Refund of Service Tax consequent to Sec 11C Notification 45/2010 - When eligibility of Notification itself is in dispute, limitation of six months u/s 11C is not applicable - Refund in such cases is governed by Sec 11B: CESTAT
By TIOL News Service
HYDERABAD, JULY 29, 2016: THE appellant provided ECIS services relating to Transmission and Distribution of Electricity. They filed a refund claim for an amount of Rs 16,81,771/- being the amount paid towards Service Tax. The claim was rejected by the lower authorities on the ground that the appellant is not eligible for the benefit of Notification and also that the refund claim is barred by limitation as the same has to be filed within six months from the date of issue of Notification No 45/2010 ST as per the proviso to Section 11C.
It is the case of the appellant that the limitation for refund claim will start only from the date of favorable judgment (allowing the benefit of Notification No 45/2010) as per the provisions of Sec 11(B)(5)(B)(ec) and the eligibility of Notification No 45/2010 ST has been decided in favour of the appellant in a number of judgements.
After hearing both sides, the Tribunal held:
+ On the issue of eligibility of No. 45/2010-ST in the appellants own appeal, this Bench has set aside the demand made against the appellant by denial of notification No. 45/2010-ST vide Final Order No. A/30489/2016 dated 23.05.2016.
+ The main issue per se was in agitation/subjudice in respect of this appellant at least till the date of Tribunal's afore cited Final Order viz; 23.05.2016. In the normal course, pursuant to issue of a notification under Section 11 (C) of Central Excise Act, 1944, any refund arising on account of such section 11 (C) notification will have to be necessarily claimed before the expiry of six months from the date of issue of the said notification [Proviso to subsection (2) of Sec.11 (C)]. This is a deviation from the normal period of one year provided for in claim of refund in Sec.11 (B) ibid. However, as per clause (ec) of Explanation (B) of sub section (5) of Section 11 (B) ibid read with subsection (1) thereof, in case where a duty becomes refundable as a consequence of judgment, decree, order or direction of appellate authority, Appellate Tribunal or any court, the refund claim can be made before the expiry of one year from the date of such judgment decree or direction. The statutory interpretation in such a situation, as distilled from settled law, is that when there are in an enactment two provisions which cannot be reconciled, they should be so interpreted that if possible, effect should be given to both. This is what is called as harmonious construction.
+ Both the apparently conflicting provisions in section 11(B) vis-a-vis 11 (C) ibid, with regard to time limit prescribed to file refund claim are in fact harmonious with each other. Each has its own place, purpose and intention in the statute. The time limit of six months provided in Section 11 (C) will normally be applicable in respect of refund claims emanating out of notifications issued under that section. However, if the issue involved in such 11 (C) notification is also subjudice in any Court etc., the said provision of Section 11 (C) will stand eclipsed by the general provision of Section 11 (B). The general provision of S 11 B (5) (ec) will then take precedence over the special provision in S 11 C ibid. In such a case, by implication the refund claimant will legally become entitled to file the claim within a time limit of one year from the date of judgment, decree, order or direction of appellate authority, Tribunal or Court in view of clause (ec) of explanation B of S 11B (5) ibid .
+ The limitation can therefore start clicking only from the date of final judgment/decree/decision of Court/Tribunal/Appellate Authority. In this case therefore the limitation period will only start, at the earliest, after 23.05.2016 i.e. date of Final Order No. A/30489/2016 stated above.
Accordingly, the Tribunal allowed the appeal.
(See 2016-TIOL-1897-CESTAT-HYD)
