2026-VIL-1695-CESTAT-ALH-ST
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SERVICE TAX CESTAT Cases

Service Tax - Refund of service tax paid under mistake of law on Goods Transport Agency service - Applicability of Section 11B of the Central Excise Act, 1944 - Appellant, a manufacturer of yeast, paid service tax under reverse charge on Goods Transport Agency service, although it was eligible for exemption for food stuff under Notification No. 25/2012-ST as amended, and had not claimed the exemption in its returns - Commissioner (Appeals) rejected the refund on the ground that exemption was not claimed at the time of self-assessment and ignorance of law is no excuse - Whether the amount paid by the Appellant by mistake of law is refundable to the Appellant - HELD - The Commissioner (Appeals) did not dispute that the Appellant was entitled to exemption, so the service tax paid under reverse charge was not payable and was admittedly paid under mistake of law. An amount paid under mistaken notion of law does not take the colour of duty and remains only a deposit, Section 11B refers to claim for refund of duty only and not to other amounts collected without authority of law, and the provisions of Section 11B and its limitation are not attracted. The principle of unjust enrichment does not apply and the Revenue has no authority to retain the amount - The refund of the amount paid is admissible to the Appellant – The appeal is allowed - Service Tax - Interest on refund of amount paid under mistake of law - Rate of interest - Appellant sought interest from the date of respective deposit till the date of refund of the amount paid by mistake of law, which was treated as a deposit - Whether the Appellant is entitled to interest and, if so, at what rate - HELD - Since Section 11B is not applicable to the refund of an amount paid under mistake of law, Section 11BB and the notification prescribing the rate of interest thereunder are also not applicable. Following the decisions of the Tribunal granting interest at twelve per cent per annum on such refunds, the decisions of the High Court upheld by the Supreme Court, and the Tribunal's decision in the Appellant's own case granting interest at the same rate, the Appellant is eligible for interest at twelve per cent from the date of deposit till the date of payment of the refund - The impugned order is set aside, the Revenue is directed to refund the amount along with interest at twelve per cent per annum from the date of respective deposits.
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