The Chandigarh CESTAT, in Veer Overseas Limited v. CCE & ST Panchkula, held that the statutory limits prescribed under section 11B of the Central Excise Act, 1944 is not applicable to the amount of service tax collected by the department without authority of law.
As per Notification No. 13/2003-ST, Business Auxiliary Services provided by a Commission Agent in relation to sale or purchase of agricultural produce are exempted from the levy of service tax. Appellants, without knowing the same, paid service tax in connection with the export of sale.
Subsequently, they claimed refund of tax. However, the department rejected the claim on ground that the refund was filed beyond the statutory time limit of one year prescribed under Section 11B of the Central Excise Act, 1944.
Before the Tribunal, the assesse submitted that they had to deposit Service Tax on the impugned service being recipient of service provided by foreign commission agents. Subsequently, they filed refund claim on 01.02.2010 contending that the Service Tax was paid inadvertently.
After analyzing the facts and the arguments from both sides, the bench noted that the payments made by the appellants on the dates of payment were not on account of any mistake of law or mistake of fact. However it was only on 26.05.2011 that a clarification was issued by the CBEC, which clarified that “Also where the commission agents stationed abroad provide business auxiliary service to promote the export of rice, said business auxiliary service is covered by Notification No. 13/2003 ST (as amended) because, the word rice is mentioned under the explanation to the terms agricultural produce, in the inclusive portion along with other items like cereals, pulses, etc.”
“Thus, as a result of this clarification dt. 26.05.2011, the benefit of this exemption notification No. 13/2003 became available to the appellant and the amount collected by the Revenue was therefore without any authority. It is settled position in law that beneficial circular has to be applied retrospectively while oppressive circular has to be applied prospectively. “
With regard to the question of applicability of statutory limit, the bench noted that “the amount deposited by the assessee-Appellants without any authority of law cannot be considered as Service Tax. As per Article 265 of the Constitution, no tax can be collected without any authority of law. At the relevant time, there was no authority of law to collect Service Tax on the activity carried out by the assessee-Appellants. Hence, Section 11B of the Central Excise Act, 1944 is not applicable. The amount was deposited in the year 2006-2007 and the refund was filed on 02nd January, 2008. Hence, the claim has been made within the period of three years prescribed by Honble Delhi High Court. Therefore, we are of the view that the assessee-Appellants are entitled to get the refund and the same is not hit by the limitation prescribed under Section 11B of the Central Excise Act, 1944 read with Section 83 of the Finance Act, 1994.”
“In the instant case, we are of the view that it is not a case of refund of tax, but return of deposit for which limitation (Section 11B of the Act) is not applicable. Hence, we set aside the impugned order and direct the jurisdictional Commissioner to return the deposited amount, as per law.”
Relying on the decision in Parekh Bros Vs. CIT, the bench also pointed out that the Department should not take advantage of the ignorance of the assessee-Appellants.
Read the full text of the Order below.
