Custom, Excise & Service Tax Tribunal
M/S. Sopariwala Exports vs Commissioner Of Service Tax, Mumbai on 29 June, 2016
IN THE CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL WEST ZONAL BENCH AT MUMBAI COURT NO. Appeal No. ST/383/11 (Arising out of Order-in-Appeal No. RBT/160/2011 dt. 8/4/2011 passed by the Commissioner (Appeals)-IV Central Excise, Mumbai- Zone-I ) For approval and signature: Honble Mr. Ramesh Nair, Member (Judicial) Honble Mr. C.J. Mathew, Member (Technical) ============================================================
1. Whether Press Reporters may be allowed to see : No the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982?
2. Whether it should be released under Rule 27 of the : No CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not?
3. Whether Their Lordships wish to see the fair copy : Seen of the Order?
4. Whether Order is to be circulated to the Departmental : Yes authorities?
======================================================= M/s. Sopariwala Exports :
Appellant VS Commissioner of Service Tax, Mumbai :
Respondent Appearance Shri L. Badrinarayan, Advocate with Shri Vinay Jain, C.A. for Appellant Shri S.L. Karoliya, Asstt.Commr., (A.R) for respondent CORAM:
Honble Mr. Ramesh Nair, Member (Judicial)
Honble Mr. C.J. Mathew, Member (Technical)
Date of hearing : 29/06/2016
Date of pronouncement : 20/10/2016
ORDER NO.
Per : Ramesh Nair
The appellant having service tax registration as a recipient of service under the category of Business Auxiliary Service as defined under Section 65 (105) (ZZB) of Chapter V of Finance Act, 1994. The appellant filed refund claim of Rs.75,81,103/- on the ground that Section 66A of the Finance Act, 1994 was introduced w.e.f. 18.04.2006 and therefore service received from outside India prior to 18.04.2006 are not liable for service tax. As such service tax paid on the commission paid to the foreign agents under the category of Business Auxiliary Service for the goods exported prior to 18.04.2006 is collected without authority of law and required to be refunded. The appellant submitted two refund applications on 15.10.2008. One is for Rs.52,25,209/- pertaining to the period 16.02.2005 to 31.03.2006 and another application for Rs.4,53,164/- pertaining to the period 1.4.2006 to 17.04.2006. The appellant had filed a separate refund claim for Rs.19,02,730/- for the period 1.4.2005 to 15.6.2005 (Rs.52,25,209/- + Rs.4,53,164/- + Rs.19,02,730/- = Rs.75,81,103/-). Refund of Rs.18,33,537/- was already granted vide OIO No. SKY/R-10509 dt. 13.05.2009. Therefore remaining amount of refund i.e. for Rs.57,47,566/- is the subject matter of this case. The adjudicating authority rejected the claim of Rs.57,47,466/- precisely on the ground of limitation as the refund claim was filed after the stipulated time period of one year from the relevant date as provided under Section 11B of Central Excise Act, 1944. Being aggrieved by the order of the sanctioning authority the appellant filed appeal before the Commissioner (Appeals), who after discussing in detail on the basis of various judgments and also interpreting Section 11B rejected the appeal filed by the appellant and upheld the order in original No. K/R-53/2010, dated 24.03.2010. Being aggrieved by the impugned order the appellant is before us.
2. Shri L. Badrinarayan, Ld. Counsel along with Shri Vinay Jain, Ld. Chartered Accountant appearing o behalf of the appellant submits that the appellant had paid the service tax on the service provided by the foreign person before 18.04.2006 in advertently as the said service was not taxable during the relevant period. Therefore the amount paid by appellant cannot be treated as service tax but in fact it is a deposit lying with the department. The amount paid and collected by the department is without the authority of law. In such circumstances the limitation of one year period will not apply. The provision of Section 11B is applicable only in respect of excise duty/service tax paid with the authority of law. In the present case since there was no authority of law for collection of service tax on the services received by the appellant prior to 18.04.2006, the provision of Section 11B including the limitation of time period of one year shall not apply. In support of his submission he placed reliance on the following judgments:
(i) Indian National Ship Owners Association Vs. Union of India 2008-TIOL-633-HC-MUM-ST
(ii) Commr. Of C.Ex. (Appeals), Bangalore Vs. KVR Construction 2012 (26) S.T.R. 195 (Kar.)
(iii) Natraj And Venkat Associates Vs. Asstt. Commr. Of S.T.,Chennai-II 2010 (17) STR 3 (Mad.)
(iv) M/s. PSL Ltd. Vs. Commissioner of Central Excise, Rajkot 2014-TIOL-675-CESTAT-AHM
(v) Geojit BNP Paribas Financial Services Lltd. Vs. Commissioner of Central Excise, Customs and Service Tax, Kochi 2015-TIOL-1602-HC-Kerala-ST
(vi) Commissioner of Central Excise and Service Tax, Bhavnagar Vs. Madhvi Procon Pvt. Ltd.
2015-TIOL-87-CESTAT-AHM
(vii) SGR Infratech Ltd. Vs. Commissioner of Central Excise, Nagpur 2014-TIOL-1702-CESTAT-MUM
(viii) Vasudha Agencies Vs. Commissioner of Service Tax, Mumbai-I 2015-TIOL-1470-CESTAT-MUM
(ix) D. Navinchandra & Co. Bombay and Another Etc. Vs. Union of India and others 1987 (29) ELT 492 (SC)
(x) Samtel India Ltd. Vs. Commissioner of Central Excise, Jaipur 2003 (155) ELT 14 (SC)
(xi) Commissioner of Central Excise, Pune Vs. Sandvik Asia Ltd.
2015 (323)ELT 431(Bom).
3. On the other hand, Shri S.L. Karoliya Ld. Asstt. Commissioner (A.R.) appearing on behalf of the Revenue submits that the amount paid by the appellant admittedly as service tax under the head of service tax. Therefore for the purpose of refund if any arise, the provisions of Section 11B shall apply. He submits that for the purpose of refund of any amount of service tax, Section 11B will invariably apply. In the present case, the refund claim was admittedly filed after one year from the relevant date. Therefore it is clearly time barred. He placed reliance on the following judgments:
(i) Union of India Vs. Kirloskar Pneumatic Company 1996 (84) ELT 401 (S.C.)
(ii) Andrew Telecom (I) Pvt. Ltd. Vs. Commissioner of Cus. & C. Ex., Goa 2014 (34) STR 562 (Bom.)
(iii) M/s. Giriraj Construction & M/s. Parijat Construction, Nashik Vs. Commissioner of Central Excise, Customs and Service Tax, 2016-TIOL-1391-CESTAT-MUM
4. We have carefully considered the submissions made by both the sides and perused the records. We find that the refund was sought for an amount of service tax paid by the appellant on the services received by them from the person located in the foreign country. We do agree that the service tax was not payable on such services by the appellant for the period prior to 18.04.2006, i.e. before enactment of Section 66A of the Finance Act, 1944. However the issue involved in the present case that in the case where the appellant filed the refund claim after one year from the relevant date (date of payment of service tax), whether limitation of one year as provided under Section 11B, will apply or otherwise.
The submission of the Ld. Counsel is that the amount paid by the appellant cannot be treated as payment of service tax but it is a deposit. We find that at the time of payment even though the service tax was not payable but the appellant paid the amount as service tax only. Therefore the refund thereof is governed by the provisions of Section 11B of the Central Excise Act, 1944. The Ld. Counsel relied upon various decisions. However some of the judgments were given under the writ jurisdiction by the High Court under Articles 226 and 227. The Honble Supreme Court in the case of Kirloskar Pneumatic Company (supra) held that under the writ jurisdiction High Court cannot direct the customs authority to ignore the time limit prescribed under Section 27 of the Act. Therefore the High Court judgments relied upon by the Ld. Counsel which were passed in the writ jurisdiction cannot be applied in the present case. As regard other judgments relied upon by the Ld. Counsel, these stand distinguished in the light of the judgment of this Tribunal in the case of M/s. Giriraj Construction (supra) wherein almost all the judgments on the issue of limitation has been considered. The relevant portion of the order in Giriraj Construction case is reproduced below:
6. We find that the appellant have admittedly paid the service tax on Commercial or Industrial Construction Service even though such service was not leviable to service tax. However for the purpose of claiming refund of such amount of service tax, which was paid by the appellant under the Central Excise Act, Section 11B is the only provision which deals with refund of any amount refundable to any person. Section 11B is applicable in the case of service tax matter by virtue of Section 83 of the Finance Act 1994. In our view, since the amount claimed for refund by the appellant can be refunded only under Section 11B, the limitation provided in the said Section shall also apply for sanction of refund. There is no other provision for refund of Service Tax/Excise duty except Section 11B of the Act, therefore limitation is applicable. It is the contention of the Ld. counsel that if the service is not a taxable service the payment made is without authority of law, hence Section 11B is not applicable for refund of the such amount. In this regard, we are of the view that in every case of refund the amount became refundable only where it is not payable as per law and accordingly every such amount shall be treated as payment without authority of law. If this view is accepted then Section 11B will stand redundant, as in every refund matter Section 11B shall not apply for the reason that any amount which is refundable is neither the service tax nor excise duty and all such amount shall be deemed to be paid without authority of law. Therefore in my considered view, at the time of payment the assesee pays the amount under a particular head such as service tax, excise duty etc. and when subsequently it is found that this amount is not payable, the same amount stand refundable to the assessee and such refund is treated as refund of service tax / duty only. Therefore, the provision if any applies for refund of such duty is only provided under Section 11B and there is no any other provision. Therefore in our view, any amount which is to be refunded shall be refunded in accordance with Section 11B which include the condition of time limitation. As regard judgments cited by the Ld. A.R. on going through those judgments, we find that the judgments which includes the various Supreme Court judgments wherein the Hon'ble Supreme Court has categorically held that for refund of any amount, Section 11B stipulates the time limitation which has to be followed mandatorily. We are therefore of the view that this issue has been clearly settled by the Hon'ble Supreme Court that even though the refund of duty recovered without authority of law but for the refund claims made before the departmental authorities, limitation provided under the Customs Act/Central Excise Act or the Rules made thereunder is applicable. The authorities functioning under the Act bound by its provision. In the case of Doaba Co-operative Sugar Mills (supra) which was held that-
"6. It appears that where the duty has been levied without the authority of law or without reference to any statutory authority or the specific provisions of the Act and the Rules framed thereunder have no application, the decision will be guided by the general law and the date of limitation would be the starting point when the mistake or the error comes to light. But in making claims for refund before the departmental authority, an assessee is bound within four corners of the Statute and the period of limitation prescribed in the Central Excise Act and the Rules framed thereunder must be adhered to. The authorities functioning under the Act are bound by the provisions of the Act. If the proceedings are taken under the Act by the department, the provisions of limitation prescribed in the Act will prevail. It may, however, be open to the department to initiate proceedings in the Civil Court for recovery of the amount due to the department in case when such a remedy is open on the ground that the money received by the assessee was not in the nature of refund. This was the view taken by the Tribunal in a previous decision in the case of Miles India Ltd. v. The Assistant Collector of Customs but it was assailed before this Court. The appeal was withdrawn. This Court observed that the Customs Authorities, acting under the Act, were justified in disallowing the claim for refund as they were bound by the period of limitation provided therefore in the relevant provisions of the Customs Act, 1962. If really the payment of the duty was under a mistake of law, the party might seek recourse to such alternative remedy as it might be advised. See the observations of this Court in Miles India Ltd. v. The Assistant Collector of Customs [1987(30) E.L.T.641 (S.C.) = 1985 E.C.R. 289]."
In the case of Miles India Ltd. (supra) held that-
"After the matter was heard for some time and it was indicated that the Customs Authorities, acting under the Act, were justified in disallowing the claim for refund as they were bound by the period of limitation provided therefor under Section 27(1) of the Customs Act, 1962, learned counsel for the Appellant sought leave to withdraw the appeal. We accord their leave to withdraw the appeal but make it clear that the order of the Customs, Excise & Gold (Control) Appellate Tribunal suffers from no infirmity. If really the payment of the duty was under a mistake of law, the appellant may seek recourse to such alternative remedy as it may be advised. The appeal is accordingly dismissed as withdrawn."
In the case of Anam Electrical Manufacturing Co. (supra) the Hon'ble Supreme Court with regard to limitation under Section 11B lays down the following guidelines:
"Where refund application was filed by (1) manufacturer/purchaser beyond the statutory time limit of Section 11B/27 ibid."
In the case of Bajaj Foods Ltd. (supra) the Hon'ble Tribunal held as under
"The Appellate Tribunal in its impugned order had held that the limitation period prescribed under the Limitation Act would not apply for the refund of export cess which was paid by the appellant on account of ignorance of the law. Since the refund claim was filed beyond the period prescribed under the Customs Act, the same was rightly held by the Commissioner as not sustainable being barred by limitation period."
The above judgment was upheld by the Hon'ble Gujarat High Court.
Similarly in the case of Andrew Telecom India Pvt. Ltd. of the Hon'ble Bombay High Court, the fact was that the assessee paid the service tax, which was not payable and subsequently refund claim was submitted after one year of the payment. The Hon'ble High Court has held that the refund claim is covered by Explanation (B) (f) of Section 11B (1) of Central Excise Act 1944, as applicable to service tax vide Section 83 of the Finance Act, 1994, refund claim is not sustainable as it was filed beyond 1 year from the date of payment of service tax. In view of the above, Hon'ble Supreme Court judgments and the jurisdictional Bombay High Court judgment, all the judgments relied upon by the Ld. Counsel stand distinguished. We are of the view that since refund of any amount is governed by Section 11B and there being no other provision, this Tribunal being a creature under the Central Excise/Custom Act cannot go beyond the statute and therefore cannot relax the time limitation provided under the statute. As per our above discussion and settled legal position, we are of the considered view that the refund claims being filed after one year is hit by limitation and therefore correctly rejected by the lower authority. The impugned orders are upheld and the appeals filed by the appellants are dismissed.
From the above decision of this Tribunal it can be seen that all the conflicting judgments on the issue of limitation for the purpose of refund have been considered and the conclusion was drawn that any amount of refund shall be governed by the provisions of Section 11B of the Act. Hence the refund claim filed after one year from relevant date, i.e. from the date of payment of service tax in the present case is clearly time barred. We therefore upheld the impugned order and dismiss the appeal.
(Pronounced in court on 20/10/2016) (C.J.Mathew) Member (Technical) (Ramesh Nair) Member (Judicial) SM.
10Appeal No. ST/383/11