excise Appeal No.75720/2015 Natural Gas. In the aforesaid premises, the requirements of Section 93 of the Finance Act, 2004 and Section 138 of the Finance Act, 2007 are not satisfied in the present case, and consequently, the said provisions have no applicability to the facts of the present case. The petitioner, therefore, cannot be said to have been liable to pay Education Cess and Secondary and Higher Secondary Education Cess under the above provisions.
In the facts of the present case, the refund is claimed on the ground that the amount was paid under a mistake of law and such claim being outside the purview of the enactment, can be made either by way of a suit or by way of a writ petition. The petitioner was, therefore, justified in filing the present petition before this Court against the order passed by the adjudicating authority rejecting its claim for refund of the amount paid under a mistake.
Since Oil Cess is not a duty of excise, the amount paid by the petitioner by way of Education Cess and Secondary and Higher Secondary Education Cess, cannot in any manner be said to be a duty of excise inasmuch as what was paid by the petitioner was not a duty of excise calculated on the aggregate of all the duties of excise as envisaged under the provisions of Section 93 of the Finance Act, 2004 and Section 138 of the Finance Act, 2007. Thus, the amount paid by the petitioner would not take the character of Education Cess and Secondary and Higher Secondary Education Cess but is simply an amount paid under a mistake of law. The provisions of Section 11B of the Central Excise Act, 1944 would, therefore, not be applicable to an application seeking refund thereof. The petitioner was therefore, wholly justified in making the application for refund under a mistake of law and not under Section 11B of the Central Excise Act, 1944.
Since the provisions of Section 11B of the Act are not applicable to the claim of refund made by the petitioner, the 26 Excise Appeal No.75720/2015 limitation prescribed under the said provision would also not be applicable and the general provisions under the Limitation Act, 1963 would be applicable. Section 17 of the Limitation Act inter alia provides that when a suit or application is for relief from the consequences of a mistake, the period of limitation would not begin to run until the plaintiff or applicant has discovered the mistake, or could, with reasonable diligence, have discovered it. Since the period of limitation begins to run only from the time when the applicant comes to know of the mistake, the application made by the petitioner was well within the prescribed period of limitation. Moreover, since the very retention of the Education Cess and Secondary and Higher Secondary Education Cess by the respondents is without authority of law, in the light of the decision of this Court in Swastik Sanitarywares Ltd. v. Union of India (supra) [2013 (296) E.L.T. 321 (Guj.)], the question of applying the limitation prescribed under Section 11B of the C.E. Act would not arise.
Even in case where any amount is paid by way of self- assessment, in the event any amount 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. The authority concerned is also 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 the Education Cess and Secondary and Higher Secondary Education Cess collected from the petitioner is not backed by any authority of law, in view of the provisions of Article 265 of the Constitution, the respondents have no authority to retain the same.
If the adjudicating authority was not satisfied with the Chartered Accountants certificate and the other material produced by the petitioner, he could have called upon the petitioner to 27 Excise Appeal No.75720/2015 produce further documentary evidence in support of its claim that it had not passed on the incidence of duty to the purchaser. However, without affording a reasonable opportunity to the petitioner to produce documentary evidence in support of its claim that there was no unjust enrichment, the adjudicating authority was not justified in holding that there was unjust enrichment. Therefore, the finding that the petitioners‟, claim is hit by unjust enrichment cannot be legally sustained."
9.From the facts as emerging from the record, it is evident that the above decision would be squarely applicable to the facts of the present case. It is, however, an admitted position that the above referred decision of this Court which was rendered on 16-6-2016 is subsequent to the passing of the Order-in-Original dated 28-4- 2015, and therefore, was not available at the time when the Order-in-Original came to be passed. It appears that the order-in- appeal having been made on 29-6-2016, soon after the judgment and order dated 16-6-2016 came to be passed, the same may not have been produced before the Commissioner (Appeals). Consequently, the authorities below did not have the benefit of the said decision. It would, therefore, be in the interest of justice if the matter is restored to the file of the appellate authority to consider the appeal afresh in the light of the observations made in the above referred decision."
18. In view of this observations and following the judicial principles laid down by the Hon‟ble Calcutta High Court, we hold that in the case in hand, the EC & SHEC was paid by the appellant under the mistake of law, therefore, the time limit in terms of Section 11B of the Central Excise Act, 1944 is not applicable to the facts and circumstances of the case. Therefore, the refund claim filed by the appellant, cannot be dismissed as time barred.
28 Excise Appeal No.75720/201519. In these terms, we set aside the impugned order and allow the appeal with consequential relief, if any.
(Pronounced in the open court on 16.04.2025) (Ashok Jindal) Member (Judicial) (K.Anpazhakan) Member (Technical) mm