1. Briefly stated the facts of the case are that the appellant is engaged in the business of construction of residential flats, commercial and industrial construction services etc. The appellant entered into a transaction for sale of Flat No. 6B having super-built-up area of 2320 sq. ft. with two car parking spaces standing at Holding No. 13, Road No. 4, Contractors Area, Bistupur, Jamshedpur in favour of one Mrs. Abha Singh and Mr. Bhupesh Kumar. The relevant certificate of Completion/Occupancy Certificate dated 06.04.2015 (page 55 of Appeal Paperbook) had been issued much prior to the aforesaid transaction of sale of property having taken place. As per Agreement for sale dated 08.03.2016 (pages 23 to 39 of Appeal Paperbook), the total sale consideration was Rs. 1,16,35,000/- together with Service Tax, including Cess of Rs. 5,06,122/-. Accordingly, Invoice dated 10.03.2016 was drawn up. The transaction of sale was completed in due course with the first sale consideration received by the appellant on 16.02.2016 vide cheque dated 16.02.2016 drawn in favour of the appellant by the said purchasers. The appellant, however, received only the payment towards sale value of the subject property excluding the Service Tax thereof. The same is duly reflected in the ledger account relating to the payments made by the aforesaid purchasers (pages 41 to 42 of Appeal Paperbook). On its own, the appellant discharged the full purported Service Tax liability of Rs. 5,06,122/-. Thereafter, only Rs. 65,000/- was received from the appellant's purchasers towards the said purported service tax liability. The appellant subsequently came to know that the transaction of sale of the subject property was an outright transfer of title in immovable property and, accordingly, not leviable to Service Tax as defined in Section 65B(44) read with 66E(b) of the Finance Act, 1994 (hereinafter referred to as "Act"). The appellant realized that it had paid Rs. 5,06,122/- (including Swachh Bharat Cess) under mistake of law although there was no statutory basis for charging such tax. The appellant lodged a refund claim dated 07.07.2017 for refund of the purported Service Tax paid under mistake of law. The appellant participated in pre-show cause consultations, explaining its stand and submitting a detailed reply dated 24.08.2017. A show cause notice dated 08.09.2017 was issued proposing to reject the appellant's refund claim mainly on the grounds that the disputed claim was hit by limitation under Section 11B of the Central Excise Act, 1944 read with Section 83 of the Act as also by the principles of unjust enrichment. On 16.11.2017, Order-in-Original was passed rejecting the appellant's refund claim. Aggrieved by the said order, the appellant appealed before the Commissioner (Appeals). However, the aforesaid Order-in-Original was affirmed vide the present impugned Order-in-Appeal. Hence, the present appeal before the Tribunal.
2. The learned Advocate appearing on behalf of the Appellant submits that Rs. 5,06,122/- had been paid by it under a bona fide mistake of law. It is submitted that had the Appellant not paid those amounts, the authority could not have demanded such payment from the Appellant. In other words, the Department lacked authority to levy and collect such Service Tax. In case, the Department was to demand such payments, the Appellant could have challenged it as unconstitutional and without authority of law. It is submitted that once the said amount is not payable in law and the Department has no authority to retain such an amount, the said amount will not be "duty of excise" or as in the instant case 'service tax' to attract Section 11B of the 1994 Act. Hence, the instant case is outside the purview of Section 11B of the 1994 Act and there is no question of time-bar.
3. Learned Advocate submits that the disputed refund claim fell outside the purview of Section 11B of the Central Excise Act, 1944 and there was no question of any time bar. The Commissioner (Appeals) never disputed the non-leviability of Service Tax on the transaction in question. The appellant's sale of the subject property was an outright transfer of title in immovable property in favour of Mrs. Abha Singh and Mr. Bhupesh Kumar. Indeed, no 'service' had been rendered by the appellant as defined in Section 65B(44) of the Act read with Section 66E(b) thereof.
4. Learned Advocate further submits that the disputed claim was not hit by the doctrine of unjust enrichment inasmuch as the burden of Service Tax had been borne entirely by the appellant-claimant and the same had not been passed on to the purchasers of the subject property in question. Necessary declaration in this regard had been made in the appellant's refund claim (page 57 of Appeal Paperbook). The buyer paid the basic consideration of Rs. 1,16,35,000/- and Rs. 65,000/- towards Service Tax. The said amount of Rs. 65,000/- had subsequently been returned back by the appellant, which fact has not been disputed at any stage of the proceedings.
5. Learned Advocate also submits that Section 73A of the Act could not have been invoked since it was never the Department's case that the appellant had collected any amount of Service Tax from its purchasers but had failed to dispute the same with the Government. Even if the appellant had failed to file its refund claim in the proper format, it is submitted that this is merely a procedural defect. Based on this ground the appellant's legitimate claim for refund, a substantive right, could not have been rejected.
6. For the reasons aforesaid, it is contended by the learned Advocate for the Appellant, that the instant appeal may be allowed with consequential relief and the impugned Order-in-Appeal dated 05.06.2018 may be set aside.
7. Learned Authorized Representative appearing on behalf of the respondent Revenue justified he impugned order and submitted that both the adjudicating and the appellate authorities have rejected the refund claim since it was filed beyond the period prescribed under section 11B and also on unjust enrichment.
8. Heard the rival contentions and have perused the appeal records and written submissions submitted by both the sides.
9. The issue to be decided in this case is whether the provisions of Section 11B of the Central Excise Act, 1944, prescribing a period of limitation for filing a claim for refund, is applicable in a case where an assessee deposits an amount under a mistake of law?
10. The constitutional Bench of the nine Hon'ble Judges of the Hon'ble Supreme Court in the case of Mafatlal Industries Limited Vs. Union of India reported in : 1997 (89) ELT 247 extensively considered the nuances of Section 11B of the Act. While summarizing the propositions, the Hon'ble Court at para 99(ii) held as follows:-
"(ii) Where, however, a refund is claimed on the ground that the provision of the Act under which it was levied is or has been held to be unconstitutional, such a claim, being a claim outside the purview of the enactment, can be made either by way of a suit or by way of a writ petition. This principle is, however, subject to an exception: where a person approaches the High Court or Supreme Court challenging the constitutional validity of a provision but fails, he cannot take advantage of the declaration of unconstitutionality obtained by another person on another ground; this is for the reason that so far as he is concerned, the decision has become final and cannot be re-opened on the basis of a decision on another person's case; this is the ratio of the opinion of Hidayatullah, C.J. in Tilokchand Motichand and we respectfully agree with it.
Such a claim is maintainable both by virtue of the declaration contained in Article 265 of the Constitution of India and also by virtue of Section 72 of the Contract Act. In such cases, period of limitation would naturally be calculated taking into account the principle underlying Clause (c) of sub-section (1) of Section 17 of the Limitation Act, 1963. A refund claim in such a situation cannot be governed by the provisions of the Central Excises and Salt Act or the Customs Act, as the case may be, since the enactments do not contemplate any of their provisions being struck down and a refund claim arising on that account. In other words, a claim of this nature is not contemplated by the said enactments and is outside their purview."
11. Further, at paragraph 113 of the said judgement, the Hon'ble Court classified the various refund claims into three groups or categories:-
"(I) The levy is unconstitutional - outside the provisions of the Act or not contemplated by the Act.
(II) The levy is based on misconstruction or wrong or erroneous interpretation of the relevant provisions of the Act, Rules or Notifications; or by failure to follow the vital or fundamental provisions of the Act or by acting in violation of the fundamental principles of judicial procedure.
(III) Mistake of law - the levy or imposition was unconstitutional or illegal or not exigible in law (without jurisdiction) and, so found in a proceeding initiated not by the particular assessee, but in a proceeding initiated by some other assessee either by the High Court or the Supreme Court, and as soon as the assessee came to know of the judgment (within the period of limitation), he initiated action for refund of the tax paid by him, due to mistake of law."
After referring several judgments and provisions of Section 11A & 11B of Central Excise Act, at paragraph 137 of the said judgement, their Lordships have concluded as under:-
"137. Applying the law laid down the decisions aforesaid, it is not possible to conclude that any and every claim for refund of illegal/unauthorised levy of tax, can be made only in accordance with the provisions of the Act (Rule 11, Section 11B etc. as the case may be), and an action by way of suit or writ petition under Article 226 will not be maintainable under any circumstances. An action by way of suit or a petition under Article 226 of the Constitution is maintainable to assail the levy or order which is illegal, void or unauthorised or without jurisdiction and/or claim refund, in cases covered by propositions No. (1), (3) (4) and (5) in Dulabhai's case, as explained hereinabove, as one passed outside the Act and ultra vires. Such action will be governed by the general law and the procedure and period of limitation provided by the specific statute will have no application. [Collector of Central Excise, Chandigarh v. M/s. Doaba Co-operative Sugar Mills Ltd., Jalandhar [1988 (37) E.L.T. 478 (SC) : 1988 Supp. SCC 683); Escorts Ltd. v. Union of India & Ors. [1994 Supp. (3) SCC 86)] Rule 11 before and after amendment, or Section 11B cannot affect Section 72 of the Contract Act or the provisions of Limitation Act in such situations. My answer to the claims for refund broadly falling under the three groups or categories enumerated in Paragraph 5 of this judgment is as follows:
where the levy is unconstitutional - Outside the Category (I) provisions of the Act or not contemplated by the Act:-
In such cases, the jurisdiction of the civil courts is not barred. The aggrieved party can invoke Section 72 of the Contract Act, file a suit or a petition under Article 226 of the Constitution, and pray for appropriate relief inclusive of refund within the period of limitation provided by the appropriate law. [Dulabhai's case (supra) - Para 32 -Clauses (3) and (4)]."
12. The Hon'ble Supreme Court in the case of Mafatlal (supra) at para 137 reiterated the proposition as laid down in Doaba Cooperative Sugar Mills case wherein the Supreme Court held that in applying Section 11B, an exception has been culled out in cases where the payment of duty was under a mistake of law (37 ELT 478 (SC), Para-6-Last 4 lines).
13. The aforesaid propositions reveal that what one has to see is whether the amount paid by the assessee under a mistaken notion was payable or not. In other words, if the assessee had not paid those amounts, the authority could not have demanded from the assessee to make such payment. In other words, the department lacked authority to levy and collect such tax. In case, the department was to demand such payment, the assessee could have challenged it as unconstitutional and without authority of law. When once there is lack of authority to demand service tax or excise duty from the assessee, the department lacks authority to levy and collect such amount and the said amount is not "Service Tax" or "Excise duty" and Section 11B of the Act has no application in such cases.
14. The aforesaid view has also been taken by different High Courts in the country which are as follows:-
(i) CCE Vs. KVR Construction [2012 (26) STR 195 (Kar.) (Para 15-19,23)]
(ii) Commissioner Vs. KVR Construction [2018 (14) GSTL J70 (SC)]
(iii) GB Engineers Vs. UOI [2016 (43) STR 345 (Jhar)-Jurisdictional HC (Para 9)]]
(iv) Nararaj and Venkat Associates Vs. ACST [2010 (17) STR 3 (Mad) (Para 6-14)]
(v) Parijat Construction Vs. CCE [2018 (359) ELT 113 (Bom.) (Para 5-6)]
(vi) Geojit BNP Paribas Financial Services Ltd. Vs. CCE, Cus & ST [2015 (39) STR 706 (Kar)(Para 10)]
(vii) Joshi Technologies International Vs. UOI [2016 (339) ELT 21 (Guj.) (Para 12.1, 14.4)]
15. It is submitted that the instant case has originated vide show cause notice dated 08.09.2017 issued by the Assistant Commissioner, Jamshedpur. The Order-in-Original dated 16.11.2017 was passed by the Assistant Commissioner, Jamshedpur. The impugned Order-in-Appeal dated 11.06.2018 was passed by the Commissioner (Appeals), Ranchi. In the said facts and circumstances, the jurisdictional High Court, is the High Court of Jharkhand. The impugned issue is squarely covered in the case of J.B. Engineers (supra) of the Hon'ble Jharkhand High Court. It is trite law that the Tribunal ought to follow the jurisdictional High Court as a matter of judicial discipline and law relating to precedents. The following cases are relied upon in support of the said propositions:-
i) CCE Vs. Kashmir Conductors [1997 (96) ELT 257 (T-LB) (Para 10.2, 11)]
ii) J.K. Tyre & Inds. Ltd. v. ACCE [2016 (340) elt 193 (Tri.-LB) (Para 19, 20)]
iii) CC & CE & ST Vs. Andhra Sugar Ltd. [2015 (319) ELT 297 (AP) (Para 3)]
iv) CC (Prev) Vs. Ratan Kumar Saha [2005 (189) ELT 11 (Cal) (Para 4)]
16. The judgement of the Tribunal in the case of Veer Overseas Limited Vs. CCE reported in 2008 (15) GSTL 59 (T-LB) relied upon by the respondents is distinguishable, both on facts and in law.
The facts in the said judgement related to services which were liable to tax and by way of exemption notification the said services in respect of certain commodities were exempted. It was not, as if, there was no tax liability at all. This important aspect is itself noted at para 6 of the said judgement wherein the Tribunal has distinguished its earlier decision in the case of Monnet International reported in : 2017 (3) GSTL 380. In Veer overseas (supra), the Tribunal at para 8 notes that the Apex Court in Mafatlal has observed the exceptional situations wherein Section 11B is not attracted. The Tribunal has categorically noted that such a situation is not present in the said case before the Tribunal.
17. It is further submitted that the authoritative decisions of various High Courts as aforesaid stated were not brought to the knowledge of the Tribunal in the case of Veer Overseas (supra). The decision of the Hon'ble Bombay High Court in the case of Parijat was, however, referred to in the dissenting opinion. Relevant paragraphs in the case of Mafatlal were also not quoted and/or cited before the Tribunal. In the said circumstances, the said judgement in the case of Veer Overseas is clearly distinguishable both on facts and in law.
18. I find that after the larger Bench decision of the Tribunal in the case of Veer Overseas (supra), the Hon'ble High Court of Madras in the case of 3E Infotech vs. CESTAT, Chennai as reported in : 2018 (18) G.S.T.L. 410 (Mad.) have held as under:-
"8. The present appeal lies from the order of the Appellate Tribunal. We have heard the Learned Counsel for the Assessee and the State. The issue, which arises for consideration in this case, whether the provisions of Section 11B of the Central Excise Act would be applicable to claim of refund made by an Assessee when the tax has been paid under mistake of law. In this case, indisputably, there was no liability on the petitioner to pay service tax. The Supreme Court of India, in the case of Union of India v. ITC Ltd. reported in : (1993) Supp. IV SCC 326 : 1993 (67) E.L.T. 3 (S.C.) while dealing with the question of refund of excess excise paid held:-
8. In Shri Vallabh Glass Works Ltd. v. Union of India, this Court, while examining the question as to what is the point of time from which the limitation should be deemed to commence observed that relief in respect of payments made beyond the period of three years may not be granted from the date of filing of the petition, taking into consideration the date when the mistake came to be known to the party concerned. Just as an assessee cannot be permitted to evade payment of rightful tax, the authority which recovers tax without any authority of law cannot be permitted to retain the amount, merely because the tax payer was not aware at that time that the recovery being made was without any authority of law. In such cases, there is an obligation on the part of the authority to refund the excess tax recovered to the party, subject of course to the statutory provisions dealing with the refund.
9. We are, therefore, of the opinion that the High Court, while disposing of the writ petition under Article 226 of the Constitution of India, was perfectly justified in holding that the bar of limitation which had been put against the respondent by the Collector of Central Excise (Appeals) to deny them the refund for the period September 1, 1970 to May 28, 1971, and June 1, 1971 to February 19, 1972 was not proper as admittedly the respondent had approached the Assistant Collector Excise soon after coming to know of the judgment in Voltas case and the assessee was not guilty of any laches to claim refund.
9. In the above cited case, the Supreme Court stated that the Assessee's claim to refund would not be disallowed solely because it seemed barred by limitation. Since the Assessee in that case 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.
10. The High Court of Gujarat in Oil and Natural Gas Corporation Ltd., v. Union of India, reported in : 2017 (354) E.L.T. 577 (Guj.) relied on another judgment of the Gujarat High Court in Joshi Technologies International, INC-India Projects v. Union of India : 2016 (339) E.L.T. 21 (Guj.) and quoted the relevant paragraph, which reads as under:-
"Merely because the provisions of the Central Excise Act, 1944 and the rules framed thereunder for collection and refund viz., the machinery provisions have been incorporated in the OID Act for collection and refund of the cess levied thereunder, it cannot be inferred that the Oil Cess imposed under the provisions of the OID Act assumes the character of central excise duty. The finding recorded by the adjudicating authority that the Oil Cess is in the nature of excise duty, is erroneous and contrary to the law laid down by this court in Commissioner v. Sahakari Khand Udyog Mandli Ltd. (supra).
In the Circular dated 7th January, 2014, reference to sugar cess and tea cess levied under the Sugar Cess Act, 1982, and the Tea Act, 1953, respectively, is merely illustrative in nature and what is meant by the circular is that the cesses which are collected by the Department of Revenue, but levied under an Act which is administered by different Department are not chargeable to Education Cess and Secondary and Higher Secondary Cess chargeable under the provisions of the Finance Acts, 2004 and 2007, respectively.
Education Cess and Secondary and Higher Secondary Education Cess being cesses levied at a percentage of the aggregate of all duties of excise, the basic requirement for levy thereof is the existence of excise duty. In the present case Oil Cess is not a duty of excise and hence, the basic requirement of levy of such cesses is not satisfied. Furthermore, for the purpose of levy of Education Cess and Secondary and Higher Secondary Education Cess, two other conditions precedent, are required to be satisfied, viz., (i) that the duty of excise should be levied by the Central Government in the Ministry of Finance (Department of Revenue); and (ii) the duty of excise should be collected by the Central Government in the Ministry of Finance (Department of Revenue). In the present case, since the machinery provisions of the Central Excise Act, 1944 and the rules framed thereunder have been incorporated in the OID Act, the second condition precedent is satisfied, viz. that the cess is collected by the Central Government in the Ministry of Finance (Department of Revenue); however, the first condition with regard to levy of such duty of excise by the Central Government in the Ministry of Finance (Department of Revenue) is not satisfied inasmuch as the Oil Cess under the OID Act is levied by the Ministry of Petroleum and Natural Gas. In the aforesaid premises, the requirements of Section 93 of the Finance Act, 2004 and Section 138 of the Finance Act, 2007 are not satisfied in the present case, and consequently, the said provisions have no applicability to the facts of the present case. The petitioner, therefore, cannot be said to have been liable to pay Education Cess and Secondary and Higher Secondary Education Cess under the above provisions.
In the facts of the present case, the refund is claimed on the ground that the amount was paid under a mistake of law and such claim being outside the purview of the enactment, can be made either by way of a suit or by way of a writ petition. The petitioner was, therefore, justified in filing the present petition before this court against the order passed by the adjudicating authority rejecting its claim for refund of the amount paid under a mistake.
Since Oil Cess is not a duty of excise, the amount paid by the petitioner by way of Education Cess and Secondary and Higher Secondary Education Cess, cannot in any manner be said to be a duty of excise inasmuch as what was paid by the petitioner was not a duty of excise calculated on the aggregate of all the duties of excise as envisaged under the provisions of Section 93 of the Finance Act, 2004 and Section 138 of the Finance Act, 2007. Thus, the amount paid by the petitioner would not take the character of Education Cess and Secondary and Higher Secondary Education Cess but is simply an amount paid under a mistake of law. The provisions of Section 11B of the Central Excise Act, 1944 would, therefore, not be applicable to an application seeking refund thereof. The petitioner was therefore, wholly justified in making the application for refund under a mistake of law and not under section 11B of the Central Excise Act, 1944.
Since the provisions of Section 11B of the Act are not applicable to the claim of refund made by the petitioner, the limitation prescribed under the said provision would also not be applicable and the general provisions under the Limitation Act, 1963 would be applicable. Section 17 of the Limitation Act inter alia provides that when a suit or application is for relief from the consequences of a mistake, the period of limitation would not begin to run until the plaintiff or applicant has discovered the mistake, or could, with reasonable diligence, have discovered it. Since the period of limitation begins to run only from the time when the applicant comes to know of the mistake, the application made by the petitioner was well within the prescribed period of limitation. Moreover, since the very retention of the Education Cess and Secondary and Higher Secondary Education Cess by the respondents is without authority of law, in the light of the decision of this court in Swastik Sanitarywares Ltd. v. Union of India (supra), the question of applying the limitation prescribed under Section 11B of the CE Act would not arise.
Even in case where any amount is paid by way of self assessment, in the event any amount has been paid by mistake or through ignorance, it is always open to the assessee to bring it to the notice of the authority concerned and claim refund of the amount wrongly paid. The authority concerned is also duty bound to refund such amount as retention of such amount would be hit by Article 265 of the Constitution of India which mandates that no tax shall be levied or collected except by authority of law. Since the Education Cess and Secondary and Higher Secondary Education Cess collected from the petitioner is not backed by any authority of law, in view of the provisions of Article 265 of the Constitution, the respondents have no authority to retain the same.
If the adjudicating authority was not satisfied with the Chartered Accountant's certificate and the other material produced by the petitioner, he could have called upon the petitioner to produce further documentary evidence in support of its claim that it had not passed on the incidence of duty to the purchaser. However, without affording a reasonable opportunity to the petitioner to produce documentary evidence in support of its claim that there was no unjust enrichment, the adjudicating authority was not justified in holding that there was unjust enrichment. Therefore, the finding that the petitioner's claim is hit by unjust enrichment cannot be legally sustained.
11. A similar view has been taken by the Bombay High Court in the case of Parijat Construction v. Commissioner Excise, Nashik, reported in : 2018 (359) E.L.T. 113 (Bom.), where the Bombay High Court has held as under:-
4. We are of the view that the issue as to whether limitation prescribed under Section 11B of the said Act applies to a refund claimed in respect of service tax paid under a mistake of law is no longer res integra. The two decisions of the Division Bench of this Court in Hindustan Cocoa (supra) and Commissioner of Central Excise, Nagpur v. M/s. SGR Infratech Ltd. (supra) are squarely applicable to th
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e facts of the present case. 5. Both decisions have held the limitation prescribed under Section 11B of the said Act to be not applicable to refund claims for service tax paid under a mistake of law. The decision of the Supreme Court in the case of Collector of C.E., Chandigarh v. Doaba Co-Operative Sugar Mills (supra) relied upon by the Appellate Tribunal has in applying Section 11B, limitation made an exception in case of refund claims where the payment of duty was under a mistake of law. We are of the view that the impugned order is erroneous in that it applies the limitation prescribed under Section 11B of the Act to the present case were admittedly appellant had paid a Service Tax on Commercial or Industrial Construction Service even though such service is not leviable to service tax. We are of the view that the decisions relied upon by the Appellate Tribunal do not support the case of the respondent in rejecting the refund claim on the ground that it was barred by limitation. We are, therefore, of the view that the impugned order is unsustainable. We accordingly allow the present appeals and quash and set aside the impugned order, insofar as it is against the appellant in both appeals. We fully allow refund of Rs. 8,99,9621/- preferred by the appellant. We direct that the respondent shall refund the amount of Rs. 8,99,962/- to the appellant within a period of three months. There shall be no order as to costs. 12. Further, the claim of the respondent in refusing to return the amount would go against the mandate of Article 265 of the Constitution of India, which provides that no tax shall be levied or collected except by authority of law. 13. On an analysis of the precedents cited above, we are of the opinion, that when service tax is paid by mistake a claim for refund cannot be barred by limitation, merely because the period of limitation under Section 11B had expired. Such a position would be contrary to the law laid down by the Hon'ble Apex Court, and therefore we have no hesitation in holding that the claim of the Assessee for a sum of Rs. 4,39,683/- cannot be barred by limitation, and ought to be refunded. 14. There is no doubt in our minds, that if the Revenue is allowed to keep the excess service tax paid, it would not be proper, and against the tenets of Article 265 of the Constitution of India. On the facts and circumstances of this case, we deem it appropriate to pass the following directions:- (a) The Application under Section 11B cannot be rejected on the ground that is barred by limitation, provided for under Section. (b) The claim for return of money must be considered by the authorities." 19. In view of the above discussion and by respectfully following the judgements of the superior Courts, cited supra, the impugned orders cannot be sustained and are set aside. The appeal filed by the appellant is allowed with consequential relief.