In Service Tax Appeal No. 30360 of 2020- CESTAT - CESTAT (Hyderabad) rejects refund claim of Aegis Logistics Ltd., holds that the claim falls within the scope of Section 11B of the Central Excise Act, which mandates filing within prescribed time limit
Member A.K. Jyotishi (Technical) [01-05-2023]

Read Order: Aegis Logistics Ltd v. Commissioner of Central Tax Tirupati – GST

Chahat Varma

New Delhi, May 24, 2023: The Hyderabad bench of the Customs, Excise and Service Tax Appellate Tribunal has rejected the refund claim of Aegis Logistics Ltd. (appellant), stating that the refund sought by the appellant was not based on any provision of service tax that had been declared unconstitutional and the refund claim fell under the purview of section 11B of the Central Excise Act, which requires the claim to be filed within the prescribed time limit from the relevant date.

Briefly stated facts of the case were that the appellant was providing certain services like maintenance and repair services to M/s Hindustan Petroleum Corporation Ltd. (HPCL). The appellant issued invoices to HPCL for these services and paid the corresponding service tax on a self-assessment basis. However, HPCL disputed some of the invoices, on that ground that they were not actually rendered by the appellants as was mutually agreed. The appellant, therefore, passed credit notes in their books of account for reversing the invoice income, including service tax, on the said invoices. They also took credit of excess service tax paid on the output services in respect of the unpaid/disputed invoices as per Rule 6(3) of Service Tax Rules, 1994. Instead of carrying forward the excess tax paid as credit in Tran-1, the appellant filed a refund application. The Original Authority rejected the claim on the grounds that the claim was time barred, prone to unjust enrichment, lacked merits and primarily beyond the scope of Finance Act, 1944. On appeal to Commissioner (Appeals), the order of the Original Authority was upheld.

The Tribunal observed that non-receipt of payment due to a commercial dispute does not exempt the services from being considered as taxable services or an activity that does not amount to ‘service’ under the statutory provisions, on which no service tax can be levied or collected.

The Tribunal noted that the appellant had acknowledged the existence of a commercial dispute that was pending in arbitration, which also covered the invoiced amounts and service taxes involved. This admission confirmed that services were indeed provided, and service tax was liable to be paid on those services.

The Tribunal further observed that the issue of the applicability of section 11B and the limitation under the central excise statute was extensively debated by the Supreme Court in the case of M/s Mafatlal Industries Ltd. vs. Union of India [LQ/SC/1996/2243], wherein, the Supreme Court has held that a refund application must be filed in accordance with the provisions of the enactment, unless the refund is a result of the declaration of any provision under the law as unconstitutional, in which case the person may seek recourse to writ jurisdictions or the Contract Act, among others.

Accordingly, the appeal of the appellant was dismissed.