By TIOL News Service

CHENNAI, JULY 09, 2018: THE appellant rendered export services to its client Alpin Management Partners , USA , and paid a total sum of Rs.9,72,458/- as service tax during the financial year 2015-16. Out of this amount, a sum of Rs.4,39,683/- was paid on 07.04.2015 .

Later, the appellant realised that under Rule 6A of Service Tax Rules, 1994, they were not required to discharge any Service Tax liability and, hence on 30.06.2016 made a representation for refund of the tax paid.

The Assistant Commissioner allowed the refund of Rs.5,32,772/- but disallowed the claim of Rs.4,39,683/- on the ground that it was time barred u/s 11B of the CEA, 1944.

The Commissioner(A) as well as CESTAT upheld this order and, therefore the appellant is before the Madras High Court.

The High Court observed that the apex court in ITC Ltd. (1993) Supp. IV SCC 326 has held that when the tax has been paid under mistake of law, it would not be just to hold that such claim is hit by laches of limitation and furthermore the High Courts in the cases of Oil and Natural Gas Corporation Ltd. - 2017-TIOL-822-HC-AHM-CX, Joshi Technologies International, INC-India Projects - 2016-TIOL-1240-HC-AHM-CX & Parijat Construction - 2017-TIOL-2170-HC-MUM-ST have held that - Limitation prescribed u/s 11B of the CEA, 1944 is not applicable to refund claim in respect of service tax paid under a mistake of law.

It was held -

+ The claim of respondent in refusing to return the amount would go against the mandate of Article 265 of Constitution of India, which provides that no tax shall be levied or collected except by authority of law.

+ 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 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.

+ 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 of India.

Accordingly, it was directed that -

+ The Application under Section 11B cannot be rejected on the ground that it is barred by limitation, provided for under Section.

+ The claim for return of money must be considered by the authorities.

The Civil Miscellaneous Appeal was disposed of accordingly.

(See 2018-TIOL-1268-HC-MAD-ST)