Order Date – 22 December 2023

Parties: Amit B. Wadhwani Vs Commissioner of Central Tax, Navi Mumbai Respondent

Facts –

• The Appellant, Amit B. Wadhwani, a tax invoice and paid Service Tax thereon, which was subsequently cancelled since the services were not provided. The appellant filed a refund claim on 29.11.2019 for refund of the amount paid against the said invoice.
• A show cause notice was issued proposing rejection of the refund claim on the ground of limitation as prescribed under Section 11 B of Central Excise Act, 1944 read with Section 83 of the Finance Act, 1994.

Issue –

• Whether the refund is barred by limitation under the provisions of Section 11B of the Central Excise Act, 1944?

Order –

• The Tribunal observed that the refund claim filed by the Appellant cannot be rejected on the ground of limitation as what was paid by the appellant was not tax as envisaged under the Finance Act, 1994. Thus, the amount paid by the Appellant would not take the character of tax but is simply an amount paid under a mistake of law.
• The provisions of Section 11B ibid would, therefore, not be applicable to an application seeking refund thereof. Moreover, since the retention of the amount in issue by the department is without authority of law, the question of applying the limitation prescribed under Section 11B ibid would not arise.
• Further, the Hon’ble Bombay High Court, Hon’ble Calcutta High Court, Hon’ble Madras High Court, Hon’ble Telangana High Court have held that refunds of amounts paid under mistake of law would not be hit by the statutory limitation periods.
• Hence it was held that the statutory limitation period prescribed under Section 11B is not applicable to the refund claimed by the Appellant since the amount paid by the Appellant is not a tax.