The limitation period prescribed under Section 11B of the Central Excise Act, 1944, is inapplicable to refund claims for amounts paid inadvertently by mistake, as such payments do not constitute 'duty' or 'tax' and the government cannot retain money collected without the authority of law.

HEMAMBIKA R. PRIYA

This appeal has been filed by M/s. McCann Erickson (India) Pvt Ltd¹1. the Appellant against the Order-in-Appeal No.112/ST/DLH/2024 dated 24.06.2024 passed by the Commissioner (Appeals-I), Delhi, which rejected the refund of service tax amounting to Rs.2,93,72,118/-.

The brief facts are that the Appellant was registered for providing advertising agency services taxable under the Chapter V of the Finance Act, 1994. The Appellant discharged their service tax liability on a monthly basis in accordance with the provision of section 66B of the Finance Act, 1994. However, for certain months from January 2017 onwards, the Appellant paid service tax without adjusting the previously paid Service Tax in the previous tax periods (December 2016 onwards). Consequently, the appellant paid the service tax in excess of the amount required to be paid. Further in addition to the above, the Appellant had discharged excess payment in cash in the months of March 2017 and April 2017 to the tune of Rs.23,30,533/-. Such excess payment of tax made in the months of March and April 2017 was not adjusted for the discharging the liability of any future months. The Appellant filed a refund application in 'Form R' dated 09.01.2020 amounting to Rs.2,93,72,118/- (Rs.2,70,41,585/- + Rs.23,30,533/-). On scrutiny of the said claim, the Department opined that the refund claim was time barred. Further, the appellant had not submitted any documents to establish the non utilization of such excess tax paid. A Show Cause Notice dated 30.04.2020 was issued to the Appellant.

The Assistant Commissioner vide Order-in-Original No.13/2023-24 dated 14.02.2024 rejected the refund claim on the ground that refund claim filed was beyond time limit of one year prescribed under Section 11B of Central Excise Act, 1944. Being aggrieved by the aforesaid order, the Appellant filed an appeal before the Commissioner (Appeals). The Commissioner, vide the impugned Order-in-Appeal No.12/ST/DLH/2024 dated 24.06.2024 confirmed the finding of the adjudicating authority that limitation under Section 11B of the Act is applicable to the refund claim.

Learned counsel submitted that the said excess payment of service tax was not in nature of tax, hence the limitation of one year under Section 11B of Central Excise Act,1944 was not applicable in the present case. Learned counsel further contended that the impugned order was erroneous as it had applied the limitation prescribed under Section 11B of the Act to the present case where admittedly Appellant had paid excess amount even though such excess amount was not due to the department. Therefore, the impugned order rejecting the Appellant's refund of amounts, being in the nature amount paid in excess of tax liability, was unsustainable. Learned counsel placed reliance on the case of Union of India vs. ITC Ltd .²2.1993 Supp.IV SCC 326, while dealing with the question of refund of excess excise paid, the Hon'ble Supreme Court held that that the appellant’s claim to refund would not be disallowed solely because it seemed barred by limitation. Learned counsel further submitted that the appellant made the claim for refund shortly after learning about their entitlement for the same, it would not be just to hold that such claim is hit by laches. He relied on of M/s Jain Irrigation systems Ltd. vs. CCE, Nashik³3.2016 (42) STR 377 (Tri-Mum), the Tribunal allowed the refund of service tax paid which was not actually payable. He further stated that such excess payment takes on the nature of a deposit and no amount can be collected from the appellant by revenue department if it is not in accordance with law. Similar view was taken by the Hon'ble High Court of Delhi in case of Commissioner of CGST, Delhi vs M/s Afflatus International⁴4. 2024-VIL-948-DEL-ST; Telecare Network (India) Pvt. Ltd.Vs. Union of India⁵5.2024-VIL-961-DEL-CU, wherein it was held that in case of payment of tax made under mistake of law, the period of limit