Claim for Refund, even where Tax has been Paid under Mistake of Service Tax Law to be Decided upon u/s 11B of Central Excise Act: CESTAT [Read Order]

The Chennai Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT), ruled that the Claim for refund, even where tax has been paid under mistake of service tax law to be decided upon under Section 11B of Central Excise Act, 1944.

The appellant, M/s. GAIL India Ltd, was registered with the Service Tax Department and were engaged in the business of transporting and trading of industrial gases through their own pipelines on which they were discharging service tax. The tariff charges are fixed by the Government agency known as Petroleum and Natural Gas Regulatory Board (PNGRB).

The appellant has filed a refund claim of Rs.10,54,78,124/- on 9.7.2015 under Rule 173S of the Central Excise Rules, 1944 in respect of service tax paid on gas transmission charges collected by them from their customers and duly remitted to the Government during the period 1.4.2011 to 31.7.2014. The said refund claim arose due to differential price charges i.e. the difference between tariff already charged as per contract by the appellant and the tariff amount as received by PNGRB.

On scrutiny of the ST-3 returns of the appellant, it appeared to the Department that the said refund amount had already been adjusted / utilized by the appellant under Rule 6(3) of Service Tax Rules, 1994. Hence after due process of law, the refund claim was rejected by the original authority.

The Counsel for the appellant submitted that it was only due to inadvertence, at the time of filing of ST-3 returns, that instead of stating that the actual amount adjusted which is Rs.66,24,851/-, they have keyed in the entire amount of Rs.11,47,41,041/- as having been adjusted. This being a clerical error, it could not empower the adjudicating authority to reject the refund claim only on that ground.

A Two-Member Bench of the Tribunal comprising Sulekha Beevi C.S., Member (Judicial) and M. Ajit Kumar, Member (Technical) observed that “While this is a fresh legal issue which has not been examined by the Original Authority, it is no longer in dispute that claims for refund, even where tax has been paid under a mistake of service tax law are to be filed and decided upon under Section 11B of the Central Excise Act, 1944, subject to the claimant establishing that burden of duty has not been passed on to third parties.”

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