Service Tax Refund: Period of limitation not applicable where Service Tax was not payable but was paid mistakenly

The appellant is registered with the Service Tax Department. The appellant filed refund claim for Rs. 31,50,587/- on 25.05.2011. It is submitted by the appellants that as per Board’s Circular No. 123/5/2010 -TRU dt.24.05.2010, the work undertaken by them for Electricity Board/Nigam, as aforementioned, are not liable to service tax, hence no service tax was payable. The amount mistakenly paid was thus a deposit and not service tax, which is refundable to them alongwith interest u/s 11B. The appellant claimed refund of such amount i.e. Rs.31,50,587/-, paid during the period 2007-08 to 2009-10. They submitted that limitation u/s 11B is not applicable in this case, as the amount was paid mistakenly which was not payable.

Order of CESTAT:

10. Having considered the rival contentions, I find that service tax was not leviable on the services provided by the appellants, which was paid by mistake by the appellants, thus, it will be treated as deposit, ipso facto, and are entitled for refund.

11. This fact is more evident as the services provided by the appellants are – route survey, design, supply of material for construction, erection and commissioning of 33KV D/C Line on Panther Conductor for 2.5 km from 132 KV GSS, Equipment for the work of urban focus programme, equipment for providing HVD/LVD system, etc.

12. Further Limitation u/s 11B will not be applicable as the amount deposited is not tax and, at best, revenue deposit. My view is fortified in view of the judgements passed by Madras High Court in its ruling in 3 E Infotech (supra).

13. As far as applicability of unjust enrichment, in view of the work orders, which were issued to the appellants in competitive open bid, as per contract it is clear that the prices are Firm in all respect and Independent of any variation. It is also not in dispute that the appellants have not charged any service tax in their invoices. I am of the view that unjust enrichment is also not applicable.

14. Accordingly, the appeal is allowed and the impugned order is set aside. The adjudicating authority is directed to grant refund of the said amount in cash, as required under the Transitional Provisions of CGST Act within 45 days from the receipt of this order and is further directed to pay interest @12% p.a. from end of three months from the date of refund application by the appellant, till the date of grant of refund.

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