AHMEDABAD, JULY 04, 2018: THE facts are that the petitioner had paid service tax in relation to construction service of Salaya Port.

Pursuant to insertion of Section 103 in Finance Act, 1994 by the Finance Act, 2016, they filed an application on 28.11.2016 for refund of Service Tax of Rs.12,67,61,271/- paid during the period 01.04.2015 to 29.02.2016.

Quick Reference:

103. Special provision for exemption in certain cases relating to construction of airport or port.-

(1) Notwithstanding anything contained in section 66B, no service tax shall be levied or collected during the period commencing from the 1st day of April, 2015 and ending with the 29th day of February, 2016 (both days inclusive), in respect of services provided by way of construction, erection, commissioning or installation of original works pertaining to an airport or port, under a contract which had been entered into before the 1st day of March, 2015 and on which appropriate stamp duty, where applicable, had been paid before that date, subject to the condition that Ministry of Civil Aviation or, as the case may be, the Ministry of Shipping in the Government of India certifies that the contract had been entered into before the 1st day of March, 2015.

(2) Refund shall be made of all such service tax which has been collected but which would not have been so collected had sub-section (1) been in force at all material times.

(3) Notwithstanding anything contained in this Chapter, an application for the claim of refund of service tax shall be made within a period of six months from the date on which the Finance Bill, 2016 receives the assent of the President.

It is pertinent to note that the Finance Bill, 2016 received the assent of the President on 14.05.2016.

A SCN was issued on 07.12.2016 proposing rejection of the said refund claim on the ground that the same was filed beyond the period of six months as stipulated under Sec.103 of Finance Act, 1994 and thus barred by limitation.

The adjudicating authority rejected the claim but the Commissioner (Appeals) allowed the appeal by condoning the delay of 15 days in filing the Refund Application considering the same as procedural lapse and, therefore, Revenue filed an appeal before the CESTAT contending that the Commissioner (Appeals) had exceeded his jurisdiction inasmuch as there is no provision u/s 103 of Finance Act, 1994 for condonation of delay, if any, beyond the period of six months prescribed thereunder in claiming the refund of Service Tax.

The CESTAT agreed and allowed the Revenue appeal.

While reaching this conclusion, the CESTAT highlighted the following -

++ Applying the ratios [in UOI Vs. Kirloskar Pneumatic Company - 2002-TIOL-60-SC-CUS & Indian Oil Corporation Ltd Vs UoI - 2011-TIOL-1053-HC-AHM-CX] to the facts of the present case, it can safely be inferred that the period of six months prescribed under Sub. Sec.(3) of Sec.103 of the Finance Act, 1994 cannot be extended by the departmental authorities.

++ Tribunal, created under a statute cannot travel beyond the contours of the jurisdiction conferred under the statute. This principle is settled in a series of cases. [ Union of India Vs. Paras Laminates (P) Ltd.) - 2002-TIOL-48-SC-CUS refers]

We reported this order as 2017-TIOL-3645-CESTAT-AHM .

Aggrieved by this order, the assessee filed a Special Civil Application before the Gujarat High Court.

The High Court considered the elaborate submissions made by both sides and observed thus -

+ In the present case admittedly the petitioner submitted the application for claim of refund of the service tax on 28.11.2016 i.e. much after the completion of six months' period from 14.05.2016 .

+ A conditional exemption and conditional refund was provided by policy decision contained in section 103 of the Finance Act, 1994. It cannot be disputed that but for section 103 of the Finance Act, 1994 and the exemption being granted retrospectively, the petitioner could not have as a matter of right claimed such exemption and/or even consequently the refund of the tax paid.

+ As such the Union Government was not under any obligation to provide the exemption retrospectively and that too with refund of the tax already paid. By way of policy decision which was culminated into section 103 of the Finance Act, 1994, such an exemption was provided retrospectively and the refund was provided, however subject to sub-section (3) of section 103 of the Finance Act, 1994.

+ Being a policy decision, it is always open to impose certain conditions. Under the circumstances such a provision more particularly provision like sub-section (3) of section 103 of the Finance Act cannot be the subject matter of judicial review and the same cannot be declared as arbitrary, unconstitutional and/or ultra vires to Article 14 of the Constitution. Section 103 is a statutory provision and section 103 is inserted which can be said to be a policy decision.

+ It is not the case on behalf of the petitioner that section 103 is beyond the competence of the Union Government. Nothing has been pointed out how the said provision can be said to be arbitrary and/or unconstitutional. In any case, being a policy decision culminated into statutory provision, the same is not subject to judicial review and therefore, the prayer of the petitioner to declare section 103(3) of the Finance Act, 1994 as unconstitutional deserves rejection. [Shri Bakul Oil Industries and Another - 2002-TIOL-1812-SC-CT, Indian Oil Corporation Limited (2017 SCCOnLine SC 1393), Held - such policy decisions are not amenable to judicial review.]

+ The question of reading down (sub-section (3) of section 103 of the Finance Act, 1994) will arise only if there is an ambiguity in section. Section 103 is very clear and the intention of the legislature is very clear. Therefore, there is no question of reading down the same as submitted on behalf of the petitioners.

+ Even the prayer of the petitioners to direct the respondents to compute six months' period within which the refund claim was to be filed in terms of section 103 of the Finance Act, 1994, from the date the requisite certificate was issued by Ministry of Shipping also cannot be granted in exercise of powers under Article 226 of the Constitution of India. No directions can be issued in exercise of powers under Article 226 which shall be contrary to the statutory provision . Grant of such relief in exercise of powers under Article 226 of the Constitution of India would be contrary to the statutory provision.

Submission that for the delay on the part of the Ministry (of Shipping) the petitioner may not be made to suffer was also held by the High Court to be without substance, although it seemed attractive.

In fine, after distinguishing the case law cited by the appellant of Cosmonaut Chemicals - 2008-TIOL-473-HC-AHM-CX, the High Court concluded that the refund application submitted by the petitioner was rightly rejected as the same was beyond the period of limitation prescribed under sub-section (3) of Section 103 of the Finance Act, 1994.

As regards the submission of the petitioner that sub-section (3) of Section 103 of the Finance Act, 1994 is discriminatory and violative of Article 14 of the Constitution of India on the ground that the period provided under Section 11B of the Central Excise Act, 1944 shall be one year and the limitation prescribed under sub-section (3) of Section 103 of the Finance Act, 1994 is six months is concerned, the High Court held that it carried no substance.

Inasmuch as the High Court held -

"…The petitioner is claiming the refund under Section 103 of the Finance Act, 1994. The right accrued in favour of the petitioner to claim the refund is under Section 103 of the Finance Act, 1994 and therefore, the limitation prescribed under Section 103 of the Finance Act, 1994 shall be applicable. The substantive right to claim the refund in favour of the petitioner would be under Section 103 of the Finance Act, 1994. Therefore, sub-section (3) of Section 103 of the Finance Act, 1994 cannot be said to be discriminatory and/or violative of Article 14 of the Constitution of India as contended on behalf of the petitioner."

The impugned order passed by the CESTAT was upheld and the petition was dismissed.

(See 2018-TIOL-1240-HC-AHM-ST)