CESTAT, Chandigarh Bench
Veer Overseas Ltd. vs. Commissioner of Central Excise and Service tax, Panchkula
Section 54, 11B
Devender Singh, Technical Member
Interim Order No. 20 Of 2017
Appeal No. St/320/2011
September  7, 2017Â
Circulars and Notifications: Notification No. 13/2003-ST, dated 20-6-2003, Circular No. 143/12/2011-ST, dated 26-5-2011
ORDER
1. The appellants have filed this appeal against the Order-in-Appeal No. 747/S. Tax/ D-II/10 dt. 06.12.2010 passed by the Commissioner of Central Excise, Delhi-II. The brief facts of the case are that the appellants filed two refund claims of Service Tax paid as recipients of service on the services received from the Foreign Commission Agent under Business Auxiliary Services. The claims were filed on the ground that the said tax was paid by them inadvertently as the same was otherwise exempt under Notification No. 13/2003-ST dt. 20.06.2003 as amended. The said notification exempts Business Auxiliary Services provided by a Commission Agent in relation to sale or purchase of agricultural produce from the Service Tax leviable under Section 66 of the Finance Act, 1994. The appellants are in the business of export of Rice. The claim of the appellants had been rejected by both the lower authorities on the ground that the refund was filed beyond the statutory time limit of one year prescribed under Section 11B of the Central Excise Act, 1944. Aggrieved from the order of the Ld. Commissioner (Appeals), the appellants have filed this appeal.
2. Ld. Advocate for the appellants submits that Service Tax pertaining to these claims was deposited on 11.02.2008, 07.04.2008 and 25.04.2008 and the two refund claims were filed on 01.02.2010 under Section 11B of the Act. He contended that the assessee deposited Service Tax on the service of Foreign Commission Agents for the export of rice, inadvertently which was exempted from payment of Service Tax. He relied on the Circular No. 143/12/2011-ST dt. 26.05.2011 issued by CBEC clarifying that the Business Auxiliary Service provided by Commission Agents stationed abroad to promote the export of rice is covered by the Notification No. 13/2003-ST. He also relied on the following Judgments:—
1. Geojit BNP Paribas Financial Services Ltd. v. CCE, C & ST [2015] 59 taxmann.com 401 (Ker.)
2. Monnet International Ltd. v. CCE [2017] 80 taxmann.com 380/3 GSTL 380 (New Delhi – CESTAT)
3. On the other hand, Ld. AR defended the order of the Ld. Commissioner (Appeals) and stated that the Ld. Commissioner (Appeals) had rightly relied upon the order of this Tribunal in the case of CCE v. XL Telecom Ltd. 2006 (206) ELT 303 (Trib. – Bang.) in which it was held that statutory time limit was applicable even for refund of illegal levy and time limit could not be extended any authority or Court. He also relied on the case of Miles India Ltd. v. AC, Customs 1984 taxmann.com 497 (SC).
4. Heard the parties and perused the records.
5. I find that the Service Tax was paid in the category of the Business Auxiliary Services on account of payment of Service Tax for the Foreign Commission agents. The amendment in the Notification No. 13/2003 wherein the agricultural produce was inserted in the preamble and by way of an explanation was brought about on 09.07,2004. In the said explanation, rice was also included. As a result of further amendment dt. 07.06.2005 in the Notification No. 13/2003, clause (i) of the explanation was deleted. The said clause (i) pertained to the definition of the Commission agents. The CBEC clarification dt. 26.05.2011 made it clear that the commission agents stationed abroad were covered by the Notification No. 13/2003- ST. Hence, the first question is whether the Service Tax which was paid by the appellants was due to mistake of law. I find that the clarification dt. 26.05.2011 did not exist on the date of payment of the Service Tax. The amended Notification No. 13/2003, from which the clause (i) had been deleted, provided for “the commission agents in relation to sale or purchase of agriculture produce” from the Service Tax leviable thereon under Section 66 of the said Act. Hence, clearly the activity of foreign commission agents was not covered in the said notification as it referred to Section 66 (2) of the Finance act, 1994 and not to Section 66 A of the Finance Act, 1994 or Rule 2 (I) (d) (iv) of the Service Tax Rules. So the payments made by the appellants on the dates of payment were not on account of any mistake of law or mistake of fact. In their defence before adjudicating authority, the assessee had submitted that they had to deposit Service Tax on the impugned service being recipient of service provided by foreign commission agents. Subsequently, they filed refund claim on 01.02.2010 contending that the Service Tax was paid inadvertently. However it was only on 26.05.2011 that a clarification was issued by the CBEC, which clarified that:
“Also where the commission agents stationed abroad provide business auxiliary service to promote the export of rice, said business auxiliary service is covered by Notification No. 13/2003-ST (as amended) because, the word ‘rice’ is mentioned under the explanation to the terms ‘agricultural produce’, in the inclusive portion along with other items like cereals, pulses, etc.”
Thus, as a result of this clarification dt. 26.05.2011, the benefit of this exemption notification No. 13/2003 became available to the appellant and the amount collected by the Revenue was therefore without any authority. It is settled position in law that beneficial circular has to be applied retrospectively while oppressive circular has to be applied prospectively.
6. However, on the question of limitation, I find that there are conflicting decisions of the Division Benches of this Tribunal on whether the statutory time limit under Section 11B of the Central Excise Act, 1944 is applicable to claim for refund of tax which was collected without authority of law. In the case of Monnet International Ltd. (supra), relied upon the appellants, the Tribunal has held as below:—
“17. Thus, we are of the view that in the instant case, the amount deposited by the assessee- Appellants without any authority of law cannot be considered as Service Tax. As per Article 265 of the Constitution, no tax can be collected without any authority of law. At the relevant time, there was no authority of law to collect Service Tax on the activity carried out by the assessee-Appellants. Hence, Section 11B of the Central Excise Act, 1944 is not applicable. The amount was deposited in the year 2006-2007 and the refund was filed on 02nd January, 2008. Hence, the claim has been made within the period of three years prescribed by Hon’ble Delhi High Court. Therefore, we are of the view that the assessee-Appellants are entitled to get the refund and the same is not hit by the limitation prescribed under Section 11B of the Central Excise Act, 1944 read with Section 83 of the Finance act, 1994.
18. Moreover, it may be mentioned that the Department should not take advantage of the ignorance of the assessee-Appellants as per the ratio laid down in the case of Parekh Bros v. CIT (1984) 150 ITR 105 and CIT v. Maha Laxmi Sugar Mills (1986) 160 ITR 920 (SC).
19. In the instant case, we are of the view that it is not a case of refund of tax, but return of deposit for which limitation (Section 11B of the Act) is not applicable. Hence, we set aside the impugned order and direct the jurisdictional Commissioner to return the deposited amount, as per law.”
7. I also find that in the case of XL Telecom Ltd., relied upon by the Revenue., the Division Bench of this Tribunal held as below:—
‘4. On a careful consideration, we notice that the Revenue has taken a well sustained ground. For the reason that the Apex Court in the case of Asstt. Commissioner of Customs v. Anam (supra) had laid down in very clear terms that even in respect of claim for refund of an “illegal levy”, the statutory time limit prescribed in terms of Section 11B of CE Act and Section 27 of Customs Act is not extendable by any authority or court. The Apex Court has given this clarification in the light of the earlier judgments rendered in the case of Mafatlal Industries Limited v. UOI reported in 1997 (89) E.L.T. 247 (SC) = 2002-TIOL-54-SC-CX-CB. The order of court on this point is reproduced hereinbelow:
2. So far as the question of levy of surcharge of ten per cent which is in issue herein is concerned, we affirm the judgment and order of the Madras High Court. So far as the question of refund is concerned, it is obvious that it shall be governed by the law declared in Mafatlal Industries v. Union of India – 1997 (89) E.L.T. 247 (S.C.) = 2002-TIOL-54-SC-CX-CB – 1996 (9) scale 457, read with Clause (6) of the format order, a copy of which is enclosed herewith, which is as follows:
“Where a refund application or an appeal is preferred under and in accordance with the directions (1), (2), (3) and (4) above, the same shall be entertained only if the applicant for refund/appellant files affidavit stating that he has not passed on the burden of the duty, which is claimed by way of refund, to another person. In case the applicant for refund is a company or a society, the affidavit shall be sworn by the Managing Director or the Principal Officer of the Company or the Society, as the case may be. Such an affidavit shall be treated as an averment/assertion which an applicant for refund has to make in terms of the judgment in Mafatlal”.
3. The appeals are disposed of in the above terms. No costs.
FORMAT ORDER
Pursuant to the directions given in Mafatlal Industries v. Union of India – 1997 (89) E.L.T, 247 (S.C.) = 2002-TIOL-54-SC-CX-CB 1996 (9) scale 457, the appeals/Special Leave Petitions coming up for disposal shall be disposed of in terms of one or the other of the clauses below
(1) Where a refund application was filed by the manufacturer/purchaser beyond the period prescribed by the Central Excise Act/Customs Act in that behalf, such petition must be held to be untenable in law. Even if in any appeal, suit or writ petition, direction has been given that the refund application shall be considered with reference to the period of limitation prescribed in the Central Excise Act/Customs Act – or that the period of limitation shall be taken as three years – such a direction of the Appellant Court/Civil Court/High Court shall be deemed to be unsustainable in law and such direction shall be set aside. The period prescribed by the Central Excise Act/Customs Act for filing a refund application in the case of “illegal levy” cannot be extended by any Authority or Court.
(2) Where, however, a refund application was filed within the period prescribed by the Central Excise Act/Customs Act but has been dismissed wholly or partly on any ground and the said order is questioned by way of a writ petition or a suit or any appeal arising therefrom the manufacturer/purchaser shall be entitled to withdraw the writ petition, suit or an appeal arising therefrom, as the case may be, and file an appeal before the appropriate appellate authority within sixty days from today. It is clarified herewith that even in a case where such writ petition has been allowed and an appeal filed by the Revenue is pending, the writ petitioner shall be entitled to withdraw the writ petition, in which event, the Revenue appeal shall be disposed of permitting the writ petitioner to withdraw the writ petition to pursue the remedy proposed hereby. If such an appeal is filed, it shall be entertained without raising an objection on the ground of limitation and shall be dealt with in accordance with law. This direction shall apply even in cases where the High Court or Civil Court is approached after exhausting the remedy of appeal to Collector (Appeals). He can file an Appeal to C.E.G.A.T. within sixty days from today, after withdrawing the writ petition or the suit, as the case may be.
(3) Where, however, a writ petition or suit claiming refund was filed directly in the High Court/Civil Court (i.e., without filing a refund application), the petitioner/plaintiff shall be entitled to withdraw such writ petition/suit or any appeal arising therefrom and prefer a refund claim under Section 11B within sixty days from today provided the writ petition or suit was filed within the period prescribed by the Central Excise Act/Customs Act for filing the refund application. It is clarified herewith that even in a case where such writ petition has been allowed and an appeal filed by the Revenue is pending, the writ petitioner shall be entitled to withdraw the writ petition, in which event, the Revenue appeal shall be disposed of permitting the writ petitioner to withdraw the writ petition to pursue the remedy proposed hereby.
(4) The above rules, however, do not apply in the case of a claim for refund of duty levied and recovered under an unconstitutional provision. In such a case, the period of limitation shall be prescribed in Mafatlal Industries. The duty to allege and prove that the duty has not been passed on to another person, of course, remains even in such a case.
(5) Where a person challenges the constitutionality of a provision in the Central Excise Act/Customs Act in a High Court or the Supreme Court but fails in his challenge to constitutionality, he cannot take advantage of the decision in the case of another person striking down the said provision, as explained in the judgment. This rule is evolved in the particular context of refund claims under these two enactments and has to be observed.
(6) Where a refund application or an appeal is preferred under and in accordance with the directions (1), (2), (3) and (4) above, the same shall be entertained only If the applicant for refund/appellant files affidavit stating that he has not passed on the burden of the duty, which is claimed by way of refund, to another person. In case the applicant for refund is a company or a society, the affidavit shall be sworn by the Managing Director of the Principal Officer of the Company or the Society, as the case may be. Such an affidavit shall be treated as an averment/ assertion which an applicant for refund has to make in terms of the judgment in Mafatlal.
(7) (a) Where the refund claim is rejected by this Court, the assessee who has already obtained any amount by way of refund shall be liable to pay back the same to the Department and the Department shall be entitled to recover the same in accordance with law.
(b) If the refund claim is rejected by an authority under the Act and where the assessee has already obtained the refund he shall be liable to pay back the said amount to the Department according to law and the Department shall be entitled to recover back the said amount, subject to orders, if any, by an Appellate Authority.
In view of the above clarification given by the Apex Court in term of Mafatlal’s case (supra), the refund application even in respect of “illegal levy” or amounts collected beyond the recoverable duty is required to be filed within the period of limitation prescribed under Section 11B of CE Act. Respectfully following the ratio of the Apex Court judgment, the order passed by the Commissioner (A) is set aside and the appeal is allowed.’
8. It is worthwhile to mention that the decision of XL Telecom Ltd. (supra) was not brought before the Bench considering the issue in the case of Monnet International Ltd. v. CCE, New Delhi (supra).
9. In view of the divergent views of this Tribunal on the same issue, therefore as held by the Hon’ble Supreme Court in the case of Gammon India Ltd. v. Commissioner of Customs 2011 (269) ELT 289 (SC), the matter requires reference to the Hon’ble President for constitution of a Larger Bench. Hence, I refer the matter to the Hon’ble President for constitution of a Larger Bench of this Tribunal to decide the following issue:—
“
(a) Whether in respect of the claim for refund of illegal levy of Service Tax or of Service Tax collected without authority of law, the statutory time limit prescribed in terms of Section 11B of Central Excise Act 1944 will be applicable or not?”
10. Registry is directed to take appropriate steps for referring the matter to the Hon’ble President.
