Order date – 16 September 2022

Facts – 

• The appellant, M/s Techno Power Enterprises Private Limited, filed a claim for refund of Service tax on 14.10.2019 on the ground that service tax was wrongly deposited by them on warehousing services provided to M/s.Haryana State Cooperative Supply and Marketing Federation Limited, which was squarely covered under the Negative list of services on which no Service tax was payable. 
• Section 66D of the Finance Act, 1994 prescribes the negative list of services which inter-alia includes “(v) Loading, unloading, packing, storage, or warehousing of agricultural procedure”. The wrong payment on aforesaid services came to the knowledge of the Appellant when the client disputed the charging of service tax on warehousing services provided for storage of food grains.
• The Appellant submitted that the question of limitation would not apply in their case since the tax was paid under the mistake of law.
• The Ld. Assistant Commissioner rejected the refund claim by holding that the refund claim was clearly barred by limitation of time of one year as prescribed under Section 11B.
• Aggrieved, the appellant filed an appeal.

Issue – 

• Whether the question of limitation would apply in cases where refund was claimed against the tax paid under the mistake of law?

Order – 

• The Tribunal observed that it is not in dispute that assessee is not liable to pay service tax in respect of warehousing services which is categorically specified in the negative list of the services.
• Therefore, relying on the High Court of Bombay in the case of Parijat Construction Vs. Commissioner of Central Excise, Nashik it was held that the limitation prescribed under 11B of the Central Excise Act, 1944, is not applicable to refund claim for service tax paid under mistake of law.
• Hence, the Tribunal held that when the money has been paid by mistake, the person in receipt of such money becomes at common law a trustee with an obligation to repay the sum received. It was further held that when a wrong is continuing, there is no limitation for instituting a suit complaining about it.
• Therefore, even in the present case, the amount paid by the Appellant was not tax and was never leviable under the provisions of the Finance Act, 1994 or the Central Excise Act, 1944 and accordingly, the period of limitation provided therein would not apply.
• Also no dispute was ever raised in the Show Cause Notice as well as in the Order-in-Original with regard to the documentary evidence for payment of service tax by the assessee.
• Appeal allowed.