The Chennai Bench of the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) held that Royal Enfield Motors’ claim for refund of Rs. 1.79 crore in service tax paid on SIPCOT development charges was not maintainable as it was filed beyond the statutory time limit prescribed under Section 104(3) of the Finance Act, 1994.
Royal Enfield Motors, the appellant, a unit of Eicher Motors Ltd., had paid service tax on one-time development charges to SIPCOT for land allotted on a long-term lease. Following the introduction of Section 104 by the Finance Act, 2017, which retrospectively exempted such payments from service tax for the period from June 1, 2007, to September 21, 2016, the appellant sought a refund of the tax paid, filing a refund claim on October 31, 2017.
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The department issued a show cause notice proposing to reject the claim, stating that it had been filed 31 days after the six-month deadline that ended on September 30, 2017. The original authority denied the refund solely on the ground of delay. The Commissioner (Appeals) upheld the rejection, observing that Section 104 was a special provision with a specific time bar that could not be extended.
Before the tribunal, the appellant’s counsel submitted that the delay was due to SIPCOT’s late communication, dated September 12, 2017, advising the appellant to file the refund claim. Until then, there was no clarity on whether SIPCOT or the appellant should initiate the refund process.
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They also argued that the amount paid was not actual service tax but an erroneous collection, and hence should be refunded automatically. Citing Section 17 of the Limitation Act and various case laws, they claimed that limitation should be counted from the date of discovery of the mistake.
The revenue argued that Section 104 clearly prescribed a six-month limitation period, which was mandatory. It contended that administrative delays by SIPCOT were irrelevant and that refund claims must be filed strictly within the prescribed timeframe. The department also pointed to the CESTAT Chennai ruling in T.V.M. Edible Oil Refineries, where a similar refund claim was denied as time-barred.
The two-member bench comprising M. Ajit Kumar (Technical Member) and Ajayan T.V. (Judicial Member) ruled that statutory time limits under special refund provisions like Section 104 must be strictly followed. It observed that accepting the appellant’s explanation would render the time bar meaningless and open the floodgates to stale claims disguised as administrative delays.
The tribunal further clarified that amounts collected as service tax, whether mistakenly or not, must be refunded strictly in accordance with the refund provisions of the law. It also held that the Limitation Act does not apply to quasi-judicial proceedings under tax statutes unless explicitly stated.
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The tribunal declined to examine the merits of the taxability of development charges, observing that the show cause notice and lower authority orders had not dealt with this issue. It found the refund claim was undisputedly filed 31 days late and was barred by limitation. The appeal and the accompanying miscellaneous application were both dismissed.
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