CHAPTER 118 REFUND OF TAX Under the provisions of service tax, the assessee is entitled to claim the refund

of As per section 83 of the Act, certain provisions of the Central Excise lie in regard to the service tax as well; therefore, where the assessee is n refund of excess service tax paid, he has to comply with the section l1B of the Central Excise Act, 1944 to claim the refund. l. When does the claim of refund arise? The claim of refund of tax paid by the assessee may arise in the following circumstances: (1) The assessee is entitled to claim the refund when the Central Excise Officer carrying out rectification of mistake that is apparent from the record amending the order passed by him because of such mistake and refund become due [sub-section (6) 0 f section 74]. (2) Upon finalisation of provisional assessment, if any tax has become due to the assessee (because assessed tax on final assessment is less than the tax deposited by the assessee), then the assessee is entitled to claim refund [sub rule (6) of rule 6]. (3) whenever the assessee makes excess payment of service tax because of any he is always entitled to claim refund for such excess tax. It may be noted that under sub-rule (3) of rule 6, certain circumstances have been set out, where the assessee has the facility for selfdjustment in the case of excess payment of service tax. Further, as per sub-rule (4A) of rule 6, service providers who have opted for centralised registration is also allowed to make suo mota adjustments of the excess amount paid, if any, and utilise the excess amount for the payment of service tax for the subsequent period, if the excess payment was made due to non-receipt of details of the value of taxable services received. at other branches/offices. For a detail discussion, refer to' Chapter -- "Selfadjustment of Ex.cess Service Tax Paid" of this book.

'Bharti Cellular Ltid. v CCE, New Delhi 2006 (1) STR 39 (Tri.-Del.) - In this case, as per the decleration for the period October 1998 to March 1999, the appellants paid of service tax for the month of November, December 1998 and February & March 1999, and the appellants paid service tax in short for the month of October 1988 and January, 1999. Even if the adjustment of service tax paid in excess is made against the short -payment, service tax paid by the appellant is more. Rule 7(sic) of Service Tax Rules provides the adjustment of excess payment against the deficiency in respect of payment of service tax during the period covered under the retum". Therefore, such adjustment is permissible.

The Honble Supreme Court in the case of CCE, Kanpur v Flock (India) Pvt. (2000)(120) ELT 285 (SC) : AIR 2000 SC 2484 : (2000) 6 SCC 650 held that "there is little scope for doubt that in a case where an adjudicating authority has passed an order which is appealable under the statute and the party aggrieved did not choose to exercise the statutory right of filling an appeal , it is not open to the party to question the correctness of the order of the adjudicating authority subsequently by filling a claim for refund on the ground that the adjudicating authority had committed an error in passing its order The Honble Supreme Court in the case of PriyaBlue Industies Ltd v CC ( (Preventive) ' (172) ELT 145 (SC) : AIR 2004 SC md claim is not an appeal proceeding. ot sit :in appeal over an assessment mad~ :ring the refund cla:im cannot also revie the case of Central Office, Mewar :005-TIOL-887-CESTAT-DEL, fol1owi rt held that the "order of assessment c6uld lthout filing the statutory appeal again.st case of Mis Uniflock International Ltd v is TAT-DEL held that if the assessment or 1962 and is not challenged, then the re Refund of Tax 1487 ) EL T 88, held that even though interest is not a part of duty but when the est has been collected, which is not recoverable, the said amount is to be ded to the assessee. Therefore, anywhere wh.en any amount is wrollgly ted, the Department cannot refuse refund on the ground that it is not provided the statutory provision of the refund. Therefore, even if there is no provision refund of interest, such amount if paid/collected without the authority of law ired to be refunded. Rig\'. Court in the case of CCE, Delhi-III v Northern Minerals Ltd 2007~TIOL"HCP&H-CX : 2007 (216) ELT 198 (P&H) held that we find no reason to lude the payment of interest from the provisions of section 11 of 'the Act merely use it uses the expression 'refund of duty' because delayed payment of duty fattracts the payment of interest which is inextricably associated with duty. reover, SUell a collection of interest on account of delayed payment of duty would unauthorised imposition of tax which is impermissible by the provisions of article of the ConstitutiOll. Tribunal in the case of Sri Vasavi Industries Ltd. v CCE, Bolpur 2007 (212) ELT (Tri.Kolkata) held that the appellant is entitled for the refund of excess interest d by him. . epartmoent clarification for refund e Department has the experience of difficulty being faced by the service tax essees in getting service tax: refund. In this regard, the Director General of !}ai has issued clarification vide Letter F. No. VDGSTI22/CD-4/98/5262, dated '3-1999, appended as Annexure I. Reflllld procedure procedure for claming refund under the Central Excise Act, 1944 has been given eunder that is applicable in relation to service tax: , Whom to make an application for refund? he assessee may make an application for refund to the Assistant Commissioner of eatral Excise or Deputy Commissioner of Central Excise [section 11 B(l)]. (2) . Time limit

. he application should be made within one year from the 'relevant date'. The timelimit for making the refund application has been extended to one year w.e.f 12-5'2000 by the Finance Act, 2(}(}(}. Earlier, the time-limit to make the application for r.efund was six months [section 11B(I)]. The period oflimitation of one year shall I).ot apply when any tax has been paid under protest [second proviso to sub-sectioll 0) of section liB}. The Tribunal in the case of Russi S. Kharnbatta v CCE, Mumbai tlO07-TIOL-166-CESTATMUM held that if the refund claim is filed within time on a plain paper and later on the prescribed Form 'R', the refund cannot be declared as time-barred. lnthe case of Dura line lndia Pvt ltd. v CCE, Goa 2008-TlOL-1966-CESTA T-MUM, refund claim was filed by the party. However, the Department rejected the said claim OltBccount of incomplete documents and the party took 13 months to re-file the documents with all fonnalities. Again, the Department rejected the cl<linl as ti,ne ,parred only on the ground that the party has taken a 1011g time to re-submi.t tIle reii.:tBi.l claim. The Tribunal held that the .,aid order is unsustainable when the refund nnai v Aristo Spinnders Pvt. Ltd. 2007 (2 the various Supreme Court decisions, held ~e by tbe department does not amount to ld was allowed for the guarantee so encash; v CCE, Mumbai 2003-TlOL-1588-CES :d the amount twice in the PLA and suo Ie Department. The Department did !lot al he larger bench of the Tribunal in the ca 12008 (229) EL T 364 (Tribunal-LB) held lder Section lIB of the Central Ex.cise Act 80S the Departmentis satisfied with the inten Tribunal in the case of Mahavir Vanas TrGL-1995CESTAT-DEL, relying upon tlal in the case of BDH Industries Ltd v : ll-CESTAT-MumLB, held that all typ der the Central Excise Act and Rules ke suo moto credit ofth.e excess duty paid. ?sident Systems Ltd. v CC, Chennai 200S-Tl the Larger Bench decision of the Tribunaliu Exports Ltd 2007 (216) EL T 137 (Tri-LB), able unless the assessment order in relati and modified/set aside. . f()r the excess interest paid? ithersons Sumi Systems Ltd v CCE, Noida2 upon its earlier decision in the ca:>es ofC J T 638 and Gemini Steel Tuhes Ltd. v CCE 2

1488 Service Tax Chap. 11 filed by the party at fITst instance was within time limit and allowed the refund. .... other words, the date of claim shall be reckoned from the date when refu application was originally filed and not from the date when it was re-:filed. It was held in the case of Jai Bhagwati Impex Pvt. Ltd. v Union of India 2009 H S.T.R. 24 (Bom.) that the assessee cannot be denied the right to claim a re ordered by the Tribunal on the basis of SLP moved by the assessee. He is not on entitled to the claim of refund but also entitled to interest for the delay in payment refund. Russi S. Khc:mbatta ." CCE, ~umbai 2007-TIOL-166-CESTAT-MUM : 2007 ( STR 135 (Tn.-Mum.) - In the mstantcase, the refund application was filed on a pIa' paper. Subsequently, the refund claim was made on Form R. The Triblll1al in thi case held that the refund claim made on a plain paper was within the time- limi Therefore, it cannot be held time-barred even if the refund claim was made on Fo R subsequently. It is a well-settled law that the deposited amounts that are pending appeal in tenns 0 the ~rovision of section 35F of the Central Excise Act, 1944 (which is applicable ser~lce tax as well) are neither hit by limitation nor hit by unjust emichment [Kon Cylmders v CCE, BBSR 2002 (144) ELT 454 (Tri.-KoL)]. In the case of Jay Shr Tea & Industries Ltd v CCE, Kolkata 2006-TIOL-03-CESTAT-Kol, the Tribuna .held claiming the ~efund of amount deposited in the PLA cannot be subjected to ilme-bar under sectIOn I I(B) ofthe Central Excise Act. The Bombay High Court has admitted the revenue appeal in the case 0 Commissioner v Reliance Communication Ltd. 2009 (13) STR J/90 (HC) to decide' the :rr;atter whether the refund claim which was returned by the authority and re~ su~rmtted br the p~rty i~ hit by limitation as the Tribunal held that re-submitting the claIm was III contmuatJon of the earlier claim, and therefore, will not be hit by limitation. . .' ap.118 Refund of Tax 1489 e case of c.c. Patel & Associates Private Limited v A.C. Service Tax: cell 2005 T 185) (Tri.-Mum.) : 2005 (187) ELT 278 (Tri.-Mum.) : 2006 (3) STR 315 . "Mum.), it was held that under section lIB the refund application should be e within six months (now one year) from the date of payment. e case of CCE, Bangalore-III v Motorola India Pvt. Ltd. 2006 (206) ELT 90 .), : 2008 (11) STR 555 (Kar.)relying on the Supreme Court decision in the case dian Cements Ltd. v CCE 1989 (41) ELT 358, it was held that the amount paid istakecannot be termed as duty and time-bar will not apply for seeking refund.

Tribunal in the case of CC, Chennai v Rqjesh Chemicals 2006 (196) ELT 64 .-Bang.) held that when the excess amount has been paid due to arithmetical akes, the said amount cann<Jt be considered as duty. Therefore, the provision of enrichment is not attracted. 'Pus Service (India) Pvt. Ltd. v CCE, Coimbatore 2008 (9) STR 259 (Tri.ai) - In the instant case, the appellants, duly registered with the Department as estate agents, filed service tax returns and paid the tax self-assessed. These ssments were accepted and the same were never challenged by either side. The d claim in question was for the amount of tax so assessed and paid. In the nt circumstances, the Tribunal held that it is not open either to the assessee or to evenue to contend that the amount paid by the appellants in terms of the returns by them was not a tax. In view of the author, the decision of the Tribunal eared to be erroneous as the mere fact that tbe tax has been paid cannot be treated tax and that does not mean that the validity of the same cannot be challenged. Tribunal in the case of Karnik Maritime Pvt. Ltd. v CCE, Mumbai-/ 2007- nOLCESTAT-MUM : 2007 (6) STR 314 (Tri.-Mum.) referred the observation made the Hon'ble Gujarat High Court wherein it was held that in the case ofthe mistake itted by both - the petitioner and the Department - section 17 of the Limitation shall apply which provides that if a suit or application is based <In upon a take, the period of limitation would not begin to run until the plaintiff or the licant has or could have discovered the mistake, with reasonable diligence; hence, Ce the claim is based on the discovery of mistake, the period of limitation would tcommence from the date of reversal of CENV AT credit but from the date when mistake committed mutually of wrong reversal of credit by the parties was covered. Therefore, the time-limitation of refund lll1der section lIB has to be mputed accordingly. . he Tribunal in the case of CCE, Pune-III v Kinetic Engineering Ltd. 2007-TlOL126CESTAT-MUM, relying upon the Supreme Court decision in CCE v Doaba i)-operative Sugar Mills 1 <)88 (37) EL T 478 (SC) : AIR 1988 SC 2052 : 1988 Supp SCC683 and Asstt. Collector of Central Excise v Kashyap Engg. & tallurgicals Pvt. Ltd 2002 (142) ELT 518 (SC): AlR2002 SCJ101: (2002) 10 C 443, held that the provision of the Limitation Act, 1963 does not have any .' plication for the refund claim under the Central Excise Act. he Tribunal in the case of Kinetlc Engineering Ltd. v CCE, Pune-III2008-TIOLF06CESTAT-MUM held that once the duty is paid under protest, the period of 'mitation for granting refund does not arise and it was further held that three year's eriod of limitation prescribed under the Limitation Act, 1963 does not apply as the When the assessee made the payment of service tax on the amount received in advance before the services were actually rendered, the refund applicable cannot be sustained if it is time-barred under section lIB [Brite Neon Signs v CCE, New Delhi 2002 (149) ELT 330 (Tri.-Del.): 2006 (2) STR 541 (Tri.-Del.)]. rnthe case of CCE v Doaba Co-operative Sugar Mills 1988 (37) ELT 478 (SC) AIR 1988 SC .2052 : 1988 Supp (1) SCC683, it was held that when making claims for refund

before the Departmental authority, an assessee is bound within four comers of the sta1:u.te and period of limitation prescribed in the Central Excise Act ~nd the Rules frameCl thereunder must be adhered to. The Authorities functioning under the Act are bound by the provisions of the Act. ....... ill the case <Jf EMM Jay Travels & Exports P. Ltd v CCE, Chandigarh 2003 (161) ELT 371 (Tri.-Del): 2006 (3) STR 77 (Tri.-Del.), the matter was remanded back to consider the refund claim arising out of the assessment order passed by the Superintendent of Central Excise for air travel agent selVices in respect of the tickets cancelled or modified - whether it is time-barred or not - in light <Jf the decision in the case of Omega Alloys Castings (P) Limited v CCE, Bhopal (2000) 121 ELT 336 where it was held that the Cf.uestion of time-bar does not arise in case of consequential relief.

1490 Service Tax Chap; p~1l8 Refund of Tax 1491 cd is claimed was collected, or paid by him and the incidence of such tax has not passed by him to any other person. He is also required to submit the documents ed to in section 12A of the Central Excise Act, 1944 ie the invoice issued for Ie services or any other like documents [section liB(1)]. Therefore, the see would be entitled to claim the refund of service tax only ifhe can prove that s not passed on the incidence oftax to any other person. ether person who borlle the burden of tax has ItJcus standi to file the refund atitJlI ? Marigold Paints Pvt. Ltd. v CCE, Co chin 2008 (9) STR 365 (Tri.-Bang.) - In instant case, refund was sought by the person who borne the burden of tax eas the Department took the plea that such person has no locus standi to file the d application because he has not directly paid the service tax; therefore, the n is not eligible to claim refund under section liB of the Central Excise Act. Tribunal held that the said person is eligible and has a locus standi to file the ndapplication and theplvision of unjust enrichment is not applicable in this :The Tribunal also relied upon the Supreme Court decision in the case of [DL icals Ltd. v U011996 (86) EL T 182 (SC) wherein the Supreme Court held that on lIB was amend,ed in 1991, providing for the filing 0 f the refund claim even purchaser. It is evident that the purchaser does not pay central excise duty tly to the Department. Even when he has borne the burden of the excise duty, h is not actually payable by him, the law provides that he can also claim refund the Department. In these circumstances, it is not correct to reject the refund on round of locus standi. Further, the Tribunal in the case of SP Fabricators Pvt. y CC, Bangalore 2007 (220) ELT 517 (Tri.-Bang.) held that once from the record established that the duty incident has been borne by the person, it cannot be said the said person does not have any locus standi in filing the refund claim even gh he may not fallfregister within the jurisdictional Deputy Commissioner. Tribunal in the case of CCE, Bangalore v Standard Chartered Bank 2008- TIOL8GESTAT-BANG, relying upon the decision ofthe Kamataka High Comt in the of CST Bangalore v Standard Chartered Bank 200S (10) STR 6 (Kar), held that e assessee was unable to recover tax from its customer, the assessee cannot be eto pay service tax in excess and if such refund is asked, it cannot be considered njust as it is money which the assessee is entitled to, since the same was paid by assessee in excess.

said period of limitation has been prescribed under the Central Excise Act, whO will prevail over the general law of limitation as held by the Supreme Court in case of Asstt. Collector of Central Excise v Kashyap Engg. & Metallurgicals Ltd. 2002 (142) ELT 518 (SC): AIR 2002 SC 3707: (2002) 10 SCC 443. Para 99(iv) of the reported decision held by the Apex Court Constitutional Bene the case of Mafatlal Industries Ltd. \I UOl 1997 (89) ELT 247 SC : (1997) 5 S 536 is as follows: "Para 99(iv) - It is not open to any person to make a refund claim on the basis decision of a Court or Tribunal rendered in the case of another person. He cali also claim that the decision of the Court/ Tribunal in another person's case has him to discover the mistake of law under which he has paid the tax nor can he cl that he is entitled to prefer a Writ Petition or to institute a suit within three ye([~ such alleged discovery of mistake of law. A person. whether a manufacturer importer, must fight his own battle and must succeed or fail in such proceed' Once the assessment of levy has become final in h is case, he cannot seek to reope nor can he claim refund without re-opening such assessment! order on the groun a decision in another person's case. Any proposition to the contrary not only re in substantial pre:judice to public interest hut is offensive to several well establis principles of law. It also leads .to grave public mischief Section 72 of the Cont Act, orfor that matter Section 17(1)(c) of the Limitation Act, 1963 has no applicat to such a claim for refund'. The Hon'ble Delhi High Court in the case of Jumax Foam Pvt Ltd \I UOI2003 (15 ELT 252 (Del) after discussing the Hon'ble Supreme Court's views in Mis Mafa Jndustries Ltd and Anam Electrical Manufacturing Co cases (cited supra) held that: "even if the tax is collected by the authority under the Act by misinterpretating misapplying any of the Rules, regulations or Notifications or by an erroneJ. determination of the relevant facts, i.e. an erroneous finding of the facts, the s~{ may be called an illegal levy, however, even for the refund ofthe aforesaid amount; claim has necessarily to be preferred under and in accordance with the provisions the respective enactments before the authorities specified thereunder and within period of limitation prescribed therein." The Tribunal in the case of Chemtrols Engineering Ltd. v CCE, Mumbai-II 2007-TIOL 581-CESTAT-MUM held that it is well settled that the deposit of duty during the co of investigation, in respect of which proceedings are ultimately dropped either by original authority or by the appellate authority, is not hit by the bar of limitation. (3) Form of refund An application should be made in such form in tdp1icate and in such manner as ill, be prescribed [section IIB(I)]. The proforma for the refund application has by prescribed in Form 'R' (appended in Annexure II) under the Central Excise Rul [Rule 173-S in Central Excise Rule Series 2AA].

(4) EncltJsures with application The application shall be accompanied by such documentary or other evidence as.t applicant may furnish to establish that the amount of tax in relation to which SUiC Unjust enrichment and orier of refund the receipt of the application, the Assistant Commissioner of Central Excise or uty Commissioner of Central Excise, after being satisfied, may himself, make an r for the refund of whole or any part of tax. However, such amount shall be ded to the applicant only if the incidence of tax has not been passed by the licant to any other person; otherwise, the amount shall be transferred to the nsumer Welfare Fund. ~ Larger Bench of the Supreme Court in the case of Sahakari Khand Udyog ndal Ltd. v CCE&C 2005 (181) ELT328 (SC) held that-

1492 Service Tax Chap "3i. Stated simply, 'Unjust enrichment' means retention of a beniifit by a that is unjust or inequitable. 'Unjust enrichment' occurs when a person money or benefits which in justice, equity and good conscience, belong to so else. 32. The doctrine of 'unjust enrichment', therefore, is that no person can be al to enrich inequitably at the expense of another. A right of recovery uncl doctrine of 'urijust enrichment' arises where retention of a benefit is consi contrary to justice or against equity. 33. The juristic basis of the obligation is not founded upon any contract or to upon a third category of law, namely, quasi-contract or the doctrine of restitution. Refund of Tax 1493 s Ltd. v CCE 2001 (132) ELT 455 allowed the appeal of the appellant for g refund. Further, in the case of Siltap Chemicals Ltd v CCE, Vadodara-Il TIOL-l045-CESTATMum, it was held that "sold the goods to a Society and n issued a credit note in respect of the duty, which is sufficient proof for not the incidence of duty and the Society in its turn supplied the goods to the freely, as such there cannot be an element of passing of incidence of duty to sumers. She has also relied upon another decision reported in 2004 (168) EL T ri.-Chennai). It is observed in the above decision that incidence of duty y passed on to buyers, credited into the buyer's account subsequent to ce of goods. Evidence on record dearly shows reimbursement to buyer by g necessary entries by book adjustment. In such circumstances, order to credit d amount to the Consumer Welfare Fund is set aside" and held that "no n of unjust emichment and the refund claim can be sanctioned". ribunal in the case of CCE, Pune v Jayashree Suraksha Rankshak Shakari a Maryadit 2007 (7) STR 147 (Tri.-Mumbai) held that invoices raised by the ants to the service receivers do not indicate any amount as representing duty of ~ tax. In such a case, it is not proper to hold that they have collected amounts as nting service tax, from the service receivers. ~mount deposited towards service tax was collected by the service providers its customer/client; therefore, refund would be against the provisions related to t enrichment contained in section lIB of the Central Excise Act, 1944; ore, it upheld the rejection of the refund application on the ground of unjust ment by the Department [International Security Organisation v CCE, New 2002 (144) ELT 343 (Tri.Del.): 2006 (2) STR 550 (Tri.-Del.)]. In the case of ore Foam Pvt. Ltd. v CCE, Indore 2006 (193) ELT 112 (Tri.-Del.), the al relying on the ratio of CCE, Mumbai-II v Allied Photographics india Ltd (166) ELT 3 (SC) : 2004 (3) SCALE 447: (2004) 4 SCC 34 held that the onus the appellants to provide that the incidence of duty has not been passed on

to customers. The Tribunal in the case Paras Plastic Processors v CCE, Mumbai TIOL02-CESTA T-Mum held that if the purchaser has suffered the duty, then he can make the application for refund. The Tribunal in the case of GAIL v Gwalior 2006 (196) EL T 68 (Tri.-Del) held that mere issue of invoice does amount to passing on the duty liability. Passing on takes place only upon the ent of duty as shown in the sale document by the recipient of goods. Therefore, se the buyer settled tbe bill for the lower amount, it cannot be said that a higher amount was passed on to the buyer. assessee who made the refund application has to be heard and given opportunity r()duce such material as they may opt to prove that the bar of unjust enrichment not hit their claim of refund, before passing any order to credit the sum to the trsumer Welfare Fund [Lucas TVS Limited v CCE, Chennai 2002 (144) ELT 422 '.-Chennai)]. .tlw cas~ of He:xacon (I) Ltd. v CCE, Jaipur 2003 (156) ELl:' 357 (Tri.-Del.): 2006 SIR 131 (Tri.-Del.) : 2003-TIOL-263-CESTAT-DEL, it was.held that "if any . unts are 9011ected erroneously as representing service tax, which is not in force, yis no bar to the return of such amounts". It was also held that "provisions ating to refund of service tax, including those relating to unjust enrichment, cannot 48. From the above discussion, it is clear that the doctrine of 'unjust enrich is based on equity and has been accepted and applied in several cases. in opinion, therefore, irrespective of applicability of Section llB of the Act, the do can be invoked to deny the benefit to which a person is not otherwise entitled. Se llB of the Actor similar provision merely gives legislative recognition to doctrine. That, however, does not mean that in absence of statutory provisio person can claim or retain undue benefit. Before claiming a relief of refund, necessary for the petitioner/appellant to show that he has paid the amount for relief is sought, he has not passed on the burden on consumers and if such reI; not granted, he would suffer loss!' In the case of CCE&C, BBSR-I v Ni/achal Concrete Products (P) Ltd. 2006 (1) 48 (Tri.-Kolkata), it was held that when the sale price ofthe finished product rem unchanged during the period prior to the imposition of service tax and after imposition of service tax, therefore, "incidence of tax had not been passed on to customer". In the case of Synergy Irifo-Sers v CCE, Nagpur, 2006 (I) STR 142 ( Mumbai), it was held that the appellant having passed on the incidence of duty to customers has no locus standi to claim refund of duty allegedly wrongly paid. I now well settled that passing on credit notes does not mean that the bar of un enrichment does not apply. This issue was well settled in the decision of a La Bench of the Tribunal in the case of S. Kumar Ltd. v CCE, Indore 2003(153) 217 (LB); this case was affirmed by the Supreme Court by dismissing the App Similar views were taken in the cases of Kanyakumari Silicate & indst, Sa Silicates v CCE, Tironelveli 2006-TIOL-33-CESTATMad. and Cadila Healthc Limited v CCE, Ahmedabad 2006- TIOL-54-CESTAT-Mum. However, a contr stand was taken in the case of L&T-Sargent & Lundy Limited v CeE 2004 (178) E 769 (Tri-Mwnbai) : 2006 (2) STR 523 (Tri.-Mumoai) - In this case, the appell provided engineering services to Mis. Larsen & Toubro Limited and paid the se tax: and also included the same in the bills raised on M/s. Larsen & Toubro Limit They later re!!lised that Mis. Larsen & Toubro Limited being consulting engine themselves were liable to pay the service tax on the services rendered by them to customers. On that

ground, they filed a refund claim of the tax already paid, before that credit notes had been issued by the appellant to MJs. Larsen & Tou Limited and a plea was taken that the burden of tax had not been passed on by th to their customers. The Tribunal applying the ratio of the order in Thermon R

1494 Service Tax Chap; have any application to the return of the amount in question. It is further noted provisions contained in section 11 D of the Central Excise Act l1ave not been applicable to service tax (which is now made applicable by the Finance Act, w.e.f. 14-5-2003) ". The rejection of the refund application therefore is not corr the present case. The ratio of the said case was also followed in the cases of Kolkata-I v M A Financial Services Pvt LId 2005TIOL-1344-CESTAT-KOL' Raipur v Indian Ispat Works (P) Ltd. 2006-TlOL-1446CESTAT-DEL; CCE, Rai v Indian Ispat Works (P) Ltd. & Ors. 2006-TIOL-425CESTAT-DEL. The bar. ~f unjust enrichment is not applicable to refund consequent upon finalisa. of provlsLOnal assessment, whereas the refund of duty paid under protest after assessments attracts the bar of unjust enrichment - CCE, Mumbai-II v Al Photographics India Ltd 2004 (166) ELT 3 (SC) : 2004 (3) SCALE 447 : (200 SCC 34. The ratio ofthe said case is also followed in the case of CCE, Jaipur v B Corporation Ltd. 2007-TIOL-llSC-CX : 2007 (208) ELT 481 (SC) : 2007 SCALE 28:) : ,<2007}3 SCC 68. Now, after the issue is settled by tlle Supreme C III the aforesaid case, the Board has issued a Circular No. 794J27/2004-CX.,d 23-6-2004 (appended as Annexme IV in the Chapter -'Provisiollal Assessme directing of pending cases. In the case. of E. V. Mathai & Co. v CCE, Cochin 200:) (157) EL T 10 I ( Bangalore), It was held that the assessee is entitled for the refulld of service tax on transportation charges by C&F agents on which no service tax is levia however, to decide on the applicability of the provisions ef unjust enrichment left with the adjudicating authority. In the case of R.B. Agan-valla & Co. Pvt. Lt CCE&C, BBSR-II, 2006 (1) STR 148 (Tri.Kolkata): 2005-TlOL-1348-CEST KO~ the applicants were ellgaged in the mallufacturing and selling of casting 0 specified rate of contract. The amount of service tax paid by the appellants is 0 goods transport operator. The refund, sanctiolled on the basis of the Cha Accountant's certificate, was demanded back en the ground that tlle certificate submits that the amount debited in the expenses account is in the profit and account. The Tribunal held that the certificate issued by the professional gene should not be chal1enged witheut having contradictory certificate from an professional. Further, in the case of CCE, Allahabad v Prism Cement LId 200 STR 206 (T:i. Del.), the Tribunal upheld the finding of the Commissioner (App on the baSIS (If a Chartered Accountant's certificate tllat there is no un enrichment. In the case of CCE&C, Bhubaneshwar-[ v Ferro Alloys Corpn, 2006 (193) ELT 563 (Tri.-Kolkata), on the basis of a Chartered Account certificate and buyer letter that they have not paid any excise duty to the assesseeaP hav.e not t~en any ~ODV AT credit, it was held that the prillciple of UIlj~~ll ennchment IS 1l0t apphcable. The Tribunal ill the case of Thales-E-Transaction qi~ v ~Cl!' New Delhi 200~-TIOL-561-CESTAT-DE held that there is no justificatiolVij reJecttn~ the refund clat~ 011 the presumption that the assessee might have collec~i the service tax from theIr customers, as the rates quoted ill the contract are illclusil:

ef all taxes. The Tribunal further held that if the assessee is able to show by way (Jt~ CA's certification from the customer that the incident of service tax has not be[~ passed, then they are eligible for refund. Techno Rubber Products v Cc;~ Bangalore-JI 2007TIOL-487-CESTAT-BANG - In the instant case the Tribun~ , ..;"(?{ Refund a/Tax 1495 1 whell the assessee proved that he has borne the higher duty which was paid ke, he is entitled for refund. se of CCE v Tecumseh Products India Ltd2005 TlOL 65 CESTAT-BANG, 'rig the judgment of the Madras High Court ill the case of Addison and Co. v Madras 200 I (129) EL T 44 whereill it was held that the assessee is not d to discharge the burden to show iliat the incidence of duty is required to be to the ultimate consumers, which was also followed in the case of CCE, Delhi onpalPharmaceuticals LId. 2003 (152) ELT 186 (Tri.De!.), rejected that of the Revenue. case of u.P. Twiga Fiberglass Ltd v CCE 2004 (175) ELT 561 (Tri-De!.): (3) STR 250 (Tri-Del), the appellants paid service tax fer availing the service goods transporter. On realising the mistake, the appellants filed a refund ation. The adjudicating efficer after giving a categorical finding that the burden ice tax had not been passed on to the transporter and it was borne by the ee rejected the refund claim on the ground that, legally, no tax was leviable and .. been paid without the authority of law. The Commissioner (appeal) rejected plaim on the principle of unjust enrichment. 011 appeal, the Tribunal held that e the findillg of the adjudicating authority that the burden of service tax had not passed on to the transporter and it was borne by the assessee was not challenged e Revenue, impuglled order was not sustaillable. e case ofCCE, Daman v Biochem Pharmaceuticals 2006-TIOL-225-CESTAT, it was held that "since the department was not legally entitled to recover the from the assessee respondents, the question of principles of unjust enrichment g attracted in this case does not arise. Therefore, that being the position it was competent for the adj udicating authority to have ordered for dep 0 sit of the re fund e Consumer Welfare FUlld". Further, the principles of unjust enrichmellt are not icable in this case because the duty cannot be collected by the Department under authority oflaw -- Dabur India Ltd. v State of Uttar Pradesh 1990 (49) EL T 3 ) : AIR 1990 SC 1814: (1990) 4 SCC 113. In the case of CC v Rajesh Chemicals 6 (196) ELT 64 (Tri.-Bang.), it was held that if an excess amount is paid due to hmetical mistakes, the said amount cannot be considered as duty, therefore, the ovision of unjust enrichment is not applicable. The Tribunal in the case of Triveni lass Ltd. v Commissioner 2003 (162) ELT 529 (Tri.-Del.) held that sillce the tiginal payment of duty was on amounts higher than the transaction value, the ppellant is eligib Ie for th~ refund of duty paid on excess amounts, as the credit notes dicate the revised price as well as the CENV AT amounts. ln these circumstances, here is no questioll of the appe11ant passing on the higher amount of duty to their uyers. Further, the Supreme Court declined the stay of the above decision of the Tribunal. 2006 (20G) ELT AIOS. In the case of Avery Cycles Indus. Ltd. v CCE, tudhiana 2006 (200) ELT 425

(Tri.-Del.), the Tribunal held that mere issuance of illvoices does not prove that the price mentiened therein is the price at which the 'transaction took place. Similarly, mentioll of a particular amount in an invoice does not mean that the payment has been made by the buyer at that amoullt aleng with .. duty amount. 1f it is found that the transaction was concluded and the amount was paid at the revis.ed lower prices and duty was also reimbursed only at the revised prices, refund shall be paid to the appellallt for the excise duty paid.

]496 Service Tax Chap, 1497 l1S Refund of Tax . . p. .' r 'bl for benefit of refund as the Illcldent of see issued credit notes, he IS not e Igl e . d ed to be passed on the customer. IS eem CGE Visakhapatnam 2007-TlOL-774alavalasa Cooperati~e Sugars Ltd.h v wa's a contract where the price was T-BANG - In the mstant c~se, t er:ld that when the price is fixed at a ve of duty payable. The Tnbunal ~er the oods are dutiable or not and on ular rate, irrespective of the fac~ wh~ d the as;essee gets less profit. Therefore, emand by the Department, duty1s ~al. 'elusive of duty payable, there cannot be h Id that when the contract pIlce IS III d 'I s e 'f h d ty ayable is either reduce or m . stenrichment even I t e u p 027 CESTAT-BANG : d CST Bangalore 2007-TIOL-o Andytieals India Lt . v , . the Tribunal held that when a T B ) In the mstant case, b (7) STR 35 ( n.- ang. -. 11 t d either by way of cheques or Y . d tu d the service tax co ec e ice provi er re me b question of unjust enrichment. of credit notes, there cannot e any d 2007_TIOL-1416-CESTATd GCE (Appeals-Il) Hyderaba . Peripherals Lt . v . )' 1 the instant case the refund anses on NO' 2007 (213) ELT 18 (Tn.Bang. -- n" . e and the normal transaction . b t n the stock transler Yl1C h aunt of the difference e wee . f d t l:mt the duty collected from t e e. The assessee discharged hlg~er rate 10 e ;he Tribunal held that in such r is on the normal. transact~onb va u b' the assessee; hence, the question of umstances, the differentl~l duty IS orne Y ustenrichrnent willnotanse. . CC&CE, Hyderabad 2007-TIOL-14?7eTribunal in case of V~T Industnes:, f the a ellant that the bar of unjust STAT-BANG agreed With the content~o~ 0 t ollnalisation of the provisional . chment is not applicable to refunddanlslllg ~u on account of the decision of the H hen the refun calm 1S . A t sment. owever, w . f IlB of the Central EXCise c. nal, it wiD deflllitely be subject to see Ion Meaning of "relevant date" . . f the "relevant date"; .' b made wlthm one year rom d " he refund appltcatlOn can e . f"relevant date". The "relevant ate . efore it is important to know the meamn.g 0 lIB of the Central Excise Act, 1944 , d' E I tion (B) to section . d Aft s been define III xp ana fl' of refund of excise uty. er ut that has been defined in th~ context o c a~~at the relevant date in relation to erusal of the said Explanation, It can be lD erre e service tax refund may be: t d from the levy of service tax, then tbe date (i) In case the services are exe~np e. .

h order of exemytlOll was Issued, when suc de the date of adjustment of tax When the provisional assessment was :a th~ date of final assessment shall after the final assessment. In other wor s, be the relevant date; . when such (iii) If refund become due because of rectification of mistake, the date order is passed; f' d nt fund able as a consequence 0 J u gme , (iv) In case where the duty becomes re 11 t uthority Appellate Tribunal or d r direction of the appe a e a '., decree, or er 0 h' d t decree order or dlTectlOn; any court, the date of sue JU gmen, , (v) In any other case, the date of payment oftax. The Tribunal in the case of eGE, Pune-JJ v Kirloskar Ebara Pumps Ltd 2007-Tl 77CESTAT-MUM held that once the tax is collected without any authority of the question of unjust enrichment will not arise. Therefore, in such a case, tax cannot be credited to the Consumer Welfare Fund but should be refunded to assessee. The Tribunal in the case of Aditya Cement v eCE, Jaipur-JJ 2007- TI 236-CESTAT-DEL held that the "refund is due to an assessee, if an assessee pa amount as tax under misunderstanding of the law, which ifhe is not liable to pa now a well-settled law. It is also a well-settled law that the Government cannot k with itself the amount that is not due to it." CCE, Raipur v Ambuja Cement Eas Ltd. 2006-TIOL-987-CESTAT-DEL -- In the instant case, the foreign se provider was having the office in India; however, the service tax was paid by recipient oftaxable services under rule 2(l)(d)(iv) and later on claimed the refun the ground that the amount has been paid by mistake as they are not liable to pay' under rule 2(1)(d)(iv) being a service provider having office in India. The Trib . held that the Revenue cannot hold on to the amount paid by the assessee by mis hence refund is allowed. The Tribunal in the case of Larsen & Taubro ltd. v Commissioner afCentral Exc' Vadodra-Il 2008-TfOL-f994-CESTAT-AHM allowed the refund claim of service paid as a recipient of service for the period prior to 01.01.2005 on the ground i before the said date, services were not taxable in the hands of recipient of service. The Supreme Court in the case of Sandvik Asia Ltd v CfT-I, Pune 2007 (8) ]93(SC) held that even if the revenue takes an erroneous view of the law, that cann mean that withholding of money is justifiable or not wrongfuL The Tribunal in t case of ceE, Kolkata- VI v Black Diamond Beverages Ltd. 2006-TIOL-56 CES TAT -KOL, relying upon its earlier decision in the case of Dura Syntex Ltd., hel that in case of the refund related to input credit, the principle'of unjust enrichment not applicable_ The Tribunal in the case of GCE, JaipurcI v Jai Laxmi Finance c:. 2006-TIOL-397-CESTAT-DEL, relying upon the Supreme Court's decision in th case of SRF Ltd. v AGCE, Triehy 2001 (134) ELT 324 (SC) : AIR 2002 SC 98<:. (2002) 1 sec 480, held that even in the case of unconstitutional levy, the appellant would not be entitled to refund, unless it is established that the incident of duty has not been passed onto others. The Tribunal in the case of Godrej industries Ltd. v ce, Mumbai

2007-TIOL-623-CESTAT-MUM held that the amount deposited OIl the direction of the Court shall be treated as 'deposit' and not 'duties' which automatically become refundable to the assessee on success of tl1eir appeals andit will not be hit by the bar 0 f unjust enrichment. The Tribunal in the case of UOJ v Mulder India (P) Ltd. 2007 (212) EL T 319 (Kar.) held that no change has taken place in the price structure of the product after increase in the rate of duty. It cannot be said that higher rate of duty has been passed on to rue customers and tbe refund granted was upheld. The Tribunal in the case of Shiva Analytieals (f) Ltd. v CST, Bangalore 2007 (7) STR 35 (Tri.-Bang.) held that unjust enrichment does not arise when the service provider returns service tax collected by credit notes/cheques. The Tribunal in the case of CCE, Ti~parhi v Sneha Vinyl Products Pvt. Ltd. 2007TIOL726-CESTAT-BANG, relying upon its earlier decision, held that once the

1498 Service Tax Refund o{Tax 1499 6. Interest on delayed refunds In case the refund granted under section II B(2) is not refunded wjthin 3 months ft the date ofrecejpt of application of refund under section UB(l), then the assess entitled to get the interest thereon which shall not be below 5% (changed by Finance Act, 2001, w.e.f. 11-5-2001; earlier it was 10%) but cannot exceed 30'M annum, as may be fixed by the Central Government by notification in the Of Gazette (as amended by the Finance Act, 2000, w.e.f. 12-5-2000; earlier, this p was with the Board). Such interest shall be paid after the expiry of the said 3 mo for the period from the date of receipt of application of refund up to the da. refund of tax [Section II BB]. The Central Government has the prescribed rat interest at 6% per annum for the purposes of section lIBB [vide Notifica6on 67J2003-Central Excise (N.T.), dated 12-9-2003, appended as Annexure III]. It is held that "the appellants are entitled for the interest on the refund after months from the date of final order passed by the Trjbunal as applicable during relevant period." -King Win Johnson (India) and Others v CCE, Jaipur 2005- TlO 600-CESTAT-Del. The Tribunal in the case of Goldstone Teleservices Ltd. v CC&CE, Hyderabad2007 (5) STR 300 (Tri.-Bang.) held that when a debt carrjes interest, payments appropriated in the first place, towards the interest In the instant case, Department was directed to refund the amount along with interest, whereas Departrnentdid not pay the amount of interest. Therefore, it was held that the amo paid by the Department frrst should be appropriated against the interest and balance will be treated as the amount refunded which will carry further interest the date ofpayment. The Tribunal in the case of Kerala Chemicals & Proteins Ltc!. CCE, Cochin 2007-TIOL-350-CESTAT-BANG, relying upon the Larger Ben decision in the case of Indian Thermoplastics (P) Ltd. v CC, Kolkata reported 2004 (164) ELT 156 (Tri.-LB), held that the interest is required to be paid from date of the expiry of three months from the date of receipt of the final order of Tribunal till the date of payment. Moreover, the authority was further directed calculate interest on interest and make the payment to the party. The Supreme Co in the case of UOl v Shreeji Colourchem Industries 2008-TlOL-J 7 J -SC-CX, held th ifthe claim of interest js on equitable ground, a written demand tllereof is imperati . and if the interest is on the basis of statutory provisions, then jt lIas to be awarde~ according to the provisions. In the instant case, admittedly such written demand was

made, the Court held that in terms of Section IIBB (1), assessee is entitled to the interest, three months after the date affiling the application requestiIlg for the refund ofthe amount along with interest. The Tribunal in the case of Mahindra & Mahindra Ltd. v CCE, Hyderabad 2007 (6) STR 413 (Tri.-Bang.) held that the appellant is entitled for the interest on deposits made from the date of expiry ofthree months from the Tribunal order till the date payment. 7. Appeal against the rejection of refund The Finance Act, 2003, w.e.f. 14-5-2003, had amended the provision of section with a view to provide an appeal against the rejection of the refund claim in respect of service tax, so that any person aggrieved by any order for denying any refund of ce tax shall be eligible to make an appeal to the Commissioner of Central Excise eals) within three months from the date of receipt of such order. Now, by the oe Act, 2005, w.e.f. 13-5-2003, section 85 has been amended. Now, it is ed that any person aggrieved by the decision or order passed by the lower 'ty can file an appeal against the said order/decision. The detailed procedure 'ng an appeal has been given in the Chapter -'Revision and Appeals'. ribunal in the case of Bharat Petroleum Corporation Limited, Cochin v CCE, il1 2006TIOL-1256-CESTAT-BANG held that once a double payment of duty arly established, reduction in the refund claim on technical ground is not led. Tribunal in the case of Hindustan Zinc LId. v CCE, Jaipur-1l2007-TIOL-265AT"DEL held that no adjustment can be made for the refund due to the see against another case which is pending before the Tribunal. Tribunal in the case of CC, Hyderabad v Golconda Engineering Enterprises Ltd. 7-TIOL-1326-CEST AT-BANG : 2007 (218) EL T 625 (Tri.-Bang.) held that dy issuing a letter seeking an explanation from the appellant does not satisfy the cipleof natural justice as before the rejection of the refund claim, no show-cause . e was issued. Hence, the impugned order is set aside. fund of pre-deposit and interest thereon .Finance Act, 2008, w.e.f. 10-05-2008, has amended section 83 and secbon 35FF he Central Excise Act, 1944 has been made applicable to service tax, which ides that if the amount deposited as pre-deposit under section 35F of the Central ise Act (which is also applicable to service tax) is not refunded consequent to the passed by the Appellate Authorjty within three months from the date of ll1unication of order, then such amount shall be paid with interest at the rate ified under section IlBB ofthe Central Excise Act, 1944, which is at present 6% . After having introduced the statutory provisions under the

Act in2 s regard, controversies may come to an end even though such issue was settled by the ies of decisions as discussed below. the case of ILPEA Paramount Ltd. v CCE, Faridaaad2005 (188) ELT 523 (Tri.1.), it was observed that "no doubt the Central Board of Excise & Customs has tioned in its letter dated 2-1-2002 that no formal application under Section B(l) of the Central Excise Act is required for the refund of pre-deposit amount. e Board has, however, mentioned that a simple letter, from the person who has e such a deposit, requesbng for the return of the amount along with an attested x copy of the Order-in-Appeal or Tribunal's Order consequent to which deposit e become returnable and an attested xerox copy of the challan in Form TR 6 encing the payment of duty has to be submitted to the Department. In absence of documents, the refund of the amount of pre-deposit cannot be undertaken by the artment". It was held that "the Supreme Court decision in the case CCE, /derabad v.l.TC Ltd. 2005 (179) ELT 15 (SC) as well as Board's Circular dated 12-2004 nowhere provides that the interest \vill be admissible to the claimant if tIle OUlll'6f pre-deposit is not refunded within three months of the fmal order passed the Tribunal. Tfle provisions relating to interest are contained in Section IIBB of eCentral Excise Act GIlly, according to which the interest is payable iithe refimd is

1500 Service Tax Refund of Tax 1501 orily .under section 35F is not subject to the provisions or unjust enrichment section llB and refund cannot be denied on that account. ~e-audit ofrefulld/rebate claims Board in its Circular No.8571l5/2007/CX (F.No.268/24J2006-CX-8) dated 2 07 (appended as annexure V) has clarified that "it has been decided that pre~ ?f. all refun~re~ate claims will be conducted by the Assistant/Deputy .1sslOner .(Audlt), In the Commissionerate Headquarters Office. Thereafter the ,nal i\sslstantlD~puty Commissioner will pass an order-in-original in res~ect ~. c~alm. Accordmgly, the pr~sent system of pre-audit of claims by the ISSlOner would henceforth be dIspensed with." Tinters v CCE, Delhi 2008-TIOL-230-CESTAT-DEL - In the instant case it eld that the refund of pre-deposit is to be made within 3 months from the d~te der IS passed .by the appellate authority and the appellant is entitled for the st after the expiry of three months therefrom. Tribunal in the case of Mahindra & Mahindra Ltd. v CCE, Hyderabad 2007 ELT 603 (r:n.-Ban?_) ~eld that for the refund of a pre-deposit, there is no need e refund. clamvappltcatlOn. It has to be granted within three months from the f the Tn bunal' s Order. bether writ can be filed for seeldng refund ()f tax Supreme Court in the case of Mafatlal Industries Ltd. v Union of India 1997 (89) T. 247 (S.C.) held that .In view. of these propositions, which have oeen reiterated by this Court on al occa~l~ns and thus constItute sound law, it is clear that actions by way of or petltlOns .under ArtIcle 226 of the Constitution cannot be completely nated. .T~e ~la~ms for refund can arise un der three broad classes and the is sue of r of JunsdIctton of civil courts can oe understood by focussing on the meters of these classes which are as follows: s I :"Unconstitut.ional levy" - where claims for refund are founded on the d .that the provlSlon of the Excise Act under which the tax was levied is ns tl tutlOnal.

not made within three months of the receipt of the application." Therefore, int on the refund of pre-deposit was aUowed for the period after tile expiry of 3 IDO from the date of submission of refund application and not from the date of final 0 passed in favour of assessee. This is also reiterated in the case of Afi Infrastructure Ltd. 11 CCE, Visakhapatnam 2006 (4) STR 501 (Tri.-DeL) rei upon the decision of the Gujarat High Court in the case of Padmanabh Silk Mi Union of India 2006 (193) ELT 536 (Guj.). The Tribunal in the case of Contine Petroleum Ltd. v CC, Ahmedahad 2006 (200) ELT 429 (Tri.-Del.), relying upon Larger Bench's decision in the case of Sheela Foam Pvt. Ltd. v CCE, Naida 1 (154) ELT 522 (Tri.-LB), held iliat the interest is payable on the amount deposite the assessee in pursuance to the direction by the Tribunal within a period of 3 IDO of the disposal of the appeal in the assessee's favour. The Tribunal in the cas Tollin Ruhbers (P) Ltd. v CC, Cochin 2007 (211) ELT 246 (Tri.-Bang.) held tllat encashment of the Bank Guarantee during the pendency of the appeal amount pre-deposit and the appellant is entitled for interest after a lapse ofthree months the date of disposal of cases till the date of payment of the refund amount. The Board in its Circular No. 802J35!2004-CX., dated 8-12-2004 [F. 3&7/5/2001-JC] (Appended as Annexure IV) has clarified that the pre-deposits be returned within a period of 3 months of the disposal of the appeals in assessee's favour, unless there is stay on the order of the authority/CESTAT/Court by a superior court. It was further clarified that "d beyond this period of three months in such cases will be viewed adversely appropriate disciplinary action wil1 be initiated against the concerned default officers. An concerned are requested to note that default will entail an inter liability, if such liability accrues by reason of any orders oftheCESTAT/Court,s orders will have to be complied with and it may be recoveraole from the conc.e officers". By the Finance Act, 2007, section liB is amended whereby it is provo that the relevant date in case where the duty becomes refundable as a consequence the judgement, decree, order or direction of appellate authority, Appellate Tribunal any court, is the date of such judgement, decree, order or direction. The Tribunal in ilie case of CCE, Mumbai v Simplex Mills Company 2008 (9) 3lS (Tri.Mumbai) held that once the order of the lower authority is set aside, sums paid in pursuance of the lower authority's order have to be refunded. Tribunal further held that even ifthe de novo proceedings are petlding, it is irreley.. and the same has to be refunded. Ajcons Infrastructure Ltd. v UGI 2007 (7) STR 615 (A.P.) -- In the instant case, Tribunal setting aside the order of the Commissioner (Appeals) remanded the rna back. The High Court held that in such a case, so far as the Tribunal is concerne has finally disposed off ilie matter. Therefore, pre-deposit made by the petitio under section 35F is tllus liable to be refunded with interest. The Tribunal in the case of lCI India Ltd. v CCE (Appeals), Mumbai-ll 2008- TI 897CESTAT-MUM relied upon Board's Circular No. 275/37J2K-CX.SA dated 01-2002 wherein it was clarified that the deposit made during tile pendancy of appeal automatically becomes refundable to the assessee 011 the success of t appeal, wiiliout the

assessee having made any refund application. Therefore,t Tribunal held that the predeposit made as per the directions of the Appella falling within thi.s class are clearly outside the ambit of the Excise Act. In such s~ assessees can either file a suit under section 72 of the Contract Act 1872 maft~r called "Contract Act") or invoke the writ jurisdiction of the High C rt ArtIcle 226 ofthe Constitution. ou II :':I~legalleYy:' - wherecla~ms for refund are founded on the ground that IS misInterpretatIon/mIsapplIcatIOn/erroneous interpretation of the Excise Act e Rules framed thereunder. 'narily, all such claims must be preferred under the provisions ofthe Excise Act he Rules framed thereunder ~y strictly adhering to the stipulated procedure. .ve:, m case~ where the authontles under the Excise Act arrogate to themselves IctlO11 even In cases where there is clear want of jurisdiction, the situation poses e difficulty. Reddy, J. has held that in all cases, except where unconstitutionality

... Refund of Tax 1503 1502 Service Tax is alleged, the remedy is to be pursued within the fra~ew~rk onhe Excise Act,: is a dangerous proposition for it will not cater to SituatIOns wher~ the author under the Excise Act assume authority in cases where there 1S an mherent la9 jnrisdiction. This is because, if one were to follo~ R~ddy,. J.'s .reasoning, authorities under the Act will have the final say over sltuatlons m whlch theytp lack inherent jurisdiction. In such a situation, there is nothing to prev. authorities from exercising jnrisdiction in cases which are ultra vires the EXCIS but intra vires the Constitution. To that extent, r would hold that in cases whe authorities under tl1e Excise Act initiate action, though lacking in i jurisdiction, the remedy by way of a suit under section 72 of the Cont~act AS writ under Article 226 of the Constitution will lie. Such a conclusIOn wll frustrate the exclusion of jurisdiction of Civil Courts by the Ex~ise Act ~ec.au; areas where an authority acting under a statute is said to lack mherent ]unsdlB have been clearly demarcated by several decisions of this Court. Class III :"Mistake of Law" - where claims for refund are initiated on the ba a decision rendered in favonr of another assessee holding the levy to be : unconstituti onal; or (2) without inherent jurisdi cti on. Ordinarily, no assessee can be allowed to reopen procee~i.ngs .that have been fi concluded against him on the basis of a favourable declsiOn ill the case of an assessee. This is because an order which has become final in the case of an ass will continue to stand until it is specifically recalled or set aside in his own case: ANNEXURE I Refund of Service Tax - Clarifieation IDGST, Mumbai lnstructions F. No. IJDGST/22/CD-4/98/5262, dated 18-3-1999] has been brought to the notice of the DirectDrate that refund claim of Service Tax are tbeing credited to the assessee even after such claim are duly processed and sanctioned ssistant Commissioner in charge as the PAO are not competent to make any refunds Service Tax passed by Assistant Commissioner, Service Tax. The matter was referred DY. Controller of Accounts, New Delhi who has clarified that the procedure for ment of refund as applicable to Central Excise and Customs duty holds good for ice Tax also (see

Annexure-II). It has been further clarified that Assistant missioner of Central Excise who are already authorised to issue refund cheques to cise Assessees may be therefore, further authorised to issue refund cheques to Service asses sees also. e detailed procedure in this regard is as follows:"All Excise Commissionerates dealing with the Service Tax may be advised to send to the PAO concerned the details about the names of the authorised Assistant Commissioners, their specimen signatures and particulars of branch ofthe uominated Bank on which refund cheques will be issued. The P AO will issue a separate cheque book to the concerned Assistant CommissiDners and put a stamp of "0044- Service TaK Refunds" on the cheque leaves before handing over cheque books to Assistant Commissioners. This will facilitate the bank and the PAO identify the cheques for refund of Service Tax and will ensure for using separate cheque books for Excise :lnd Service Tax refunds by the concerned Assistant Commissioners. The Assistant Commissioners will also send "list of payments" ofthe Service Tax refunds to PAO as is being done in the case of Central Excise refund". ouare kindly requested to take note of it and follow it accordingly. [Sd!- (c. P. Goyal), Asstt. Director] ... ANNEXURE II FORMR Applicati()n for refund of excise duty (Service tax) (Rule l73S) To he Assistant Commissioner, Central Excise, Division ............................ :Commissionerate 1. rfWe, claim refund of Rs. .................. (Rupees ..................................) on the grounds mentioned hereunder:(a) (&) ee)