The Delhi Bench of Customs, Excise and Service Tax Appellate Tribunal (CESTAT) has allowed the refund of service tax paid under mistake of law allowed with 12% interest.
The bench of Ashok Jindal (Judicial Member) has observed that the provision of limitation under section 11B of the Central Excise Act, 1944 would not apply for refund of service tax paid by mistake on exempted services even though the assessee had filed claim under Form-R which shows that they had treated such payment as duty but later on claimed it as not a duty.
The appellants/assessee were engaged in construction of Single House on the basis of work order issued by the Rajasthan Housing Board, the appellants were paying duty since 01.07.2008 onwards which has exempted under Notification No. 25/2012-ST dated 20.06.2012 (Sl. No. 14B) and as per Notification No. 30/2012-ST dated 20.06.2012, the appellant were liable to pay 50% service tax under Sl. No. 14B of the said notification and Rajasthan Housing Board is liable to pay remaining 50% under reverse charge mechanism.
The appellants raised bills on Rajasthan Housing Board. While clearing the payments by Rajasthan Housing Board raised by the appellant, the Rajasthan Housing Board deducted 50% of the amount from the running bill of the appellant and deposit the said amount with the Revenue. Revenue has recorded the findings thereto.
On realizing that appellants was not liable to pay service tax, the appellants filed refund claims of the service tax paid by them during the period 01.10.2008 to 31.03.2016. Various show cause notices were issued to the appellants for rejection of the refund claims on account of being time barred as same were claimed before the Adjudicating Authority after one year of the payment of service tax and on the basis of unjust enrichment.
Initially the refund claims of the appellants were rejected. On appeal, the learned Commissioner (Appeals) allowed the refund claims to the extent of 50% of the service tax paid by the appellant along with 6% interest, but rejected the refund claim of 50% of service tax paid by the service recipient on the ground that appellant has not produced any evidence to the effect of payment of service tax by the service recipient.
The sole issue arises is that in the case where service tax is paid by mistake of law, whether the provision of Section 11B was not applicable for grant of refund or not and what should be rate of interest applicable 6% or 12%.
The tribunal held that the appellants are entitled for refund claim of the amount paid by the appellants and service recipient along with 12% interest.
Case Details
Case Title: M/s Meenu Builders Versus The Commissioner of Central Excise, Central Goods & Service Tax
Case No.: Service Tax Appeal No. 52185 Of 2024 With Cross Objection Application No. 50588 Of 2025 (SM)
Date: 08.05.2025
Counsel For Appellant: Bipin Garg
Counsel For Respondent: Rohit Issar
