CESTAT Allows Refund of Amounts Paid Under Mistake, Even Beyond One-Year Limitation Period [Read Order]
CESTAT held that service tax mistakenly paid twice is refundable even beyond the one-year limitation period.
![CESTAT Allows Refund of Amounts Paid Under Mistake, Even Beyond One-Year Limitation Period [Read Order]](https://images.taxscan.in/h-upload/2025/07/23/2067944-refund-amount-allahabad-cestat-taxscan.webp "CESTAT Allows Refund of Amounts Paid Under Mistake, Even Beyond One-Year Limitation Period [Read Order]")
The Allahabad Bench of the Customs, Excise, and Service Tax Appellate Tribunal ( CESTAT ) ruled that service tax amounts paid under a mistaken belief are refundable even if claimed beyond the one-year limitation period under Section 11B of the Central Excise Act. U.P. Purva Sainik Kalyan Nigam Ltd., the appellant, is a government undertaking engaged in manpower supply services. During...
The Allahabad Bench of the Customs, Excise, and Service Tax Appellate Tribunal ( CESTAT ) ruled that service tax amounts paid under a mistaken belief are refundable even if claimed beyond the one-year limitation period under Section 11B of the Central Excise Act.
U.P. Purva Sainik Kalyan Nigam Ltd., the appellant, is a government undertaking engaged in manpower supply services. During the first quarter of the 2017–18 financial year, the appellant mistakenly deposited Rs. 20,00,000 twice on the same day due to a clerical error.
After realizing the mistake, the appellant attempted to carry forward the excess payment through the GST TRAN-1 form. The Deputy Commissioner rejected the credit claim, stating it was ineligible under CGST transition provisions. The appellant then re-deposited the amount in cash and subsequently filed a refund claim for the excess payment.
Tax Audit Deadline Is Near! Are you prepared? Click here
The department issued a show cause notice denying the refund on the ground that it was filed beyond the one-year time limit under Section 11B. The Assistant Commissioner rejected the refund, and the Commissioner (Appeals) upheld the rejection. Aggrieved by the order, the appellant approached the CESTAT.
The appellant's counsel argued that the payment was not a statutory tax liability but a mistaken deposit, which should be treated as a revenue deposit, and thus not subject to the limitation period under Section 11B of the Central Excise Act. They relied on judgments including 3E Infotech v. CCE, Doaba Cooperative Sugar Mills, and the Supreme Court’s ruling in Mafatlal Industries to support that money paid by mistake is refundable even after the limitation period.
The revenue counsel countered that the appellant initially attempted to carry forward the excess amount as transitional credit under GST and failed. The refund claim was rightly rejected under the one-year rule of Section 11B of the Central Excise Act. They also argued that refunding the amount would result in unjust enrichment as the appellant retained ITC benefit.
Tax Audit Deadline Is Near! Are you prepared? Click here
The bench led by Judicial Member P.K. Choudhary observed that the excess amount was paid by mistake and not as tax liability, and such deposits are not governed by the limitation under Section 11B of the Central Excise Act. The tribunal explained that Section 11B only applies to tax refunds and not to mistaken or voluntary deposits.
The tribunal further observed that a mistaken payment with no underlying tax liability does not require appeal of any assessment, and refund denial solely on limitation grounds would be unjust. The appeal was allowed, and the refund claim directed to be processed.
Support our journalism by subscribing to Taxscan premium. Follow us on Telegram for quick updates
