If assessee liable to pay service tax refund limitation period applies to refund application as stipulated u/s 11B of Central Excise Act 1944 – High Court
ABCAUS Case Law Citation:
ABCAUS 2022 (2017) (08) HC
The Substantial Question of Law framed for determination:
Whether the Customs, Excise and Service Tax Appellate Tribunal was in error in rejecting the plea of the Appellant/Assessee that its claim for refund of the service tax paid under the state of law is barred by limitation in terms of Section 11B of the Central Excise Act, 1944?
Important Case Laws Cited/relied upon by the parties:
Hind Agro Industries Limited v. Commissioner of Customs 2008 (221) ELT 335 (Del)
Alar Impex Private Limited v. Commissioner of Central Excise, Delhi-I 2016 (41) S.T.R. 407 (Del)
Kochar Sung-Up Acrylic Limited v. CEGAT 2004 (175) ELT 81 (P&H)
Mafatlal Industries Limited v. Union of India 1997 (89) ELT 247 (SC)
Brief Facts of the Case:
The Appellant company was inter alia engaged in the business of printing of newspapers and providing space for advertisements in newspapers. The Appellant obtained registration with jurisdictional Service Tax authority inter alia for providing services under taxable category of ‘Sale of Space or Time for Advertising Services’ with effect from 1st May, 2006.
The Appellant provided services of ‘sale of space or time for advertising services’ to various clients and raised invoices on them and thus, calculated service tax payable on the billed amount for the period between May, 2006 and January, 2007.
The submission of the Petitioner was that sometimes, the invoices were only part realised, i.e. the invoices issued for services for the aforementioned period were realised in the subsequent period. It was thus stressed that the Petitioner had paid excess amount for the Relevant Period equivalent to difference between amount paid on billed amount and Service Tax payable on realised amount for services during the Relevant Period.
The appellant filed a refund application on 25th September, 2007 before the Assistant Commissioner of Service Tax (‘AC’) for refund of the excess amount of Rs. 14,92,703/- paid as service tax during the aforementioned period.
The Assistant Commissioner allowed a refund of Rs. 10,69,249/- and rejected the refund of Rs. 4,23,454/- on the ground that the said refund claim was barred by limitation under Section 11B of the Central Excise Act 1944 (CE Act). According to the Assistant Commissioner, the aforementioned refund claim for Rs. 4,23,454/- pertained to period prior to 25th September, 2006.
The appeal filed by the Appellant against the above order was dismissed by the Commissioner (Appeals) in 2009. Thereafter the Appellant went in appeal before the CESTAT, which too by the impugned order dated 10th January 2017, dismissed the appeal.
Contention of the Appellant Assessee:
It was submitted that the CESTAT was in error in holding that the Appellant’s claim for refund was barred by limitation. It was contended that since the service tax was not payable twice, the provision of Section 11B (1) of the CE Act would not apply to the claim for refund of the excess service tax paid.
Observations made by the High Court:
The Hon’ble High court observed that in the case laws relied by the appellant, the question examined was whether the levy in question, which was cess in one case and service tax in the other, was at all payable in the first instance. As far as the levy of cess was concerned, the High Court held that it was outside the purview of ‘customs duty’ under Section 27 of the Customs Act, 1962. In other case, the High Court found that the CESTAT had failed to satisfy itself that the “services rendered by the appellant were, on facts, amenable to service tax”. Where the services rendered were not amenable to service tax, the question of applying for refund under Section 11B of the CE Act would not arise.
It was observed that the facts of the instant case were different. The Appellant did not dispute that it is liable to pay service tax for the services rendered by it. In such a situation, it was abundantly clear that the Appellant had to seek refund of service tax, paid in excess, in terms of and within the limitation period stipulated under Section 11B of that CE Act i.e. before the expiry of one year from the relevant date which is the date of payment of duty.
It was noted by the Hon’ble High court that the the Assistant Commissioner had rejected only the claim for refund of service tax paid by the Appellant prior to 25th September, 2006. Such claim was clearly barred by limitation in terms of Section 11B (1) of the CE Act. Since the payment of service tax during the said period was not under protest, the Appellant was unable to take advantage of the second proviso under Section 11B (1) of the CE Act which states that the limitation of one year will not apply where any duty and interest has been paid under protest.
It was held that the order of the CESTAT affirming the order of the Assistant Commissioner, and the consequential order of the Commissioner (Appeals) did not suffer from any legal infirmity.