M/S. Pebco Motors Limited vs Commr. Of Central Excise, & Service ...

(Arising out of the Order-in-Appeal No. 49/JSR/2011 dated-04/08/2011 passed by the Commissioner of Central Excise & Service Tax,Jamshedpur)

For approval and signature of:

DR.D.M. MISRA, HONBLE JUDICIAL MEMBER

M/s. Pebco Motors Limited APPELLANT(S) VERSUS Commr. of Central Excise, & Service Tax,, JSR RESPONDENT(S)

APPEARANCE

Sri S. Bagaria, Advocate FOR APPELLANT(S) Sri K. Chowdhuri, Supdt. (A.R.) FOR THE RESPONDENT(S)

CORAM:

DR.D.M. MISRA, HONBLE JUDICIAL MEMBER

DATE OF HEARING : 04/03/2015 Date of Pronouncement :

ORDER NO.FO/A/75231/15 Per DR.D.M. MISRA This is an appeal filed against Order-in Appeal No. 49/JSR/2011 dated-04/08/2011.

2. Briefly stated the facts of the case are that initially the Appellant was issued with a show cause notice on 10th January 2007 demanding service tax of Rs.6,86,182/- for the period from July, 2003 to August, 2004. While adjudicating the case, the Ld. Joint Commissioner, inter alia, observed that the amount collected by the applicant towards vehicle registration charges from the customers are not taxable and accordingly dropped the demand of Service Tax of Rs.97,416/- on this count vide order-in-Original No. 05/S/Tax/Jt. Commissioner/2007 dated-20/12/2007.

3. Thereafter, the present refund claim for Rs. 1,97,913/-was filed on 24/12/2008 on the ground that the Service Tax paid on registration charges for the period 1/9/2004 to 30/9/2007 by the appellant is bad in law, hence refund of the Service Tax should be allowed to them. The refund was sanctioned to them by the adjudicating authority. While setting aside the impugned order allowing refund, the Ld. Commr. (Appeals) recorded a finding that since the refund claim relates to the period September,2004 to September, 2007 and filed on 24/12/2008 and in absence of payment of Service Tax under protest, hence, the claim is clearly time barred. The demand dropped by the Jt. Commissioner relates to the period July, 2003 to August, 2004, accordingly It cannot be construed as a consequential relief, except for the said period. Also he has rejected on the ground of unjust enrichment.

4. The Ld. Advocate Shri S. Bagaria for the appellant submits that since the registration charges collected by the applicant in getting the vehicles registered with the District Transport office do not fall under the category of Business Auxiliary Services as held by the Jt. Commissioner in the adjudication order dated 26/12/2007, therefore, amount of Service Tax collected between September, 2004 to September, 2007, ought to be refunded. He submits that the demand is not barred by limitation as the Order-in-Original which dropped the initial demand against them holding that Service Tax on registration charges does not attract service tax passed on 26th December, 2007 and the refund claim was filed on 24/12/2008, therefore, the same is within the prescribed period of one year. In support, he has referred to the definition of relevant date prescribed at Section 11B of CEA, 1944. Further, he has argued that once the said amount is not payable in law, the Department has no authority to retain the said amount and should refund such amount as the same cannot be called asduty of excise. In support he has referred to the judgment of the Honble Karnataka High Court in the case of CCE Vs. KVR Construction reported in 2012 (26) STR 195 (Kar.) and Shraban Banarasilal Jejani Vs. CCE -2014 (35) STR 587 (Tri-Mum). Further, countering the observation that the refund is hit by unjust enrichment, he has submitted that the charges recovered from the customers prior to levy of Service Tax and after the levy since remained same, therefore, the burden of service tax has not been passed on to the customers.

5. The Ld. A.R. for the Revenue supporting the impugned order has submitted that the present refund claim pertains to the period September, 2004 to September, 2007, and the payment of service tax was not in dispute during the said period. The show cause notice was for the period July, 2003 to August, 2004, therefore, the period of the refund claim is not covered by the order of the Jt. Commissioner dated 26/12/2007. It is his submission that the present refund cannot be construed as a refund consequent of a judgment, degree, order or direction of Appellate Authority, Appellate Tribunal or any Court. He has submitted that since the issue of refund relates to collection of service tax under the Finance Act,1994 and the provisions of the law has not been declared ultra vires therefore, in view of the decision of the constitution Bench in Mafatlal Industries & Ors. Vs. UOI 1997 (89) ELT 247(SC) which was later followed in the case of SRF Ltd. Vs. Asst. Collector of C. Ex. 2001 (134) ELT 324(SC), Union of India Vs. Amines & Plasticizers Ltd. 1997 (93) ELT 323(SC) the refund is governed by Sec.11B of CEA,1944.

6. Heard both sides and perused the records. I find that a show cause notice was initially issued to the appellant demanding Service Tax of Rs.6,86,182/- on various issues. While adjudicating the said notice, the Jt. Commissioner has observed that the Service Tax is not payable on vehicle registration charges collected by the appellant from the customers and accordingly dropped the demand of Rs.97,416/- for the period from July, 2003 to August, 2004. The present refund relates to the period thereafter i.e. from September, 2004 to August, 2007 on the amount of Service Tax paid on vehicle Registration charges for which no demand notice was pending nor it was in dispute before the authority concerned about the payment of service tax. The Appellant had paid Service Tax voluntarily during the said period. Therefore, the present refund claim is a separate proceedings and in my opinion cannot be construed as a refund arising out of the said order. Had the refund filed for the period July, 2003 to August, 2004, the demand could have been construed as a consequential refund to the said Order and covered under the definition of relevant date, as per clause(ec) of Explanation-(B) to Section 11B(5) of CEA, 1944, which reads as:

[Explanation.  For the purposes of this section, -

(A) refund includes rebate of duty of excise on excisable goods exported out of India or on excisable materials used in the (B) relevant date means, -

..

[(ec) in case where the duty becomes refundable as a consequence of judgment, decree, order or direction of appellate authority, Appellate Tribunal or any court, the date of such judgment, decree, order or direction;]

7. I also find that there is not an iota doubt that the present refund claim arises out of applicability of provisions of Finance Act to the services rendered by the appellant. Therefore, any refund claim arises as a consequence to the application of the provisions of Finance Act,1994 ought to be in accordance with the provisions prescribed for refund prescribed under the Central Excise Act,1944 as applicable to service tax matters by virtue of Sec.83 of the Finance Act,1994, in view of the observation of the Honble Supreme Court in Mafatlal Industries case(supra) which reads as:

99.?The discussion in the judgment yields the following propositions. We may forewarn that these propositions are set out merely for the sake of convenient reference and are not supposed to be exhaustive. In case of any doubt or ambiguity in these propositions, reference must be had to the discussion and propositions in the body of the judgment.

(i)?Where a refund of tax/duty is claimed on the ground that it has been collected from the petitioner/plaintiff - whether before the commencement of the Central Excises and Customs Laws (Amendment) Act, 1991 or thereafter - by mis-interpreting or mis-applying the provisions of the Central Excises and Salt Act, 1944 read with Central Excise Tariff Act, 1985 or Customs Act, 1962 read with Customs Tariff Act or by mis-interpreting or mis-applying any of the rules, regulations or notifications issued under the said enactments, such a claim has necessarily to be preferred under and in accordance with the provisions of the respective enactment before the authorities specified thereunder and within the period of limitation prescribed therein. No suit is maintainable in that behalf. While the jurisdiction of the High Courts under Article 226 - and of this Court under Article 32 - cannot be circumscribed by the provisions of the said enactments, they will certainly have due regard to the legislative intent evidenced by the provisions of the said Acts and would exercise their jurisdiction consistent with the provisions of the Act. The writ petition will be considered and disposed of in the light of and in accordance with the provisions of Section 11B. This is for the reason that the power under Article 226 has to be exercised to effectuate the rule of law and not for abrogating it.

The said enactments including Section 11B of Central Excises and Salt Act and Section 27 of the Customs Act do constitute law within the meaning of Article 265 of the Constitution of India and hence, any tax collected, retained or not refunded in accordance with the said provisions must be held to be collected, retained or not refunded, as the case may be, under the authority of law. Both the enactments are self-contained enactments providing for levy, assessment, recovery and refund of duties, imposed thereunder . Section 11B of the Central Excises and Salt Act and Section 27 of the Customs Act, both before and after the 1991 (Amendment) Act are constitutionally valid and have to be followed and given effect to. Section 72 of the Contract Act has no application to such a claim of refund and cannot form a basis for maintaining a suit or a writ petition. All refund claims except those mentioned under Proposition (ii) below have to be and must be filed and adjudicated under the provisions of the Central Excises and Salt Act or the Customs Act, as the case may be. It is necessary to emphasise in this behalf that Act provides a complete mechanism for correcting any errors whether of fact or law and that not only an appeal is provided to a Tribunal - which is not a departmental organ - but to this Court, which is a civil court.

(ii)?Where, however, a refund is claimed on the ground that the provision of the Act under which it was levied is or has been held to be unconstitutional, such a claim, being a claim outside the purview of the enactment, can be made either by way of a suit or by way of a writ petition. This principle is, however, subject to an exception : where a person approaches the High Court or Supreme Court challenging the constitutional validity of a provision but fails, he cannot take advantage of the declaration of unconstitutionality obtained by another person on another ground; this is for the reason that so far as he is concerned, the decision has become final and cannot be re-opened on the basis of a decision on another persons case; this is the ratio of the opinion of Hidayatullah, CJ. in Tilokchand Motichand and we respectfully agree with it.

Such a claim is maintainable both by virtue of the declaration contained in Article 265 of the Constitution of India and also by virtue of Section 72 of the Contract Act. In such cases, period of limitation would naturally be calculated taking into account the principle underlying Clause (c) of sub-section (1) of Section 17 of the Limitation Act, 1963. A refund claim in such a situation cannot be governed by the provisions of the Central Excises and Salt Act or the Customs Act, as the case may be, since the enactments do not contemplate any of their provisions being struck down and a refund claim arising on that account. In other words, a claim of this nature is not contemplated by the said enactments and is outside their purview.

In the result, I do not find merit in the appeal. Accordingly, the order passed by the Ld. Commissioner(Appeals) is upheld and the appeal is dismissed.

(Pronounced in the Court on )

(D.M. MISRA) JUDICIAL MEMBER k.b/-

Service Tax Appeal Nos. ST/398/2011

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