Custom, Excise & Service Tax Tribunal
Ms J D Associates vs Cgst & Ce Kanpur on 2 September, 2025
CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL
ALLAHABAD
REGIONAL BENCH - COURT NO.I
Service Tax Appeal No.70152 of 2022
(Arising out of Order-in-Appeal No.178/ST/ALLD/2021 dated 08.07.2021
passed by Commissioner (Appeals) Customs, CGST & Central Excise,
Allahabad)
M/s J. D. Associates, .....Appellant
(585, Plot No.2, Khyoera Thana,
Nawabganj, Kanpur)
VERSUS
Commissioner of Central Excise &
CGST, Kanpur ....Respondent
(38, M.G. Marg, Civil Lines, Allahabad-211001)
APPEARANCE:
Shri Vivek Kumar Gupta, Advocate & Shri Yateesh Kumar Singh,
Advocate for the Appellant
Smt. Chitra Srivastava, Authorized Representative for the Respondent
CORAM: HON'BLE MR. P.K. CHOUDHARY, MEMBER (JUDICIAL)
FINAL ORDER NO.- 70611/2025
DATE OF HEARING : 16.07.2025
DATE OF PRONOUNCEMENT : 02.09.2025
The present appeal has been filed by the Appellant assailing
the Order-in-Appeal No.178/ST/ALLD/2021 dated 08.07.2021
passed by Commissioner (Appeals) Customs, CGST & Central
Excise, Allahabad.
2. Briefly stated, the facts of the case are that the Appellant is
engaged in providing „Cleaning Services‟ and is registered with
the Service Tax Department. The Appellant assessee filed three
refund claims amounting to Rs.24,44,166/-, Rs.6,23,749/- and
Rs.17,16,756/- all dated 06.08.2019 and Rs.1,52,243/- on
22.11.2019 on the ground that they have paid the service tax
amounting to Rs.49,36,914/- during the exemption period i.e.
for the financial year 2012-13 and 2013-14. Accordingly, two
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2
Show Cause Notices1 were issued to the assessee. The
Adjudicating Authority vide the Order-in-Original dated
29.05.2020 dropped all the proceedings initiated vide the SCNs
and the refund claims of the assessee were allowed.
Subsequently, the Order-in-Original was reviewed and vide the
Review Order dated 25.08.2020, passed by the Commissioner,
CGST & Central Excise, Kanpur, the Department filed appeal
before the first Appellate Authority on the following grounds:-
(i) The adjudication authority in the impugned order had
relied and found force in the respondent‟s plea that tax
paid by them was never due and only paid due to
mistake and such excess amount it to be paid back to
its owner and also relied upon the various judgements.
(ii) Section 11B of Central Excise Act, 1944 already
described the relevant date in their explanation. Sub-
clause (f) of clause (B) of the explanation of Section
11B clearly says that date of payment of duty is
relevant date for calculation period of one year.
(iii) In this case, the refund application filed by the claimant
on 06.08.2019 and 22.11.2019 and tax was deposited
on or before the issuance of Board Circular dated
22.08.2016 and therefore, time difference between the
tax deposited and refund application filed is more than
one year.
(iv) As per Sub Section (1) of Section 11B of CEA, 1944
any person claiming refund of any duty of excise and
interest, if any, paid on such duty may make an
application for refund of such duty and interest, if any,
paid on 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. Further, as per sub clause (f) of clause (B) of
explanation of Section 11B clearly says that date of
payment of duty is relevant date for calculating period
of one year.
1
SCN
Service Tax Appeal No.70152 of 2022
3
(v) From plain reading of the aforesaid provisions of
Section 11B of Central Excise Act, 1944 case law cited
above, it is clearly that the adjudicating authority has
erred in by sanctioning the refund claim which was filed
by the claimant after the prescribed period of one year.
Accordingly, the said order is not legal and proper.
3. The learned Commissioner (Appeals) allowed the appeal of
the Department and set aside the Order-in-Original dated
29.05.2020. Hence, the present appeal before the Tribunal.
4. The date-wise chronology of events in the present appeal
are as under:-
CHRONOLOGY OF EVENTS
S. DATE EVENTS DESCRIPTION
No.
1. 09.01.2013 Registered under M/s J.D. Associate Proprietorship firm and
Service Tax Act, 1961 its service tax No.AFSPK4497CSD002
under classification of "Cleaning Service."
2. Work Contractor Engaged in work contract for last many
years & engaged in supply of Labour for
cleaning services during the period 2012-
13, 2013-14 and 2014-15.
3. Details of Payment of S. Date Amount
Service Tax No.
1- 05.07.2013 161,254.00
2- 23.10.2013 152,243.00
3- 10.10.2013 163,286.00
4- 10.10.2013 160,219.00
5- 06.09.2013 152,243.00
6- 26.02.2013 380,571.00
7- 16.03.2013 125,179.00
8- 04.03.2013 118,000.00
9- 06.05.2013 121,245.00
10- 07.06.2013 143,332.00
11- 24.01.2014 351,173.00
12- 15.07.2014 360,000.00
13- 30.03.2014 464,004.00
14- 31.03.2015 2,084,166.00
Total= 4,936,915.00
However, Cleaning Services were
exempted from service tax as per Mega
Exemption Notification No.25/2012-ST
dated 20.06.2012 and tax payer paid the
amount mistakenly.
Service Tax Appeal No.70152 of 2022
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4. Internal Internal/Departmental Audit by Service
/Departmental Audit Tax Department on in financial year 2019.
date
5. 10.07.2019 Refund Claim date Amount Date of filing of
and relevant date for Refund Claim
filling refund 1- 24,44,166.00 06.08.2019
application 2- 6,23,749.00 06.08.2019
3- 17,16,765.00 06.08.2019
4- 1,52,243.00 22.10.2019
*In case of refund claim where the
Payment of duty made under mistake
of law in that instance time limitation
prescribed under Section 11B of
Central Excise Act would not
maintainable.
6. 18.10.2019 Show Cause Notice Show Cause Notice issued by Assistant
& date Commissioner CGST division III Kanpur.
13.12.2019 "Refund claim rejected on the ground
of time limitation prescribed under
Section 11B of Central Excise Act."
7. 29.05.2020 Order-in-Original date Order-in-Original No.07/ST/REF/ACK-
(OIO) III/2020 issued by Assistant Commissioner
CGST Division III Kanpur.
"All the proceedings initiated by both
show cause notice dated 22.10.2019 &
16.12.2019 were dropped in view of
various judgements of Tribunal and
Apex Court.
8. 01.06.2020 Refund Claim Passed refund order date on 01.06.2020
payment of refund claim amount directly
to the assessee‟s Bank account through
RTGS/NEFT was Rs.4936314/-
9. 08.07.2021 O.I.A. The Commissioner of Central Excise and
Service Tax (Appeals) Allahabad issued
Order-in-Appeal No.178/ST/ALLD/2021
dated 08.08.2021.
"Set aside the impugned order dated
01.06.2020 of the Adjudicating
Authority & allow the appeal filed by
the Department."
10. 11.04.2020 Appeal filed in Appeal filed on 11.04.2022 before the
Tribunal Appellate Tribunal Customs & Central
Excise, 38 Civil Lines Allahabad against the
order of Commissioner (Appeals)
Allahabad Order-in-Appeal
No.178/ST/ALLD/2021.
5. The learned Advocate appearing on behalf of the Appellant
submits that they have been providing cleaning services. Service
Tax had also been paid on such cleaning services which are duly
reflected in each of their ST-3 returns. It is contended by the
learned Advocate that under a mistaken apprehension they had
paid service tax though they were never liable to discharge
service tax. The mistake could only be known during the course
of their internal audit conducted in the month of September,
2019. It is his submission that the amount paid by the Appellant
Service Tax Appeal No.70152 of 2022
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under mistake of law, was never a „tax‟. That being so, all
trappings that apply to a „tax‟, including that of limitation under
Section 11B, were not applicable to the Appellant‟s refund claim.
6. It was also contended that the bar of unjust enrichment was
not applicable in the present case. It is on record that the
Appellant deposited service tax on its own without charging from
Cantonment Board. Accordingly, the learned Advocate prayed for
setting aside the impugned order and allow the appeal.
7. Learned Authorized Representative for the Department
justified the impugned order and submitted that the conditions
and prescriptions of Section 11B would apply to amounts paid by
the assessee under a misrepresentation of the statutory
provisions.
8. Heard both the sides and perused the appeal records.
9. The Appellant is providing cleaning services to the
Cantonment Board, Kanpur. I find that the Original Adjudicating
Authority vide the Order-in-Original dated 29.05.2020 have
passed a detailed and well reasoned order covering all the
aspects. The discussion and findings of the Adjudicating
Authority are reproduced for ready reference:-
"Discussion and Findings
I have carefully gone through the facts of the case, refund
claim submitted by the party along with documents,
submissions made by the party during personal hearing
held on 11.02.2020 and relevant notifications, rules,
circulars etc. and observed that the show cause notices
issued to the party mainly on the grounds that under
section 11 B (ea) which define relevant date of filing
refund in case of goods which are exempt from payment of
duty by a special order issued under Sub-Section (2) of
Section 5A of the Act, the date of issue of such order. The
relevant period is to be calculated from the issue of Board
Circular No.199/09/2016-ST dated 22.08.2016 as
explaining clarification in the Serial No.12 (e) and Serial
No.25(a) of Notification No.25/2012-ST dated 20.06.2012.
Service Tax Appeal No.70152 of 2022
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Thus the period of one year in the instant case is expired
as the party has filed refund claims amounting to
Rs.47,84,671/- on 06.08.2019 and later for Rs.1,52,243/-
on 22.11.2019 stating that they miss one challan dated
22.10.2013 has not be taken by mistake. And the same
may be added in their refund claim of Rs.17,16,756/-
which was already submitted by them on 06.08.2019.
Thus the total claim becomes Rs.18,68,999/- and the total
amount of all the four refund claims, including this claim
dated 22.11.2019 becomes Rs.49,36,914/- (Rs.6,23,749/-
+ Rs.17,16,756/- + Rs.24,44,166/- + Rs.1,52,243/-)
whereas party in their defence reply pleaded that they
have paid service tax on such cleaning services, reflected
in each their return for the relevant periods. Party further
pleaded that service tax on cleaning services was imposed
prior to 01.07.2012 on cleaning activity but was restricted
to commercial or industrial building. It specifically excluded
cleaning services in relation to agriculture, horticulture,
animal husbandry and dairying under section 65 (24b) of
the Act. They also pleaded that the issue may also
considered in the light of para 9.2 and 9.3 of the CBEC
directions issued under F.No.B1/6/2005-TRU dated
27.07.2005 which enumerated the nature of services
which are taxable under this category. According to this,
para 9.3 such cleaning services in respect of non
commercial buildings and premises thereof would not be
covered within the purview of service tax under this
category. These services had been provided to the
Government undertaking during the relevant period to the
Government undertaking i.e. Cantonment Board which is a
civil administration body in India under the control of the
Ministry of Defence, comprises elected members besides
ex officio and nominated members as per Cantonment Act,
2006 and Notification No.25/2012-ST dated 20.06.2012
also support exemption on this account. A certificate to
this effect issued by Chief Executive Officer, Cantonment
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Board, Kanpur an sample work orders dated 24.12.2013
and 23.08.2014 between the Noticee and Kanpur
Cantonment Board, Kanpur was also submitted by the
party.
Party/Noticee also submitted the copies of original challans
through which they deposited the service tax in
Government account is also provided by the party.
Regarding limitation period, party submitted that relevant
date as prescribed under Section 11 B of the Central Excise
Act, 1944 has not been taken in true sense whereas the
correct language of the said section only relates to the
refund of applicable duty and interest and their claim is
nothing to do with the provisions of Section 11 B of the
Act, ibid, as the tax, paid by us had never been due and
only been paid due to lack of knowledge and mistake and
such amount is to be paid back to the owner which is
unduly retained at the end of the Government with no
relevancy with the tax applicable as per any of the
provision on such services during relevant period. The
money deposited in such accounts belongs to them and
does not become property of Government and they can be
entitled refund at any time. Neither the law of limitation
nor theory of unjust enrichment is applicable to such
deposit.
They also cited some case laws in support of their
contention as following-
i) Jay Shree Tea and Industries Vs. CCE[2005(190) ELT
106 (CESTAT SMB)].
ii) Navdeep Packaging Industries Vs.
CCE[2007(210)ELT 417 (CESTAT)].
iii) M/s 3E Infotech Vs. Customs (Madras High Court).
iv) UOI Vs. ITC Ltd. reported in (1993) Supp IV SCC
326.
Service Tax Appeal No.70152 of 2022
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v) Hon'ble High Court Gujarat in the case of M/s Oil and
Natural Gas Corporation Ltd. Vs. UOI report in 2017
(354) ELT 577 (Guj).
vi) Hon'ble High Court Order in the case of Parijat
Construction Vs. Commissioner Excise, Nasik
reported in 2018 (359) 113(BOMB).
vii) UOI and others Vs Kamlakshmi Finance Corporation
Ltd. 11 PHT 193 CS = 1991 (55) ELT 433 (SC).
Going through the Show Cause Notice I find that there is
no allegation regarding applicability and deposit of refund,
the show cause notice is merely based on the limitation,
that party has submitted the claim after the prescribed
time limit as define under Section 11 B of Central Excise
Act, 1944 also made applicable to Service Tax matters by
virtue of Section 83 of the Finance Act, 1994. Main
allegation is that claim is filed after one year from the date
of issue of Board Circular No.199/09/2016-ST dated
22.08.2016 and thus party not following the condition of
Section 11 B (ea), as the date of filing refund in case of
goods which are exempt from payment of duty by a special
order issued under sub-section (2) of Section 5A, the date
of issue of such order.
For this I go through the circular dated 22.08.2016 and
found that this was not issued under sub-section (2) of the
Section 5A of the Central Excise Act, 1944. As there is no
mention of such section in Circular No.199/09/2016-
Service Tax dated 22.08.2016 For this I reproduce the
relevant portion of this circular-
"Subject:- Services provided to the Government, a
local authority or a Government authority with
regard to water supply
I am directed to inform you that it has been reported
to the Board that in some cases contractors
providing the service of construction of tube wells for
Service Tax Appeal No.70152 of 2022
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the Government have been considered to be liable to
pay service tax.
2.0 The matter has been examined. The following
exemptions are available in this regard:-
2.1 Vide Serial No.12(c) of Notification 25/2012-
Service Tax dated 20.06.12012-
"Service provided to the Government, a local
authority or a Government authority by way of
construction, erection, commissioning, installation,
completion, fitting out, repair, maintenance,
renovation or alteration of pipe line, conduit or plant
for (i) water supply (ii) water treatment, or (iii)
sewerage treatment or disposal."
2.2 Vide Serial No. 25(a) of Notification 25/2012-
Service Tax dated 20.06.2012
2.2.1 In the period 01.07.2012 to 10.07.2017
"Services provided to Government, a local authority
or a Governmental authority by way of carrying out
any activity in relation to any function ordinarily
entrusted to a municipality in relation to water
supply, public health, Sanitation, conservancy, solid
waste management or slum improvement and up-
gradation."
2.2.2 In the period 11-07-2014 onwards
"Services provided to Government, a local authority
or a Governmental authority by way of water supply,
public health, sanitation conservancy, solid waste
management or slum improvement and up-
gradation."
3. Thus, it follows that, among others, exemption is
available to the following services provided to the
Government, a local authority or a Governmental
authority, by way of-
Service Tax Appeal No.70152 of 2022
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(a) Construction, erection, commissioning,
installation, completion, fitting out, repair,
maintenance, renovation or alteration of pipeline,
conduit or plant for (i) water supply (ii) water
treatment and
(b) water supply
4-------------------------------
5. Thus the exemption under the entries at serial
No.12 (e) and 25(a) of Notification No.25/2012-
Service Tax dated 20.06.2012, will cover a wide
range of activities/services provided to Government,
a local authority or Governmental authority and will
include the activity of construction of tube wells."
From the above abstract of Circular dated
22.08.2016 it is clear that this was issued by the
Board while examine the issue related to the
previous period, and then decided to exempted these
services under the entries at Serial No.12(e) and 25
(a) of Notification No.25/2012- Service Tax dated
20.06.2012. And it is clear that this has every effect
on Notification No.25/2012-Service Tax dated
20.06.2012 with the retrospective effect. Because in
absence of any retrospective effect this Circular
No.199/09/2016-Service Tax dated 22.08.2016 need
not be issued by Government/Central Board of
Excise & Customs, New Delhi.
From the letter dated 24.12.2013 and 23.08.2014 it
is evident that Chief Executive Officer, Kanpur
Cantonment Board, Kanpur asked the supply of daily
wages labour for performing the cleaning services in
the Board, a Government authority and these
services were exempted even prior to 01.07.2012 by
virtue of Circular issued under F. No. B1/6/2005-TRU
dated 27.07.2005 which clearly stated that, I quote:-
"9.3 However, such cleaning services in relation to
agriculture, horticulture, animal husbandry or
Service Tax Appeal No.70152 of 2022
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dairying would be excluded from the purview of
Service Tax. Further, such cleaning services in
respect of non commercial buildings and premises
thereof would not be covered within the purview of
Service Tax under this category".
And for later period exempted vide Notification
No.25/2012-ST dated 20.06.2012 read with Circular
No.199/09/2016-Service Tax dated 22.08.2016.
For more clarity I gone through the challans through
which party deposited service tax in Government
exchequer and I found that the all the tax deposited
under the head No.00440318 which allocated to the
cleaning services other than in relation to
agriculture, horticulture, animal husbandry or
dairying. And these services were later exempted
vide Notification No.25/2012-ST dated 20.06.2012
read with Circular No.199/09/2016-Service Tax
dated 22.08.2016.
Further, there is also a certificate dated 02.04.2019
issued by the Chief Executive Officer, Cantonment
Board, Kanpur to the effect that party have provided
satisfactory services for cleaning and sanitation to
the Cantonment Board, Kanpur for the years 2012-
13, 2013-14 and 2014-15 the period for which
refund claim of service tax, which was paid by them
by mistake and this tax was not leviable on such
cleaning service' during the relevant period.
Regarding party argument that Section 11B of the
Central Excise Act, 1994 also made applicable to
Service Tax matters by virtue of Section 83 of the
Finance Act, 1994 only relates to refund of applicable
duty and interest, if any, paid on such duty and their
claims has nothing to do with the provisions of
Section 11B of Central Excise Act, 1944 as the tax
paid by them was never due and only paid due to
mistake and such excess amount it to be paid back
Service Tax Appeal No.70152 of 2022
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to its owner which is unduly retained at the
Government with no relevancy with the tax
applicable as per any of the provisions on such
services during relevant period. The party also cited
few case laws in support of their contention, which
are the following-
i) Jay Shree Tea and Industries Vs. CCE[2005(190) ELT
106 (CESTAT SMB)].
ii) Navdeep Packaging Industries Vs. CCE[2007(210)ELT
417 (CESTAT)].
iii) M/s 3E Infotech Vs. Customs (Madras High Court).
iv) UOI Vs. ITC Ltd. reported in (1993) Supp IV SCC 326.
v) Hon'ble High Court Gujarat in the case of M/s Oil and
Natural Gas Corporation Ltd. Vs. UOI report in 2017
(354) ELT 577 (Guj).
vi) Hon'ble Bombay High Court Order in the case of Parijat
Construction Vs. Commissioner Excise, Nasik reported in
2018 (359) 113(BOMB). This order is very much
identical to the issue before me. As such I quote the
relevant abstract of the order:-
"12. Further, the claim of the respondent in refusing to return
the amount would go against the mandate of Article 265 of the
Constitution of India, which provides that no tax shall be levied
or collected except by authority of law.
13. on any analysis of the precedents cited above, we are of the
opinion, that when service tax is paid by mistake a claim for
refund cannot be barred by limitation under Section 11B had
expired. Such a position would be contrary to the law laid down
by the Hon'ble Apex Court, and therefore we have no hesitation
in holding that the claim of the assessee for a sum of
Rs.4,39,683/- cannot be barred by limitation, and ought to be
refunded.
14. There is no doubt in our minds, that if the Revenue is
allowed to keep the excess Service Tax paid, it would not be
proper, and against the tenets of Article 265 of the Constitution
Service Tax Appeal No.70152 of 2022
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of India On the facts and circumstances of this case, we deem if
appropriate to pass the following directions:-
(a) the application under section 11 B cannot be rejected on the
ground that is barred by limitation, provided under section.
(b) the claim for return of money must be considered by the
authorities."
This submission has find force, that the refund of tax which was
not liable to be paid by them is applicable to them and cannot be
rejected on the ground of limitation. And also refund is available
to the party as this was not falls under the category of Section
11 B (ea) of Central Excise Act, 1944 also made applicable to
Service Tax matters by virtue of Section 83 of the Finance Act,
1994.
Now I come to discuss other allegation made in the show cause
notice that original copy of challans not submitted the party
along with their claim. In this regard I find that party has filed
original copy of challans with their defence reply. As such this
allegation itself become vague.
Further it was also alleged in the show cause notices that party
have not submitted any evidence that they have not passed
incidence of tax to any other person, in other words unjust
enrichment In the strength of challans I find that party have
deposited the service tax on its own without charging from
Cantonment Board and they paid on its own into Government
exchequer From the Trail balance of the party for the relevant
period if is also clear that this amount shown under expenditure
head for paying service tax to the Government.
As the amount of refund is above Rs. Five Lacs, this office sent
the said refund claim to the AC (Audit), CGST, Kanpur vide this
office letter of even C. No.1045 dated 26.05.2020 for pre audit
verification.
The AC (Audit), CGST, Kanpur has submitted the pre audit
clearance report of the refund claim vide their office letter C. No.
V(1)630/Pre-Audit/J. D. Associates/2020/841 dated 29.05.2020.
In the light of above discussion and findings I hereby pass the
following order:-
Service Tax Appeal No.70152 of 2022
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ORDER
I hereby drop all the proceedings initiated by Show Cause Notices issued under C.No. V(30)Tech/137/Ref/J D Associates/D- III/19/3077 dated 22.10.2019 and V(30)Tech/137/Ref/J D Associates/D-III/19/3687 dated 16.12.2019 and accordingly, allow the refund claim of the party to the tune of Rs.49,36,914/- (Rs. Forty Nine Lakhs Thirty Six Thousands Nine Hundred Fourteen only)."
10. The only ground taken by the Department in their appeal before the first Appellate Authority is that since the assessee has deposited the service tax under self-assessment voluntarily, therefore, its refund would be governed by the provisions of Section 11B of the Central Excise Act, 1944 as made applicable in service tax matters by virtue of Section 83 of the Finance Act, 1994 and the limitation period of one year would be reckoned from the date of payment of service tax. I further observe that in para 4.2 of the impugned order, the learned Commissioner (Appeals) has travelled beyond the scope of the SCNs by asserting category of services provided by the assessee which was never subject matter of the present dispute in both the SCNs. It has been consistently held by the Tribunal and the Superior Courts that the SCN is the foundation of any proceedings and once that has not been subject matter of the SCNs, it could not have been raised by the Commissioner (Appeals). Hence, the findings of the Commissioner (Appeals) in para 4.2 are not tenable and are liable to be set aside. Since the service tax in the present case was deposited under a mistake of law, the provisions of Section 11B are not applicable. The tenor of the jurisprudence on the subject indicates that the limitation prescribed under Section 11B is not applicable to a refund claim in a situation where the concerned tax was never payable by the assessee. In other words, had the Department raised a demand of such an amount, the assessee could have successfully challenged the constitutionality of the same.
Service Tax Appeal No.70152 of 2022 15
11. This principle was laid down by the Hon‟ble Karnataka High Court in KVR Constructions vs. CCE Bangalore [2010 (17) S.T.R. 6 (Kar.)], the relevant portions of which have been extracted below:-
"17. If this Court ultimately concludes that Section 11B of the Act is applicable to the facts of the present case, then, the argument of the learned Counsel for the appellant that Writ Petition was not maintainable would merit consideration. Therefore, at this stage, we will not consider the matter regarding maintainability of the Writ Petition, as first we have to look to the provisions of 11B of the Act and then decide whether Section 11B is applicable to the facts of the case as finding thereon would have bearing for considering the issue of maintainability of Writ Petition. Section 11B of the Central Excise Act reads as under :
"11B.Claimsforrefundofduty:
(1) 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 document 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."
18. From the reading of the above Section, it refers to claim for refund of duty of excise only, it does not refer to any other amounts collected without authority of law. In the case on hand, admittedly, the amount sought for as refund was the amount paid under mistaken notion which even according to the department was not liable to be paid.
19. According to the appellant, the very fact that said amounts are paid as service tax under Finance Act, 1994 and also filing of an application in Form-R of the Central Excise Act would indicate that the applicant was intending to claim refund of the duty with reference to Section 11B, therefore, now it is not open to him to go back and say that it was not refund of duty. No doubt in the present case, Form-R was used by the applicant to claim refund. It is the very case of the petitioner that Service Tax Appeal No.70152 of 2022 16 they were exempted from payment of such service tax by virtue of circular dated 17-9-2004 and this is not denied by the Department and it is not even denying the nature of construction/services rendered by the petitioner was exempted from to payment of Service Tax. What one has to see is whether the amount paid by petitioner under mistaken notion was payable by the petitioner. Though under Finance Act, 1994 such service tax was payable by virtue of notification, they were not liable to pay, as there was exemption to pay such tax because of the nature of the institution for which they have made construction and rendered services. In other words, if the respondent had not paid those amounts, the authority could not have demanded the petitioner to make such payment. In other words, authority lacked authority to levy and collect such service tax. In case, the department were to demand such payments, petitioner could have challenged it as unconstitutional and without authority of law. If we look at the converse, we find mere payment of amount, would not authorize the department to regularise such payment. When once the department had no authority to demand service tax from the respondent because of its circular dated 17-9- 2004, the payment made by the respondent company would not partake the character of "service tax" liable to be paid by them. Therefore, mere payment made by the respondent will neither validate the nature of payment nor the nature of transaction. In other words, mere payment of amount would not make it a "service tax" payable by them. When once there is lack of authority to demand "service tax" from the respondent company, the department lacks authority to levy and collect such amount. Therefore, it would go beyond their purview to collect such amount. When once there is lack of authority to collect such service tax by the appellant, it would not give them the authority to retain the amount paid by the petitioner, which was initially not payable by them. Therefore, mere nomenclature will not be an embargo on the right of the petitioner to demand refund of payment made by them under mistaken notion...."
12. The said principle was followed by this Tribunal in the following judgments: -
i. M/s ASL Builders Private Limited vs. Service Tax Appeal No.70152 of 2022 17 Commissioner of Central GST & CX, Jamshedpur [2020 (1) TMI 431 - CESTAT Kolkata]
"13. The aforesaid propositions reveal that what one has to see is whether the amount paid by the assessee under a mistaken notion was payable or not. In other words, if the assessee had not paid those amounts, the authority could not have demanded from the assessee to make such payment. In other words, the department lacked authority to levy and collect such tax. In case, the department was to demand such payment, the assessee could have challenged it as unconstitutional and without authority of law. When once there is lack of authority to demand service tax or excise duty from the assessee, the department lacks authority to levy and collect such amount and the said amount is not "Service Tax" or "Excise duty" and Section 11B of the Act has no application in such cases.
...
19. In view of the above discussion and by respectfully following the judgements of the superior Courts, cited supra, the impugned orders cannot be sustained and are set aside. The appeal filed by the appellant is allowed with consequential relief."
ii. M/s Techno Power Enterprises Private Limited [Service Tax Appeal No. 75972 of 2021] "16. I also find that the Hon‟ble Karnataka High Court, while considering the issue at hand, had laid down a test in such cases. The Hon‟ble High Court had held that what needs to be ascertained is whether the Revenue could have recovered the amount had the assessee not paid it. In the present case, since the Appellant was not required to pay the amount so paid by them, such amount could not have been recovered by the Revenue and therefore, such amount cannot now be retained by the Revenue.
17. I find that the refund claim filed by the Appellant was filed within the limitation period prescribed under the Article 113 of the Limitation Service Tax Appeal No.70152 of 2022 18 Act, 1963 and since, the amount was not payable by the Appellant under the provisions of the Finance Act, 1994 or the Central Excise Act, 1944, the provisions under the Limitation Act, 1963 would apply."
13. The High Courts of Bombay, Madras, Telangana and Calcutta have similarly held that refunds of amounts paid under mistake of law would not be hit by the statutory limitation periods, in the following judgments:-
i. Parijat Construction vs. CCE, Nashik [2018 (9) G.S.T.L. 8 (Bom.)] "5. We are of the view that the issue as to whether limitation prescribed under Section 11B of the said Act applies to a refund claimed in respect of service tax paid under a mistake of law is no longer res integra. The two decisions of the Division Bench of this Court in Hindustan Cocoa (supra) and Commissioner of Central Excise, Nagpur v. M/s. SGR Infratech Ltd. (supra) are squarely applicable to the facts of the present case.
6. Both decisions have held the limitation prescribed under Section 11B of the said Act to be not applicable to refund claims for service tax paid under a mistake of law. The decision of the Supreme Court in the case of Collector of C.E., Chandigarh v. Doaba Co-Operative Sugar Mills (supra) relied upon by the Appellate Tribunal has in applying Section 11B, limitation made an exception in case of refund claims where the payment of duty was under a mistake of law. We are of the view that the impugned order is erroneous in that it applies the limitation prescribed under Section 11B of the Act to the present case were admittedly appellant had paid a Service Tax on Commercial or Industrial Construction Service even though such service is not leviable to service tax. We are of the view that the decisions relied upon by the Appellate Tribunal do not support the case of the respondent in rejecting the refund claim on the ground that it was barred by limitation. We are, Service Tax Appeal No.70152 of 2022 19 therefore, of the view that the impugned order is unsustainable.
7. We accordingly allow the present appeals and quash and set aside the impugned order, insofar as it is against the appellant in both appeals. We fully allow refund of Rs.8,99,962/- preferred by the appellant. We direct that the respondent shall refund the amount of Rs.8,99,962/- to the appellant within a period of three months. There shall be no order as to costs."
ii. 3E Infotech vs. CESTAT [2018 (18) GSTL 410 (Mad.)] "9. In the above cited case, the Supreme Court stated that the Assessee‟s claim to refund would not be disallowed solely because it seemed barred by limitation. Since the Assessee in that case made the claim for refund shortly after learning about their entitlement for the same, it would not be just to hold that such claim is hit by laches ...
12. Further, the claim of the respondent in refusing to return the amount would go against the mandate of Article 265 of the Constitution of India, which provides that no tax shall be levied or collected except by authority of law.
13. On an analysis of the precedents cited above, we are of the opinion, that when service tax is paid by mistake a claim for refund cannot be barred by limitation, merely because the period of limitation under Section 11B had expired. Such a position would be contrary to the law laid down by the Hon‟ble Apex Court, and therefore we have no hesitation in holding that the claim of the Assessee for a sum of Rs.4,39,683/- cannot be barred by limitation, and ought to be refunded.
14. There is no doubt in our minds, that if the Revenue is allowed to keep the excess service tax paid, it would not be proper, and against the tenets of Article 265of the Constitution of India. On the facts and circumstances of this case, we deem it appropriate to pass the following directions :- (a) The Application under Section 11B cannot be rejected on the ground that is barred by limitation, provided for under Section."
Service Tax Appeal No.70152 of 2022 20 iii. Vasudha Bomireddy vs. Assistant Commissioner of Service Tax [2020 (35) GSTL 52 (Telangana)] "18. Having regard to these decisions, we are of the opinion that if the petitioners were not liable to pay „service tax‟ on the transaction of the purchase of the constructed area along with goods apart from undivided share of land at all, the payment which was made by the petitioners would not be a payment of service tax at all; that the department also could not have demanded payment of the same from the petitioners; and merely because the petitioners made the payment, it would not partake the character of „service tax‟ and the department cannot retain the amount paid by the petitioners which was in fact not payable by them."
iv. Parimal Ray vs. Commissioner of Customs (Port) [2015 (318) ELT 379 (Cal.)] "17.Now I will consider the point of limitation. A person to whom money has been paid by mistake by another person, becomes at common law a trustee for that other person with an obligation to repay the sum received. This is the equitable principle on which Section 72 of the Contract Act, 1872 has been enacted. Therefore, the person who is entitled to the money is the beneficiary or cesti qui trust. When the said sum of Rs. 360.46 lakhs was paid by mistake by the petitioner to the Government of India, the latter instantly became a trustee to repay that amount to the petitioner. The obligation was a continuing obligation. When a wrong is continuing there is no limitation for instituting a suit complaining about it.(See Section 22 of the Limitation Act, 1963).The Supreme Court through Mr. Justice Krishna Iyer opined in Shiv Shankar Dal Mills v. State of Haryana reported in AIR 1980 Supreme Court 1037 as follows:-
1. Where public bodies, under colour of public laws, recover people‟s money, later discovered to be erroneous levies, the Dharma Service Tax Appeal No.70152 of 2022 21 of the situation admits of no equivocation.
There is no law of limitation, especially for public bodies, on the virtue of returning what was wrongly recovered to whom it belongs. Now is it palatable to our jurisprudence to turn down the prayer for high prerogative writs, on the negative plea of „alternative remedy‟ since the root principle of law married to justice, is ubi jus ibiremedium.
2. Another point, in our jurisdiction social justice is a pervasive presence; and so, save in special situations it is fair to be guided by the strategy of equity by asking those who claim the service of the judicial process to embrace the basic rule of distributive justice, while moulding the relief, by consenting to restore little sums, taken in little transactions, from little persons, to whom they belong."
14. In view of the aforesaid analysis, it is concluded that the statutory limitation period prescribed under Section 11B is not applicable to the refund claimed by the Appellant since the amount paid by the Appellant is not a tax.
15. In view of the above discussion the impugned order cannot be sustained and is accordingly set aside. The Order- in-Original dated 29.05.2020 is upheld. The appeal filed by the Appellant is allowed.
(Order pronounced in open court on - 02.09.2025) (P. K. CHOUDHARY) MEMBER (JUDICIAL) LKS