CESTAT rules on the time-barred refund claim

CESTAT rules on the time-barred refund claim

The appellant had sought exemption from payment of service tax

The Allahabad bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) has held that the question of unjust enrichment does not arise if the refund claim is time-barred.

The appellant, Krishna Construction Co., is a partnership firm engaged in constructing complexes for government, local, and governmental authorities.

The appellant availed an exemption from payment of service tax under Entry No.12 of the 20 June 2012 notification regarding the construction service provided to the government/governmental authority.

The exemption was, however, restored on further amendment of the notification by insertion of Entry No. 12A in the 01 March 2016 notification Thus, the service tax was payable from 01 April 2015 to 29 February 2016 on services provided to the government, local, and governmental authorities.

Subsequently, Section 102 (1) was introduced by the Finance Bill, 2016 to provide a retrospective exemption to construction service for the period commencing from 01 April 2015 to 29 February 2016.

Pursuant to the aforesaid retrospective amendment, the appellant filed a refund claim for Rs.72,96,702.

However, the revenue department observed certain defects in the refund claim and returned it to the appellant, who re-submitted the completed refund claim.

The appellant later filed an appeal before the Commissioner of Income Tax (Appeals), but the CIT(A) rejected the refund claim on the grounds of limitation and unjust enrichment.

The bench comprising Justice Dilip Gupta (president) and P Anjani Kumar (technical member) observed, “The contention of the appellant that since the limitation period of one year contemplated under Section 11B of the Central Excise Act, 1944 provides for filing the claim within one year from the date of payment of tax, the appellant’s refund claim should be treated to have been filed within time as it was filed within one year cannot be accepted. That is because Section 102 (1) of the Finance Act provides for a limitation period of six months for filing a refund claim. Once the refund claim is held to be barred by time, the question of unjust enrichment would not arise.”

Read More