Limitation U/S 11B Not Applicable Where Credit Accrued U/R 6(3): CESTAT Allows Indiamart’s Service Tax Refund

The Customs, Excise and Service Tax Appellate Tribunal (CESTAT), New Delhi, has allowed the appeal filed by Indiamart Intermesh, setting aside the denial of refund of excess service tax paid on subscription-based services and held that the limitation under section 11B is not applicable where credit accrued under Rule 6(3). The bench of Binu Tamta (Judicial Member) and P.V. Subba Rao (Technical Member) has observed that where credit of excess service tax had already accrued to the assessee under Rule 6(3) of the Service Tax Rules, 1994, such amount must be paid in cash under Section 142(3) of the CGST Act, 2017, and the limitation prescribed under Section 11B of the Central Excise Act, 1944 would not apply. The appellant, Indiamart Intermesh Ltd., a leading online marketplace service provider, offers subscription-based packages to vendors through its digital portal. The company collected the entire subscription fee upfront and discharged service tax on the full amount at the time of receipt. In several cases, customers opted to change their subscription plans mid-term—for instance, shifting from a one-year package to a three-year package. In such situations, Indiamart refunded the proportionate amount for the unutilised period of the earlier subscription and issued credit notes, including the corresponding service tax component. Under Rule 6(3) of the Service Tax Rules, an assessee is entitled to take credit of excess service tax paid where services are not provided wholly or partially, provided the amount is refunded or a credit note is issued. Importantly, this rule did not prescribe any time limit for availing such credit. With the introduction of GST in July 2017 and the consequent abolition of service tax, Indiamart could no longer avail credit of excess service tax under the erstwhile provisions. As a result, the company filed a refund claim on 28 January 2019 for excess service tax paid during the period July 2017 to December 2017, invoking Section 11B of the Central Excise Act, as made applicable to service tax via Section 83 of the Finance Act, 1994. However, the Assistant Commissioner rejected the refund claim on the ground that it was filed beyond the one-year limitation period prescribed under Section 11B. This rejection was upheld by the Commissioner (Appeals), prompting Indiamart to approach the CESTAT. The Tribunal observed that there was no dispute regarding the factual position that excess service tax had been paid and that part of the service was not delivered, resulting in refunds to customers. CESTAT noted that had the service tax regime continued, Indiamart would have been entitled to suo motu take credit of the excess service tax under Rule 6(3), without any limitation period. The Tribunal emphasised that the right to such credit had already accrued to the assessee under the erstwhile law. The Tribunal held that any amount accruing as a refund under the previous tax laws must be paid in cash, notwithstanding anything contained in those laws. Since the amount had accrued to Indiamart as credit under Rule 6(3), it was required to be paid in cash after the transition to GST. The Tribunal clarified that this was not a case of a simple refund governed strictly by Section 11B. Instead, it involved an accrued credit under Rule 6(3), which could not be availed due to the discontinuation of service tax. Therefore, the limitation period under Section 11B could not be invoked to deny the refund. The CESTAT set aside the impugned order and held that Indiamart Intermesh Ltd. was entitled to the refund of excess service tax paid. The Tribunal granted consequential relief to the assessee, reaffirming that transitional provisions under the CGST Act are meant to protect vested rights accrued under the erstwhile indirect tax regime. Case Details Case Title: M/s Indiamart Intermesh Ltd. Versus Commissioner Case No.: Service Tax Appeal No. 50112 Of 2020 Date: 18.12.2025 Counsel For Appellant: Shagun Arora and Shri Kunal Aggarwal Counsel For Respondent: Aejaz Ahmad, Authorized Representative Click Here To Read Order Read More: Apple Watch Bands Classifiable as Watch Straps And Not Watch’s Part: CAAR

Limitation U/S 11B Not Applicable Where Credit Accrued U/R 6(3): CESTAT Allows Indiamart’s Service Tax Refund

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