Time limit for claiming refund not applicable when Service Tax paid erroneously

By:

The CESTAT, in Kolkata M/s. Bansal Biscuits Private Limited v. Commissioner of Central Excise & Service Tax, Patna [Service Tax Appeal No. 75363 of 2016 dated November 17, 2023] held that time limit prescribed for claiming refund under Section 11B of the Central Excise Act, 1944 (“the CEA”) would not be applicable in cases when Service Tax is paid erroneously.

Facts:

M/s Bansal Biscuits Private Limited (“the Appellant”) is engaged in the business of manufacturing of Biscuits and is registered with Service Tax Authorities for paying Service Tax under the Reverse Charge Mechanism for Goods and Transport Agency services (“GTA Services”) utilized by them. The Revenue Department (“the Respondent”) issued a Notification No. 25/2012-ST dated June 20, 2012, (“the Notification”) wherein exemption from payment of Service Tax is granted on payment of GTA Services availed in case of transportation of food products. However, the Appellant continued to pay the Service Tax under Reverse Charge. Later, it came to the knowledge of the Appellant that the Notification had been issued, granting the exemption from payment of Service Tax. Thereafter the Appellant filed an application for refund claim dated September 9, 2015. However, the Respondent issued a Show Cause Notice as to why the refund claim should not be rejected as the same being time-barred under Section 11B of the CEA. Thereafter the Respondent Authority vide its Order rejected the refund claim under Section 11B r/w Section 83 of the Finance Act, 1994. The Appellant filed an appeal wherein the Respondent Appellate Authority vide order dated March 15, 2016 (“the Impugned Order”) upheld the Order.

Aggrieved, the Appellant filed an appeal against the Impugned Order passed, before the Tribunal for claiming of refund.

Issue:

Whether time limit prescribed for claiming refund under Section 11B of the CEA would be applicable in cases when Service Tax is paid erroneously?

Held:

The CESTAT, Kolkata in the case of Service Tax Appeal No. 75363 of 2016 held as under:

  • Relying upon the judgement of the CESTAT, Hyderabad in the case of Credible Engg. Construction v. CCE, Hyderabad (Final Order No. A/30082/2022 dated September 5, 2022) noted that, the limit prescribed under Section 11B of the CEA would not be applicable in cases where the Service Tax is deposited erroneously when there is no requirement to pay any tax/duty.
  • Opined that, the aforementioned judgement would be applicable in the present case and provision Section 11B of the CEA prescribing time limit is not applicable.
  • Held that, the Appeal is allowed.

Relevant Provision:

Section 11B of the CEA:

“Section 11B. Claim for refund of duty.-

(1) 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 in such form and manner as may be prescribed and the application shall be accompanied by such documentary or other evidence (including the documents referred to in section 12A) as the applicant may furnish to establish that the amount of duty of excise and interest, if any, paid on such duty in relation to which such refund is claimed was collected from, or paid by, him and the incidence of such duty and interest, if any, paid on such duty had not been passed on by him to any other person:…………”

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