Payments made under compulsion during investigation are treated as payments under protest, and the limitation period for refund claims commences from the date of the adjudication order dropping the demand.

S. S. GARG :

The present appeal filed by the Revenue is directed against the impugned Order-in-Appeal dated 19.02.2016 passed by the Commissioner of Service Tax (Appeals-II), Delhi, vide which the learned Commissioner (Appeals) has rejected the appeal of the Department and upheld the Order-in-Original dated 27.07.2015.

2. Briefly stated facts of the present case are that the Respondent-M/s Shyama Power India Ltd were engaged in the business of providing services in connection with transmission & distribution of electricity and related infrastructure activities.

2.1 An investigation was initiated by the Directorate General of Central Excise Intelligence, Hqrs. New Delhi (‘DGCEI’), alleging that the Respondent were liable to pay service tax under categories such as erection, commissioning or installation services and works contract service.

2.2 During the pendency of investigation, the Respondent deposited a total amount of Rs.3,77,19,091/- in installments between March 2011 to July 2011 which was paid under protest and without admission of liability. Subsequently, a Show Cause Notice dated 24.10.2011 was issued to the Respondent demanding service tax with interest and penalties. The said Show Cause Notice was adjudicated by the learned Commissioner of Service Tax, New Delhi, who vide the Order-in-Original No. 144/GB/2013 dated 07.10.2013 dropped the entire demand by squarely holding that the services provided by the Respondent are covered vide Notification No. 45/2010-ST dated 20.07.2010 which provides exemption from whole of service tax to taxable services relating to transmission & distribution of electricity. Thereafter, the Respondent filed a refund claim of Rs.3,77,19,091/-. The said refund claim was sanctioned by the Assistant Commissioner vide Order-in-Original No. 026/Refund/ST/Div-XVII/2015-16 dated 27.07.2015. The said Order-in-Original was reviewed by the Reviewing Authority and it was found that the said refund claim is hit by limitation of one year. Accordingly, the Review Order dated 02.11.2015 was issued under Section 84(1) of the Finance Act, 1994 and against the Order-in-Original dated 27.07.2015, an appeal was filed by the Assistant Commissioner before the Commissioner (Appeals). The learned Commissioner (Appeals) has rejected the Department’s appeal and upheld the Order-in-Original dated 27.07.2015. Hence, the Department has preferred the present appeal before us.

3. Heard both sides and perused the material on record.

4. Ms. Amita Gupta, the learned Authorized Representative appearing on behalf of the Appellant-Revenue submits that the impugned Order-in-Appeal is not sustainable as the same has been passed without properly appreciating the facts and the law.

4.1 She further submits that the Commissioner (Appeals) has wrongly treated the amount as “duty paid under protest”, even though the Respondent did not follow the mandatory procedure prescribed under Rule 31 of Central Excise Rules, 2002 such as giving written intimation to the Superintendent, obtaining acknowledgment and marking challans/invoices as “under protest”.

4.2 She further submits that the proviso to Section 11B (1) of the Central Excise Act, 1944 as made applicable to service tax under Section 83 of the Finance Act, 1994 is not applicable since the payment was not made under valid protest. She also submits that the refund claim filed on 18.11.2014 is time barred as it was filed more than three years after the date of its deposit, contrary to the one-year limitatio