2026-VIL-1264-CESTAT-DEL-ST
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SERVICE TAX CESTAT Cases

Service Tax - Refund Claim - Limitation Under Section 11B - Appellant a government housing board deposited service tax under bonafide mistake in respect of construction services for period prior to 01.07.2010 when construction services by builder to prospective buyers before completion were not treated as taxable as per CBEC Circular, but after amendment with effect from 01.07.2010, such services were made taxable - Whether the refund claim filed beyond one year from relevant date is barred by limitation prescribed under Section 11B of Central Excise Act, 1944 - HELD - Section 11B prescribes period of limitation as one year from relevant date for claiming refund of any duty or tax. However, in present case the refund sought was of amount deposited under mistake of law, which cannot be termed as tax or duty as there was no law at relevant time which required service tax to be paid on construction services. The government had no authority to collect any tax and therefore even if appellant had deposited amount under head of service tax, the same cannot be termed as service tax. The appellant is entitled to recover amount deposited under mistake of law and it has been repeatedly held that refund claim cannot be rejected on ground of limitation under Section 11B - The refund application cannot be rejected on ground of being time barred as per Section 11B – The appeal is disposed of - Doctrine of Unjust Enrichment - Appellant collected service tax from customers and claimed refund asserting that amount should be returned to eligible allottees from whom it was collected under mistake - Whether the refund claim is hit by doctrine of unjust enrichment under Section 11B(2) - HELD - Section 11B requires an applicant to prove that incidence of duty or tax has not been passed on to any other person. However, appellant has admitted that service tax was recovered and collected directly from allottees and buyers. The admitted position is that burden of amount deposited by appellant as service tax has been borne by allottees and buyers. Since Government cannot collect any tax except by authority of law, it cannot retain said amount. It is just and logical that liberty is granted to eligible allottees and buyers to make refund claim and on verification the same should be disbursed to them along with interest in accordance with law - Following decision in Mafatlal Industries, the refund claims cannot be entertained except in accordance with statutory provisions of Section 11B. However, in circumstances where deposit was not a service tax as there was no law under which service tax was leviable on services, the amount deposited was a mere deposit which government had no authority to retain - The refund claim cannot be rejected on ground of unjust enrichment, but liberty is granted to eligible allottees and buyers to make refund claims, and appellant is required to provide necessary assistance so that allottees are able to make refund application.
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