Sec 11B of Central Excise Act not applicable when Payment of Service Tax is by Mistake: CESTAT [Read Order]

A Single Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT), ruled that Section 11B of Central Excise Act not applicable when payment of service tax is by mistake.

The Appellant, M/s. Raheja Regency Cooperative Housing Society ltd is providing the services under the category of Club or Association Services and is a Society Registered under the provisions of Maharashtra Cooperative Housing Society Act, 1960 and have filed two refund claims for the period 2015-16 on the ground that they have paid service tax under protest as they are Co-operative Society not engaged in any activity of profit and would not be liable to Service tax under the Club or Association Service.

Since the department was of the view that the grounds of refund claims are not sustainable and liable for rejection therefore a show cause notice was issued to the Appellant to clarify as to why the refund claim should not be rejected on merits as well as on the ground of limitation in terms of Section 11B of the Central Excise Act, 1944 as applicable to service tax vide Section 83 of the Finance Act, 1994.

The Adjudicating Authority rejected the refund claims on the ground of limitation u/s. 11B of Central Excise Act as made applicable to Service Tax matters and also on merits by applying the provisions of Section 66B & 66D of Finance Act, 1994.

The Counsel for the appellant submitted that since the amount of service tax was paid under protest therefore the period of limitation as prescribed u/s. 11B of Central Excise Act would not apply to the facts of the case and otherwise also neither the adjudicating order nor the impugned order raised any issue regarding the time bar claim and since the revenue has not challenged the order therefore, they cannot be permitted to argue on the issue of limitation.

It is clear that the appellant cannot be said to be liable to pay service tax in any manner whatsoever inasmuch as what was paid by the appellant was not tax as envisaged under the Finance Act, 1994. Thus, the amount paid by the Appellant would not take the character of tax but is simply an amount paid under a mistake of law. The provisions of Section 11B of Central Excise Act would, therefore, not be applicable to an application seeking refund thereof

The Tribunal of Ajay Sharma, Judicial Member observed that “Since as per the settled law the appellant was not liable to pay any tax therefore whatever has been paid by them was due to mistake of law. If that is so then the limitation as prescribed by section 11B of Central Excise Act is not applicable at all.

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