Limitation of one year u/s 11B of Central Excise Act not applicable when Service Tax was paid under Protest: CESTAT [Read Order]

The Ahmedabad Bench of the Customs, Excise & Service Tax Appellate Tribunal (CESTAT) limitation of one year under section 11b of the Central Excise Act, 1944 is not applicable when service tax was paid under protest.

The issue involved in the present case is whether the appellant’s refund filed after one year from the relevant date is hit by limitation in terms of Section 11B of the Central Excise Act, 1944.

 Erweka India, the appellant had the bonafide belief that their services related to the export of goods is not taxable, written a letter dated 25.06.2007 that even though they believe that their services do not come under the service tax net, they decided to take the registration and started paying service tax. 

Further stated in the said letter that till clarification on the issue that whether their service is taxable, their payment of service tax may be considered under protest.  Thereafter, whatever service tax they have paid, they filed a refund claim before the sanctioning authority. 

The sanctioning authority rejected the claim on the time limit. The Commissioner (Appeals) also rejected the appeals and opined that the said letter was not submitted before the Adjudicating Authority therefore, the same cannot be entertained at the appellate stage being afterthought and the claim was rejected. 

The appellants submitted that even though the refund was filed after one year from the relevant date but right from the beginning, at the time of registration, the appellant declared to the department vide letter dated 25.06.2007 that though they are making payment of service tax under protest till the clarity of issue whether the service is taxable or otherwise. 

Proviso under Section 11B(1) of the central excise act, the period of one year will not apply if the assessee paid duty under protest.  In the present case also, it is not in dispute that service tax was paid under protest therefore, the limitation of one year is prima-facie, not applicable. 

The Appellant failed to produce the letter under protest dated 25.06.2007 before the Adjudicating Authority, the Commissioner (Appeals) also rejected the submissions of the appellant regarding this under-process letter on the ground that it is an after-thought as the same was not produced before the original authority. 

The Court observed that the letter cannot be said that it is an afterthought and held that the Commissioner (Appeals) should have considered this letter and passed a reasoned order on this issue which he fails to do so.

Since the letter was produced before the Adjudicating Authority, a single-member bench comprising of Mr Ramesh Nair remanded the matter to the Adjudicating Authority to pass a fresh order after considering the under-protest letter dated 25.06.2007 set aside the impugned order.

Support our journalism by subscribing to Taxscan premium. Follow us on Telegram for quick updates