Custom, Excise & Service Tax Tribunal
B E C Fertilizers vs Commissioner Of Central Excise-Nagpur on 2 February, 2023
CUSTOMS, EXCISE & SERVICE TAX APPELLATE
TRIBUNAL, MUMBAI
REGIONAL BENCH
Service Tax Appeal No. 86554 of 2018
(Arising out of Order-in-Appeal No. NGP-EXCUS-000-APPL-405-17-18 dated
17.10.2017 passed by the Commissioner of GST & Central Excise (Appeals),
Nagpur)
M/s. BEC Fertilizers Appellant
Pulgaon Unit, Village - Gunkheda,
Tah. Deori, Dist. Wardha,
Maharashtra - 442 302.
Vs.
Commissioner of GST & CE, Nagpur Respondent
Central Tax GST & Service Tax Bhavan,
Telangkhedi Road, Civil Lines, Nagpur 440 001.
WITH
Service Tax Appeal No. 88153 of 2018
(Arising out of Order-in-Appeal No. NGP-EXCUS-000-APPL-461-62/17-18
dated 08.11.2017 passed by the Commissioner of GST & Central Excise
(Appeals), Nagpur)
M/s. BEC Fertilizers Appellant
Pulgaon Unit, Village - Gunkheda,
Tah. Deori, Dist. Wardha,
Maharashtra - 442 302.
Vs.
Commissioner of GST & CE, Nagpur Respondent
Central Tax GST & Service Tax Bhavan,
Telangkhedi Road, Civil Lines, Nagpur 440 001.
AND
Service Tax Appeal No. 87126 of 2021
(Arising out of Order-in-Appeal No. NGP-EXCUS-000-APPL-461-62/17-18
dated 08.11.2017 passed by the Commissioner of GST & Central Excise
(Appeals), Nagpur)
M/s. BEC Fertilizers Appellant
Pulgaon Unit, Village - Gunkheda,
Tah. Deori, Dist. Wardha,
Maharashtra - 442 302.
Vs.
Commissioner of GST & CE, Nagpur Respondent
Central Tax GST & Service Tax Bhavan,
Telangkhedi Road, Civil Lines, Nagpur 440 001.
Appearance:
None for the Appellant (Written request for adjournment)
Shri Badhe Piyush Barasu, Deputy Commissioner, Authorised
Representative for the Respondent
2 ST/86554,88153/2018,87126/2021
CORAM:
HON'BLE MR. SANJIV SRIVASTAVA, MEMBER (TECHNICAL)
Date of Hearing: 02.02.2023
Date of Decision: 02.02.2023
FINAL ORDER NO. A/85573-85575/2023
Appeal No ST/86554/2018 is directed against order in
appeal No NGP/EXCUS/000/APPL/405/2017-18 dated
17.10.2017. By the impugned order Commissioner (Appeals) has
held as follows:
"Therefore, without going into the merits of the case, I hold the
refund claim pertaining to this appeal as time-barred and
accordingly uphold the impugned Order-in-Original No.
10/ST/Ref./Dn. Wardha/2015-16 dated 28.12.2015 passed by
the Assistant Commissioner, Central Excise, Customs & Service
Tax, Division- Wardha."
1.2 Appeal Nos ST/88153/2018 & ST/87126/2021 are directed
against order in appeal No NGP/EXCUS/000/ APPL/461-
462/2017-18 dated 08.11.2017. By the impugned order
Commissioner (Appeal) has held as follows:
"The order in Original No 09/ST/Ref/Dn Wardha/2015-16 dated
28.12.2015 and order in Original No 08/ST/Ref/Dn
Wardha/2015-16 dated 28.12.2015 passed by the assistant
commissioner, Central Excise, Customs & Service tax, Division
Wardha are upheld."
2.1 Appellant is having service tax registration No-
AACB9272AST002 under the category of Business Auxiliary
service, Works Contract services, Goods Transport Agency
Services, Manpower supply agency services, and other taxable
services other than the 119. They are also registered under
Central Excise and engaged in the business of manufacture of
Chemical Fertilizers. The appellant had received services from
GTA for transportation of raw materials from different sellers to
their Pulgaon factory and also for transportation after
manufacturing of Chemical Fertilizers which is sent to different
locations and the appellant had paid the Service Tax on the
services of GTA under RCM.
3 ST/86554,88153/2018,87126/2021
2.2 The appellant filed two refund claim applications regarding
freight inward and freight outward for the period pertaining to
April 14 to March 2015 ( for Rs. 19,08,453/-) and period April
2015 to July 2015 (for Rs. 8,06,550/-). The appellant has filed
these refund claims on the ground. that they had paid service
tax on transportation of Chemical Fertilizer from the different
buyers and transported the same by Road to their Pulgaon
Factory and the same type of transporting is Exempt Under
Notification No- 25/2012, Service tax dated 20/06/2012 as
amended by Notification No 03/2013-ST dated 01/03/2013.
2.3 The adjudicating authority adjudged the three refund
claims filed by the appellant holding as follows:
(i) The refund claim is barred by limitation.
(ii) Out of the Refund claim for Rs. 19,08,453/- pertaining to
the period April 2014 to March 2015, sanctioned the Refund
amount of Rs. 6,72,208/- pertaining to period 21-8-2014 to 31-
3-2015 and credited the same to the consumer welfare fund and
the balance amount pertaining to period 1-4-2014 to 20- 08-
2014 was rejected being time-barred.
(iii) Out of the Refund claim of Rs. 8,06,550/- pertaining to the
period April 2015 to July 2015, sanctioned the refund amount of
Rs. 4,82,939/- pertaining to outward freight and credited the
same to the consumer welfare fund. The remaining balance
amount of Rs. 3,23,611/- pertaining to Inward freight was not
sanctioned.
2.4 The Appellant being aggrieved with the orders filed appeals
before Commissioner (Appeals) which have been dismissed as
per the impugned orders.
2.5 Aggrieved appellants filed these appeals.
3.1 Vide Interim No 109/2021 dated 14.10.2021, on the
Application for condonation of delay in Appeal No
ST/87126/2021, direction was given for analogous hearing of the
three appeals. Thereafter the three appeals have been listed
simultaneously for hearing on 09.03.2022, 04.05.2022,
03.08.2022, 09.11.2022 and on 02.02.2023. The appeals have
been adjourned on the request of the appellant/ counsel on
09.03.2022, 04.05.2022 and 09.11.2022. Request has been
4 ST/86554,88153/2018,87126/2021
made for adjournment by the appellant counsel again on
02.02.2023, which cannot be allowed in view of the proviso to
Section 35 C (1A) of Central Excise Act, 1944 reproduced below:
"(1A)The Appellate Tribunal may, if sufficient cause is shown, at
any stage of hearing of an appeal, grant time, from time to time,
to the parties or any of them and adjourn the hearing of the
appeal for reasons to be recorded in writing :
Provided that no such adjournment shall be granted more
than three times to a party during hearing of the appeal."
3.2 For the above reason these appeals could have been
dismissed under Rule 20 of the CESTAT Procedure Rules 1982
reproduced below, for non prosecution or could have been
decided ex-parte after hearing the authorized representative.
"RULE 20. Action on appeal for appellant's default. --
Where on the day fixed for the hearing of the appeal or on any
other day to which such hearing may be adjourned, the
appellant does not appear when the appeal is called on for
hearing, the Tribunal may, in its discretion, either dismiss the
appeal for default or hear and decide it on merits."
3.2 Heard the authorized representative Shri Badhe Piyush
Barasu, Deputy Commissioner. He reiterated the findings
recorded in the impugned order.
4.1 I have considered the impugned orders along with the
submissions made in appeal and during the course of arguments.
4.2 Appeal No ST/86554/2018 is against the impugned order,
wherein the refund claim filed by the appellant has been held to
be time barred. For arriving at the said finding impugned order
records as follows:
24. The issue to be decided is whether the appellant is eligible
for refund under Notification No. 25/2012-ST dated 20-6-2012
as amended.
25. It is seen that during the relevant period, the appellant had
paid Service Tax on transportation of Chemical Fertilizers from
different buyers and transported the same by road to their
Pulgaon factory and after manufacturing of Chemical Fertilizers,
they sent to different location of different state for use for
Agricultural purpose.
5 ST/86554,88153/2018,87126/2021
26. However before through the merits of the case, I would like
to mention here that it is an accepted fact in the instant case
that the Refund claim was filed beyond one year from the date of
payment. The levy, assessment and collection of Service Tax and
to the extent permissible by law is with the aid of the Central
Excise Act, 1944 and by certain provisions of the Finance Act,
the Central Excise Act, 1944 has been made applicable in
relation to the refund of amount of Service Tax paid by the
assessee.
27. As per Section 83 of Finance Act, 1944 the provisions of
Section 11B of the Central Excise Act, 1944, is made applicable
to service tax as they apply in relation to a duty of excise. Hence
Section 11 B of the Central Excise Act, 1944 is applicable to
refund of service tax which is reproduced below:-
"Any person claiming refund of any duty of excise may make an
application for refund of such duty to the [Assistant
Commissioner of Central Excise or Deputy Commissioner of
Central Excise] before the expiry of [one year] [from the,
relevant date] [in such form and manner] as may be prescribed
and the application shall be accompanied by such documentary
or other evidence (including the documents referred to in section
12A as the applicant may furnish to establish that the amount of
duty of excise in relation to which such refund is claimed was
collected from or paid by him and the incidence of such duty had
not been passed on by him to any other person."
28. In view of Section 11 B, a claimant is required to comply
with following condition.
The claim is required to be filed within one year.
The claimant is required to file documentary evidence in
support of their claim.
29. As per clause (1) of B of Explanation given to sub section
(5) of Section 11 B which read as relevant date means in any
other case, the date of payment." The claim shall be filed within
one year from the date of payment of Service tax made by the
claimant.
30. In case of Bajaj Foods Ltd. v. Commissioner, reported in
2015 (320) E.L.T. A197 (Guj.), The Hon'ble High Court has
6 ST/86554,88153/2018,87126/2021
discussed the issue relying upon the decision of Hon'ble Apex
Court and held as under.
"The admitted facts are that the refund has been claimed beyond
the period of limitation i.e. three years after expiry of the date of
refund. In the case of Collector of C.E., Chandigarh v. Doaba Co-
operative Sugar Mills reported in 1988 (37) E.L.T. 478 (S.C.),
the Apex Court held that so far as the refund of duty under the
Customs Act, 1962, the Customs Authorities are bound by the
limitation provided under the Act and after period of limitation,
no refund is permissible. The relevant observations in the case of
Collector of C.E., Chandigarh v. Doaba Co-operative Sugar Mills
(supra) reads as under :
"(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
therefor 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.
7 ST/86554,88153/2018,87126/2021
v. The Assistant Collector of Customs [1987 (30) E.L.T. 641
(S.C.) = 1985 E.C.R. 289]."
In view of the decision and the view taken by the Apex Court
that the departmental authorities including the Tribunal are
bound by the statute and when the statute does not provide for
refund beyond period of limitation, in our view, in the case in
hands there is no question of allowing the refund."
31. On this issue, I would like to rely on the decision of the
Hon'ble Tribunal in the case of M/s Benzy Tours and Travels Pvt.
Ltd., Vs. CCE Mumbai reported in 2016(43)STR 625 (Tri.-
Mumbai), the headnote of which is reproduced below:-
Refund - Limitation - Service Tax paid erroneously on Business
Auxiliary Service - Plea of appellant that limitation period not
applicable in such cases as tax cannot be retained without
authority of law, not acceptable because in that case statutory
provisions prescribing limitation period would become redundant
- Every case of refund is for tax/duty paid but not payable -
There being no other provision of refund, time limit prescribed in
Section 11B of Central Excise Act, 1944 has to be mandatorily
followed - Tribunal functioning under Central Excise Act/Customs
Act, cannot go beyond the statute and relax time limitation
prescribed as per law - Refund claim hit by limitation and
correctly rejected by adjudicating authorities - Impugned order
upheld - Section 11B of Central Excise Act, 1944 as applicable to
Service Tax vide Section 83 of Finance Act, 1994.
32. Further I also rely on the decision of the Hon'ble Bombay
High Court in the case of M/s Andrew Telecom (I) Pvt. Ltd., Vs.
CCE, Goa reported in 2014(34)STR 562 (Bom), wherein the
Headnote and the relevant para 19 and 20 is reproduced below:-
"Refund - Limitation - Service Tax on export of services - For
period May, 2004 to March, 2006 discharged in May, 2006 - That
tax was not imposable, and relying on clarification by
Department, its refund claim submitted on 28-4-2010 - HELD:
Case was covered by Explanation (B)(f) of Section 11B(1) of
Central Excise Act, 1944 as applicable to Service Tax vide
Section 83 of Finance Act, 1994 - Refund claim was not
sustainable as it was filed beyond one year from date of
payment of tax
8 ST/86554,88153/2018,87126/2021
-Distinction between unconstitutional and illegal levy or both
being treated at par, cannot indicate any grave error of law or
perversity in rejection of refund."
"19. Before us, the undisputed position is that the amount was
paid by the Appellant as Service Tax. That tax was not
imposable or leviable on export of services was a clarification
made by the Department and relying on that clarification, the
refund of duty or Service Tax was claimed. This was squarely a
case falling within the provisions of the Central Excise Act, 1944
and therefore, the rule of limitation under Section 11B was
applied. That was applied when the application for refund was
made invoking Section 11B of the Central Excise Act, 1944. We
have no manner of doubt that when this was the provision
invoked, same applies with full force including the rule of
limitation prescribed therein. For these reasons, we are of the
opinion that the decisions relied upon cannot be of any
assistance.
As a result of the above discussion and finding that the Appeal
does not raise any substantial question of law, we proceed to
dismiss it. It is, accordingly, dismissed. No costs."
33. In case of ASSISTANT COMMR. OF S.T., CHENNAI Versus
NATARAJ AND VENKAT ASSOCIATES reported at 2015 (40)
S.T.R. 31 (Mad.), the Hon'ble High court dealing with the
identical issue held as under.
Refund - Limitation - Export of services - Architectural services,
provided for construction of building in Sri Lanka - Refund claim
filed beyond period of limitation Plea that limitation under
Section 11B of Central Excise Act, 1944 not applicable, amount
paid being only a deposit as no Said amount tax was required to
be paid - Impugned plea not correct - paid under Head of
Account "0044-Service Tax" through TR-6 challan meant for
payment of service tax - Contention of it to be a deposit, not
sustainable - Taxes, whether direct or indirect, intended for
immediate expenditure for common good of State - Having once
spent taxes fully or in part, it would be unjust for State to
require its repayment - Refund claims filed beyond statutory
period of limitation, not tenable even if tax is paid under a
mistake of law - Refund not admissible - Section 11B of Central
9 ST/86554,88153/2018,87126/2021
Excise Act, 1944 as applicable to Service Tax vide Section 83 of
Finance Act, 1994 - Article 226 of Constitution of India. [paras 7,
8, 9]
34. The appellant in the instant case filed the Refund
claim on 19-8-2015 for the period 2013-14. They should
have filed the same within one year from the date of payment of
Service Tax. The payment of Service Tax for the second half of
2013-14 was 31st March 2014 and the same should have been
filed before 31st March 2015. appellant is time barred.
Hence the refund claim filed by the
35. In view of the above pronouncements, I find that the issue of
applicability of time limitation under Section 11B of the central
Excise Act 1944 argued in the present case is squarely covered
in above mentioned decisions which clearly held that
departmental authorities including the Tribunal are bound by the
statute and when the statute does not provide for refund beyond
period of limitation, there is no question of allowing the refund."
4.3 Undisputedly the refund claim has been filed by the
appellant much beyond the prescribed period of limitation as per
the Section 11 B of the Central Excise Act, 1944 as made
applicable to the cases of Service Tax by Section 83 of the
Finance Act, 1994. The finding recorded by both the authorities,
on this aspect cannot be said to be perverse and should not be
interfered with. The impugned order has relied upon series of the
decision rendered in the matter by various authorities, which
support the view taken. Accordingly I do not find any merits in
this appeal and dismiss the same.
4.4 Appeal No ST/88153/2018 and ST/87126/2021 against the
impugned order, wherein the refund claim filed by the appellant
are held to be partly inadmissible on merits and limitation, and
remaining part where it is held admissible has been ordered to
be credited to Consumer welfare Fund. For arriving at the said
finding impugned order records as follows:
"25. The issue to be decided is whether the appellant is eligible
for refund under Notification No. 25/2012-ST dated 20-6-2012
as amended and whether the refund claims arc time barred.
10 ST/86554,88153/2018,87126/2021
26. It is seen that during the relevant period, the appellant had
paid Service Tax on transportation of Chemical Fertilizers from
different buyers and transported the same by road to their
Pulgaon factory and after manufacturing of Chemical Fertilizers,
they sent to different location of different state for use for
Agricultural purpose. I find that vide Not.no. 3/2013-ST dated
01.03.2013, the entry 21 of Not. 25/2012 was substituted as
under
"21. Services provided by a goods transport agency, by way of
transport in a goods carriage of,-
(a) agricultural produce;
(b) goods, where gross amount charged for the
transportation of goods on a consignment transported
in a single carriage does not exceed one thousand five
hundred rupees;
(c) goods, where gross amount charged for transportation
of all such goods for a single consignee does not exceed
rupees seven hundred fifty;
(d) foodstuff including flours, tea, coffee, jaggery, sugar,
milk products, salt and edible oil, excluding alcoholic
beverages;
(e) chemical fertilizer and oilcakes"
Hence the appellants were not liable to service tax since
01.03.2003 for outward freight, i.e. when they were undertaking
transportation of chemical fertilizers. Needless to say, the inputs
used for chemical fertilizers are different, namely dolomite, coal,
rock sulphate, etc..
27. I would like to mention here that in the Refund claim for Rs.
19,08,453/- pertaining to period April 2014 to March 2015, the
period pertaining to 1-4-2014 to 20-8-2014 was filed beyond
one year from the date of payment. The Refund claim covering
the period 21-8-2014 to 31-3- 2015 is well within the time
period.
28. Hence first I would like to deal with the period 1-4-2014 to
20-8- 2014. The levy, assessment and collection of Service Tax
and to the extent permissible by law is with the aid of the
Central Excise Act, 1944 and by certain provisions of the Finance
Act, the Central Excise Act, 1944 has been made applicable in
11 ST/86554,88153/2018,87126/2021
relation to the refund of amount of Service Tax paid by the
assessee.
29. On this issue, I would like to rely on the decision of the
Hon'ble Tribunal in the case of M/s Benzy Tours and Travels Pvt.
Ltd., Vs. CCE, Mumbai reported in 2016(43)STR 625 (Tri.-
Mumbai), the headnote of which is reproduced below:-
....
30. Further I also rely on the decision of the Hon'ble Bombay High Court in the case of M/s Andrew Telecom (I) Pvt. Ltd., Vs. CCE, Goa reported in 2014(34)STR 562 (Bom), wherein the Headnote and the relevant para 19 and 20 is reproduced below:-
...
31. In case of ASSISTANT COMMR. OF S.T., CHENNAI Versus NATARAJ AND VENKAT ASSOCIATES reported at 2015 (40) S.T.R. 31 (Mad.), the Hon'ble High court dealing with the identical issue held as under.
....
32. In view of the above pronouncements, I find that the issue of applicability of time limitation under Section 11B of the central Excise Act 1944 argued in the present case is squarely covered in above mentioned decisions which clearly held that departmental authorities including the Tribunal are bound by the statute and when the statute does not provide for refund beyond period of limitation, there is no question of allowing the refund.
33. The appellant in the instant case filed the Refund claim on 19-8-2015 for the period 2014-15, for which the period covering 1-4-2014 to 20-8- 2014 is filed beyond the time limit They should have filed the same within one year from the date of payment of Service Tax. Hence the refund claim amounting to Rs. 2,57,070/- ( Inward freight) + Rs. 5,28,190/- (Outward freight), totalling to Rs. 7,85,260/- pertaining to period 1-4-2014 to 20-8- 2014 is time barred and has been rightly rejected by the lower authority.
34. Further, also the refund claim pertaining to Inward Freight is not at all admissible, since the notification No. 25/2012-ST dated 20-6-2012 as mended by Notification No. 3/2013-ST 12 ST/86554,88153/2018,87126/2021 dated 1-3-2013 pertains to exemption of services provided by a GTA by way of transportation of Chemical Fertilizer and Oil cakes. The Chemical Fertilizer transported by the appellant falls under the category of Outward freight and hence this notification is squarely applicable for outward freight GTA only and not for Inward Freight GTA. The element of refund claim pertaining to Inward Freight is Rs. 7,08,055/- for the entire period ( in which the time-barred amount of Rs. 2,57,070/- for the period 1-4- 2014 to 20-8-2014 is also included) which is rightly rejected by the lower authority and is upheld.
35. As regards the remaining refund claim of Rs. 6,72,208/- pertaining Outward freight, to the period 21-8-2014 to 31-3- 2015 in respect of sanctioned by the lower authority and ordered to be credited to the consumer welfare fund, I find that the appellant has furnished the copy of contract made between appellant and the transporter and also sample copy of the invoice. The contract states that "The supplier shall supply the above mentioned fertilizers on the following rates per ton FOR storage centres/double lock centres of the M.P. Markfed in Madhya Pradesh, exclusive of Entry tax & VAT, exclusive of subsidy as approved by Govt of India from time to time and CST, levies, duties, as applicable." Therefore, Govt. duties are not the liability of the supplier, i.e. the appellant. Also, the lower authority has clearly in his order stated that in the Cost Audit report for the year 2013-14, the freight and transportation charges are included in that the costing of fertilizers from which it is clearly established incidence of duty has been passed by the appellant to the buyer of the goods. The appellant is therefore not entitled to receive the refund amount. The Lower authority's order the said refund claim to be credited to Consumer Welfare Fund is accordingly upheld.
36. Now coming to the Refund claim of Rs. 8,06,550/-pertaining to the period April 2015 to July 2015, which includes service tax on inward freight of Rs. 3,23,611/- and service tax on outward freight Rs. 4,82,939/-. Applying the same ratio as mentioned above, the refund amount of Rs. 3,23,611/- pertaining to Inward Freight has been rightly rejected by the Lower authority. As regards the Outward freight, the refund of the Outward freight is 13 ST/86554,88153/2018,87126/2021 to be sanctioned but to be credited to the Consumer welfare fund."
4.5 I find that part of refund claim has been rejected by the impugned order on the ground of time bar on the reasoning similar to one which was adopted in order discussed earlier by me. As I have upheld that impugned order there recording the finding on the issue of time bar which is identical in the present cases this order needs to be upheld on this issue..
4.6 In case of Dilip Kumar & Co [2018 (361) E.L.T. 577 (S.C.)], a five judges bench of Hon'ble Supreme Court has held as follows:
"24. As contended by Ms. Pinky Anand, Learned Additional Solicitor General, the principle of literal interpretation and the principle of strict interpretation are sometimes used interchangeably. This principle, however, may not be sustainable in all contexts and situations. There is certainly scope to sustain an argument that all cases of literal interpretation would involve strict rule of interpretation, but strict rule may not necessarily involve the former, especially in the area of taxation. The decision of this Court in Punjab Land Development and Reclamation Corporation Ltd., Chandigarh v. Presiding Officer, Labour Court Chandigarh and Ors., (1990) 3 SCC 682, made the said distinction, and explained the literal rule-
"The literal rules of construction require the wording of the Act to be construed according to its literal and grammatical meaning whatever the result may be. Unless otherwise provided, the same word must normally be construed throughout the Act in the same sense, and in the case of old statutes regard must be had to its contemporary meaning if there has been no change with the passage of time."
That strict interpretation does not encompass strict - literalism into its fold. It may be relevant to note that simply juxtaposing 'strict interpretation' with literal rule' would result in ignoring an important aspect that is 'apparent legislative intent'. We are alive to the fact that there may be overlapping in some cases between the aforesaid two rules. With certainty, we can observe that, 'strict interpretation' does not encompass such literalism, which lead to absurdity and go against the legislative intent. As 14 ST/86554,88153/2018,87126/2021 noted above, if literalism is at the far end of the spectrum, wherein it accepts no implications or inferences, then 'strict interpretation' can be implied to accept some form of essential inferences which literal rule may not accept.
25. We are not suggesting that literal rule de hors the strict interpretation nor one should ignore to ascertain the interplay between 'strict interpretation' and 'literal interpretation'. We may reiterate at the cost of repetition that strict interpretation of a statute certainly involves literal or plain meaning test. The other tools of interpretation, namely contextual or purposive interpretation cannot be applied nor any resort be made to look to other supporting material, especially in taxation statutes. Indeed, it is well-settled that in a taxation statute, there is no room for any intendment; that regard must be had to the clear meaning of the words and that the matter should be governed wholly by the language of the notification. Equity has no place in interpretation of a tax statute. Strictly one has to look to the language used; there is no room for searching intendment nor drawing any presumption. Furthermore, nothing has to be read into nor should anything be implied other than essential inferences while considering a taxation statute.
26. Justice G.P. Singh, in his treatise 'Principles of Statutory Interpretation' (14th ed. 2016 p.-879) after referring to Re, Micklethwait, (1885) 11 Ex 452; Partington v. A.G., (1869) LR 4 HL 100; Rajasthan Rajya Sahakari Spinning & Ginning Mills Federation Ltd. v. Deputy CIT, Jaipur, (2014) 11 SCC 672, State Bank of Travancore v. Commissioner of Income Tax, (1986) 2 SCC 11 and Cape Brandy Syndicate v. IRC, (1921) 1 KB 64, summed up the law in the following manner -
"A taxing statute is to be strictly construed. The well-established rule in the familiar words of LORD WENSLEYDALE, reaffirmed by LORD HALSBURY AND LORD SIMONDS, means : 'The subject is not to be taxed without clear words for that purpose : and also that every Act of Parliament must be read according to the natural construction of its words. In a classic passage LORD CAIRNS stated the principle thus : "If the person sought to be taxed comes within the letter of the law he must be taxed, however great the hardship may appear to the judicial mind to 15 ST/86554,88153/2018,87126/2021 be. On the other hand, if the Crown seeking to recover the tax, cannot bring the subject within the letter of the law, the subject is free, however apparently within the spirit of law the case might otherwise appear to be. In other words, if there be admissible in any statute, what is called an equitable construction, certainly, such a construction is not admissible in a taxing statute where you can simply adhere to the words of the statute. VISCOUNT SIMON quoted with approval a passage from ROWLATT, J. expressing the principle in the following words : "In a taxing Act one has to look merely at what is clearly said. This is no room for any intendment. There is no equity about a tax. There is no presumption as to tax. Nothing is to be read in, nothing is to be implied. One can only look fairly at the language used."
It was further observed :
"In all tax matters one has to interpret the taxation statute strictly. Simply because one class of legal entities is given a benefit which is specifically stated in the Act, does not mean that the benefit can be extended to legal entities not referred to in the Act as there is no equity in matters of taxation...."
Yet again, it was observed :
"It may thus be taken as a maxim of tax law, which although not to be overstressed ought not to be forgotten that, "the subject is not to be taxed unless the words of the taxing statute unambiguously impose the tax on him", [Russel v. Scott, (1948) 2 All ER 1]. The proper course in construing revenue Acts is to give a fair and reasonable construction to their language without leaning to one side or the other but keeping in mind that no tax can be imposed without words clearly showing an intention to lay the burden and that equitable construction of the words is not permissible [Ormond Investment Co. v. Betts, (1928) AC 143]. Considerations of hardship, injustice or anomalies do not play any useful role in construing taxing statutes unless there be some real ambiguity [Mapp v. Oram, (1969) 3 All ER 215]. It has also been said that if taxing provision is "so wanting in clarity that no meaning is reasonably clear, the Courts will be unable to regard it as of any effect [IRC v. Ross and Coutler, (1948) 1 All ER 616]."
16 ST/86554,88153/2018,87126/2021 Further elaborating on this aspect, the Learned author stated as follows :
"Therefore, if the words used are ambiguous and reasonable open to two interpretations benefit of interpretation is given to the subject [Express Mill v. Municipal Committee, Wardha, AIR 1958 SC 341]. If the Legislature fails to express itself clearly and the taxpayer escapes by not being brought within the letter of the law, no question of unjustness as such arises [CIT v. Jalgaon Electric Supply Co., AIR 1960 SC 1182]. But equitable considerations are not relevant in construing a taxing statute, [CIT, W.B. v. Central India Industries, AIR 1972 SC 397], and similarly logic or reason cannot be of much avail in interpreting a taxing statute [Azam Jha v. Expenditure Tax Officer, Hyderabad, AIR 1972 SC 2319]. It is well-settled that in the field of taxation, hardship or equity has no role to play in determining eligibility to tax and it is for the Legislature to determine the same [Kapil Mohan v. Commr. of Income Tax, Delhi, AIR 1999 SC 573]. Similarly, hardship or equity is not relevant in interpreting provisions imposing stamp duty, which is a tax, and the Court should not concern itself with the intention of the Legislature when the language expressing such intention is plain and unambiguous [State of Madhya Pradesh v. Rakesh Kohli & Anr., (2012) 6 SCC 312]. But just as reliance upon equity does not avail an assesse, so it does not avail the Revenue."
The passages extracted above, were quoted with approval by this Court in at least two decisions being Commissioner of Income Tax v. Kasturi Sons Ltd., (1999) 3 SCC 346 and State of West Bengal v. Kesoram Industries Limited, (2004) 10 SCC 201 [hereinafter referred as 'Kesoram Industries case' for brevity]. In the later decision, a Bench of seven-Judges, after citing the above passage from Justice G.P. Singh's treatise, summed up the following principles applicable to the interpretation of a taxing statute :
"(i) In interpreting a taxing statute, equitable considerations are entirely out of place. A taxing statute cannot be interpreted on any presumption or assumption. A taxing statute has to be interpreted in the light of what is clearly expressed : it cannot imply anything which is not expressed : it cannot import provisions in the statute so as to supply any deficiency : (ii)
17 ST/86554,88153/2018,87126/2021 Before taxing any person, it must be shown that he falls within the ambit of the charging section by clear words used in the section; and (iii) If the words are ambiguous and open to two interpretations, the benefit of interpretation is given to the subject and there is nothing unjust in a taxpayer escaping if the letter of the law fails to catch him on account of Legislature's failure to express itself clearly".
27. Now coming to the other aspect, as we presently discuss, even with regard to exemption clauses or exemption notifications issued under a taxing statute, this Court in some cases has taken the view that the ambiguity in an exemption notification should be construed in favour of the subject. In subsequent cases, this Court diluted the principle saying that mandatory requirements of exemption clause should be interpreted strictly and the directory conditions of such exemption notification can be condoned if there is sufficient compliance with the main requirements. This, however, did not in any manner tinker with the view that an ambiguous exemption clause should be interpreted favouring the revenue. Here again this Court applied different tests when considering the ambiguity of the exemption notification which requires strict construction and after doing so at the stage of applying the notification, it came to the conclusion that one has to consider liberally.
28. With the above understanding the stage is now set to consider the core issue. In the event of ambiguity in an exemption notification, should the benefit of such ambiguity go to the subject/assessee or should such ambiguity should be construed in favour of the revenue, denying the benefit of exemption to the subject/assessee? There are catena of case laws in this area of interpretation of an exemption notification, which we need to consider herein. The case of Commissioner of Inland Revenue v. James Forrest, [(1890) 15 AC 334 (HL)] - is a case which does not discuss the interpretative test to be applied to exemption clauses in a taxation statute - however, it was observed that 'it would be unreasonable to suppose that an exemption was wide as practicable to make the tax inoperative, that it cannot be assumed to have been in the mind of the Legislature' and that exemption 'from taxation to some extent 18 ST/86554,88153/2018,87126/2021 increased the burden on other members of the community'. Though this is a dissenting view of Lord Halsbury, LC, in subsequent decisions this has been quoted vividly to support the conclusion that any vagueness in the exemption clauses must go to the benefit of the revenue. Be that as it is, in our country, at least from 1955, there appears to be a consistent view that if the words in a taxing statute (not exemption clause) are ambiguous and open to two interpretations, the benefit of interpretation is given to the subject and it does not matter if the taxpayer escapes the tax net on account of Legislatures' failure to express itself clearly (See the passage extracted hereinabove from Kesoram Industries case (supra)).
52. To sum up, we answer the reference holding as under -
(1) Exemption notification should be interpreted strictly; the burden of proving applicability would be on the assessee to show that his case comes within the parameters of the exemption clause or exemption notification.
(2) When there is ambiguity in exemption notification which is subject to strict interpretation, the benefit of such ambiguity cannot be claimed by the subject/assessee and it must be interpreted in favour of the revenue.
(3) The ratio in Sun Export case (supra) is not correct and all the decisions which took similar view as in Sun Export case (supra) stands overruled.
4.7 In view of the above decision of the Hon'ble Apex Court, interpreting an exemption notification, in strict manner so as to deny inadmissible refund claimed in respect of service tax paid on the inward transportation service cannot be faulted with. Accordingly the impugned order to the extent it hold that refund claim in respect of inward transportation service is inadmissible cannot be faulted with.
4.8 It is now settled law that all the refund claims need to be examined as per the provisions of the section 11B and it is for the claimant to establish that the burden of the tax paid has not been passed on to the consumer of the goods or services. In case the claimant fails to establish the same the refund even if admissible needs to credited to Consumer welfare Fund. Hon'ble 19 ST/86554,88153/2018,87126/2021 Supreme Court has in case of Mafatlal Industries [1997 (89) ELT 247 (SC)] held as follows:
"99. The discussion in the judgment yields the following propositions. We may forewarn that these propositions are set out merely for the sake of convenient reference and are not supposed to be exhaustive. In case of any doubt or ambiguity in these propositions, reference must be had to the discussion and propositions in the body of the judgment.
(i) Where a refund of tax/duty is claimed on the ground that it has been collected from the petitioner/plaintiff - whether before the commencement of the Central Excises and Customs Laws (Amendment) Act, 1991 or thereafter - by mis-interpreting or mis-applying the provisions of the Central Excises and Salt Act, 1944 read with Central Excise Tariff Act, 1985 or Customs Act, 1962 read with Customs Tariff Act or by mis-interpreting or mis-
applying any of the rules, regulations or notifications issued under the said enactments, such a claim has necessarily to be preferred under and in accordance with the provisions of the respective enactment before the authorities specified thereunder and within the period of limitation prescribed therein. No suit is maintainable in that behalf. While the jurisdiction of the High Courts under Article 226 - and of this Court under Article 32 - cannot be circumscribed by the provisions of the said enactments, they will certainly have due regard to the legislative intent evidenced by the provisions of the said Acts and would exercise their jurisdiction consistent with the provisions of the Act. The writ petition will be considered and disposed of in the light of and in accordance with the provisions of Section 11B. This is for the reason that the power under Article 226 has to be exercised to effectuate the rule of law and not for abrogating it.
The said enactments including Section 11B of Central Excises and Salt Act and Section 27 of the Customs Act do constitute "law" within the meaning of Article 265 of the Constitution of India and hence, any tax collected, retained or not refunded in accordance with the said provisions must be held to be collected, retained or not refunded, as the case may be, under the authority of law. Both the enactments are self-contained enactments providing for levy, assessment, recovery and refund 20 ST/86554,88153/2018,87126/2021 of duties, imposed thereunder . Section 11B of the Central Excises and Salt Act and Section 27 of the Customs Act, both before and after the 1991 (Amendment) Act are constitutionally valid and have to be followed and given effect to. Section 72 of the Contract Act has no application to such a claim of refund and cannot form a basis for maintaining a suit or a writ petition. All refund claims except those mentioned under Proposition (ii) below have to be and must be filed and adjudicated under the provisions of the Central Excises and Salt Act or the Customs Act, as the case may be. It is necessary to emphasise in this behalf that Act provides a complete mechanism for correcting any errors whether of fact or law and that not only an appeal is provided to a Tribunal - which is not a departmental organ - but to this Court, which is a civil court.
(ii) Where, however, a refund is claimed on the ground that the provision of the Act under which it was levied is or has been held to be unconstitutional, such a claim, being a claim outside the purview of the enactment, can be made either by way of a suit or by way of a writ petition. This principle is, however, subject to an exception : where a person approaches the High Court or Supreme Court challenging the constitutional validity of a provision but fails, he cannot take advantage of the declaration of unconstitutionality obtained by another person on another ground; this is for the reason that so far as he is concerned, the decision has become final and cannot be re-opened on the basis of a decision on another person's case; this is the ratio of the opinion of Hidayatullah, CJ. in Tilokchand Motichand and we respectfully agree with it.
Such a claim is maintainable both by virtue of the declaration contained in Article 265 of the Constitution of India and also by virtue of Section 72 of the Contract Act. In such cases, period of limitation would naturally be calculated taking into account the principle underlying Clause (c) of sub-section (1) of Section 17 of the Limitation Act, 1963. A refund claim in such a situation cannot be governed by the provisions of the Central Excises and Salt Act or the Customs Act, as the case may be, since the enactments do not contemplate any of their provisions being struck down and a refund claim arising on that account. In other 21 ST/86554,88153/2018,87126/2021 words, a claim of this nature is not contemplated by the said enactments and is outside their purview.
(iii) A claim for refund, whether made under the provisions of the Act as contemplated in Proposition (i) above or in a suit or writ petition in the situations contemplated by Proposition (ii) above, can succeed only if the petitioner/plaintiff alleges and establishes that he has not passed on the burden of duty to another person/other persons. His refund claim shall be allowed/decreed only when he establishes that he has not passed on the burden of the duty or to the extent he has not so passed on, as the case may be. Whether the claim for restitution is treated as a constitutional imperative or as a statutory requirement, it is neither an absolute right nor an unconditional obligation but is subject to the above requirement, as explained in the body of the judgment. Where the burden of the duty has been passed on, the claimant cannot say that he has suffered any real loss or prejudice. The real loss or prejudice is suffered in such a case by the person who has ultimately borne the burden and it is only that person who can legitimately claim its refund. But where such person does not come forward or where it is not possible to refund the amount to him for one or the other reason, it is just and appropriate that that amount is retained by the State, i.e., by the people. There is no immorality or impropriety involved in such a proposition.
The doctrine of unjust enrichment is a just and salutory doctrine. No person can seek to collect the duty from both ends. In other words, he cannot collect the duty from his purchaser at one end and also collect the same duty from the State on the ground that it has been collected from him contrary to law. The power of the Court is not meant to be exercised for unjustly enriching a person. The doctrine of unjust enrichment is, however, inapplicable to the State. State represents the people of the country. No one can speak of the people being unjustly enriched.
(iv) It is not open to any person to make a refund claim on the basis of a decision of a Court or Tribunal rendered in the case of another person. He cannot also claim that the decision of the Court/Tribunal in another person's case has led him to discover the mistake of law under which he has paid the tax nor can he 22 ST/86554,88153/2018,87126/2021 claim that he is entitled to prefer a writ petition or to institute a suit within three years of such alleged discovery of mistake of law. A person, whether a manufacturer or importer, must fight his own battle and must succeed or fail in such proceedings. Once the assessment of levy has become final in his case, he cannot seek to reopen it nor can he claim refund without re- opening such assessment/order on the ground of a decision in another person's case. Any proposition to the contrary not only results in substantial prejudice to public interest but is offensive to several well established principles of law. It also leads to grave public mischief. Section 72 of the Contract Act, or for that matter Section 17(1)(c) of the Limitation Act, 1963, has no application to such a claim for refund.
(v) Article 265 of the Constitution has to be construed in the light of the goal and the ideals set out in the Preamble to the Constitution and in Articles 38 and 39 thereof. The concept of economic justice demands that in the case of indirect taxes Central Excises duties and Customs duties, the tax collected without the authority of law shall not be refunded to the petitioner-plaintiff unless he alleges and establishes that he has not passed on the burden of duty to a third party and that he has himself borne the burden of the said duty.
(vi) Section 72 of the Contract Act is based upon and incorporates a rule of equity. In such a situation, equitable considerations cannot be ruled out while applying the said provision.
(vii) While examining the claims for refund, the financial chaos which would result in the administration of the State by allowing such claims is not an irrelevant consideration. Where the petitioner-plaintiff has suffered no real loss or prejudice, having passed on the burden of tax or duty to another person, it would be unjust to allow or decree his claim since it is bound to prejudicially affect the public exchequer. In case of large claims, it may well result in financial chaos in the administration of the affairs of the State.
(viii) The decision of this Court in Sales Tax Officer, Benaras v. Kanhaiyalal Mukundlal Saraf [1959 S.C.R. 1350] must be held to have been wrongly decided insofar as it lays down or is 23 ST/86554,88153/2018,87126/2021 understood to have laid down propositions contrary to the propositions enunciated in (i) to (vii) above. It must equally be held that the subsequent decisions of this Court following and applying the said propositions in Kanhaiyalal have also been wrongly decided to the above extent. This declaration - or the law laid down in propositions (i) to (vii) above - shall not however entitle the State to recover the taxes/duties already refunded and in respect whereof no proceedings are pending before any Authority/Tribunal or Court as on this date. All pending matters shall, however, be governed by the law declared herein notwithstanding that the tax or duty has been refunded pending those proceedings, whether under the orders of an Authority, Tribunal or Court or otherwise.
(ix) The amendments made and the provisions inserted by the Central Excises and Customs Law (Amendment) Act, 1991 in the Central Excises and Salt Act and Customs Act are constitutionally valid and are unexceptionable."
4.8 Both the authorities have after consideration of the facts on recorded have arrived at the finding that the burden of the tax claimed as refund has been passed on by the appellant to their consumers. The finding recorded by both the authorities, on this aspect cannot be said to be perverse and should not be interfered with. The impugned order has relied on the cost accountant certificate to hold that the burden of the tax paid has been built in the price to the end consumer. The cost accountant certificate supports the view taken. Once the burden of the tax paid has been passed on to the consumer, the admissible refund needs to be credited to consumer welfare fund as has been held in the impugned order.
4.9 Accordingly I do not find any merits in these two appeals.
5.1 The appeals are dismissed as held in para 4.3 & 4.9.
(Order pronounced in the open court) (Sanjiv Srivastava) Member (Technical) tvu