ORDER
P. Karthikeyan, Member (T)
1. In this application M/s. Wardex Pharmaceuticals (P) Ltd, Chennai seek waiver of predeposit of Rs. 2,15,463/- along with Interest and stay of recovery of the same till the disposal of the appeal. After hearing both sides on the stay petition, the requirement of predeposit is waived and the appeal itself is taken up for disposal.
2. In the wake of Finance Act, 2000 enacting provisions to recover service tax on Goods Transport Operator (GTO) service from the availers of the service retrospectively, notice dated 28.6.2002 was issued to M/s. Wardex Pharmaceutical (P) Ltd. proposing to demand service tax of Rs. 2,15,463/- on GTO service availed by them during the period 16.11.1997 to 1.6.98 along with interest till the date of payment of the service tax due. It was also proposed to impose penalties on the appellants. Following the enactment of Finance Act, 2003, inter alia, amending retrospectively Notification. No. 43/97-ST dated 5.11.1997, the appellants were addressed by the Deputy Commissioner of Central Excise & Service Tax requesting them to pay tax on GTO service availed during 16.11.97 to 1.6.98. Notification No. 43/97-ST dt.5.11.1997 as amended by the Finance Act 2003 had excluded persons registered with the Sales Tax authority and whose turnover had exceeded Rs. 50 lakhs in the preceding Financial Year from the list of persons required to pay tax on GTO service availed during 16.11.1997 to 1.6.98. The appellants paid the tax due on 12.11.2003 as directed in the above letter of the Deputy Commissioner dated 5.11.03. The Show Cause Notice issued to the appellants was disposed of by the jurisdictional Assistant Commissioner of Service tax dropping the demand for service tax granting consequential relief subject to the provisions of Section 11B of the Act, made applicable to Service tax. Accordingly, the appellants claimed refund of Rs. 2,15,463/- on 18.8.06 with the jurisdictional Assistant Commissioner. Before the Assistant Commissioner, the appellants had argued that by the amendment of Notification No. 43/97-ST dt.5.11.97 in the Finance Act 2003, SSI units were exempt from paying the service tax on the GTO service. They also produced a copy of the permanent certificate issued by the Director of Industries and Commerce, Government of Tamil Nadu certifying their status as SSI under cover of the appellant’s letter dt. 15.7.2002. The Assistant Commissioner held that the appellants were eligible for the relief extended to the SSI units terms of Notification No. 43/97-ST as amended. He held that the claim of the appellants was not hit by limitation. As the assessee had paid service tax on 12.11.2003 for freight incurred in 97-98, he found that the bar of unjust enrichment also did not apply to the claim. Accordingly, he allowed the refund of Rs. 2,12,463/- vide his Order-in-Original No. 94/06 (Refund) dated 8.11.2006.
3. In the impugned order, revising the order of the original authority, the Commissioner of Service tax found that the assessee had paid the service tax on 12.11.03 and the relevant date for filing refund claim in respect of the said amount was on or before 11.11.04. Therefore, the refund claim filed by the appellants on 18.8.2006 was hit by time bar. Therefore vide his order dated 1.6.07 he ordered recovery of the refund of Rs. 2,15,463/- erroneously sanctioned by the Assistant Commissioner.
4. In the appeal and during the hearing, the appellants have, inter alia, raised the ground that retrospective amendment of Notification No. 43/97 was intended to extend the benefit of refund of tax paid by the appellants on GTO service availed during 16.11.97 to 1.6.98. The department was required to grant suo motu refund of the tax paid in view of the said amendment. The revision of the order of the original authority was uncalled for and not legally justified.
5. Ld. Counsel, for the appellants submitted a copy of letter dated 15.7.02 wherein the appellants had requested the jurisdictional Assistant Commissioner of Service tax to drop the proceedings to demand service tax in view of Notification No. 43/97-St dated 5.11.97 and the clarificatory Circular No. F.356/91/97-TRU dated 10.2.98. In the circular the Government of India had advised the authorities to keep the proceedings to recover the service tax from the SSI units in abeyance. The payment of the impugned amount was occasioned at the instance of the department. As the appellants had claimed that they were exempted from the impugned levy, they being a SSI unit, the amount paid was under protest and limitation did not apply to their claim. The impugned order ordering recovery of the refund sanctioned was on the sole ground that the original authority had sanctioned time barred refund claim.
6. Ld. Counsel cited the following decisions of the Tribunal in support of the argument that the limitation did not apply to their claim.
i) CCE, Chennai-III v. Rane Engine Valves Ltd.
ii) CCE Raipur v. Indian Ispat Works (P) Ltd 206 (3) STR 161 (Tri. Del)
7. Ld. SDR submits that in terms of Section 11AB a claim for refund made on a date beyond a period of one year of payment of duty was barred by limitation. In the instant case, the assessee had claimed refund of the tax paid more than one year after the date of payment. As disposal of the refund claims are governed by provisions of Section 11B of the Act, the claim filed beyond one year of payment of duty was hit by limitation. The impugned order was passed in accordance with law.
8. I have carefully studied the ease records and the submissions made by both sides. In terms of Notification No. 43/97-ST dt.5.11.97 as amended, the appellants were not required to pay service tax for the GTO service availed during 16.11.97 to 1.6.98. They had made this claim as early as 15.7.2002 in response to the Show Cause Notice dated 28.6.2002. Therefore, it has to be held that the appellants had paid the impugned tax under protest. In such a case, limitation of one year did not apply to the refund due.
9. In CCE, Chennai v. Rane Engine Valves Ltd. (supra), the Tribunal held that an amount paid during the pendency of adjudication of a proposal to demand an amount had to be treated as a deposit. In that ease, the proposal to demand an amount was dropped more than a year after amount proposed to be demanded was paid by the appellants therein. Like in the Instant case, the appellants in that case also had made it clear that the amount was being paid in response to the Show Cause Notice. Following the ratio of the judgment of the High Court of Gujarat at Ahmedabad in the case of Parle International Ltd. v. UOI , the Tribunal decided that the amount deposited by the appellants during adjudication proceedings had to be treated as deposit and not duty. It was ordered that payment under protest or doctrine of Unjust Enrichment did not apply to such payment. The Tribunal ordered refund of the amount deposited by the party and claimed more than a year later. Hence the ratio of this decision clearly supports the claim of the appellants in the instant case.
10. In CCE, Raipur v. Indian Ispat Works (P) Ltd (supra) the facts of the case were ‘that the appellants t therein, a SSI unit eligible for exemption as per Notification No. 43/97-ST owing to its retrospective amendment, had claimed refund of tax paid on GTO service daring the period 16.7.97 to 16.10.98. Part of the refund claimed was rejected by the authorities on the ground of limitation. Following the ratio of Hexacom (I) Ltd. v. CCE, Jaipur (Tril. Del) the Tribunal allowed the assessee’s appeal and granted refund. It was decided that owing to the exemption under Notification No. 43/97-ST, taxes paid by the SSI Unit was only an amount collected by the Department without any authority of law. Therefore, limitation did not apply to refund such amount.
11. The decision of the Tribunal in Hexacom (I) Ltd. v. CCE, Jaipur (supra) is reproduced below:
2. We have perused, the records and heard both sides. It is not in dispute that no service tax was leviable during the period in question. Therefore, whatever payment was made did not relate to service tax at all. It was merely an erroneous collection by DOT and payment by the appellants. Therefore, provisions relating to refund of service tax, including those relating to unjust enrichment, cannot have any application to the return of the amount in question. It is further noted that provisions contained in Section 11D of the Central Excise Act have not been made applicable to service tax. Therefore, if any amounts are collected erroneously as representing service tax, which is not in force, there is no bar to the return of such amounts. The rejection of refund application was, therefore, not correct.
3. In the result, the appeal is allowed. The amount of service tax collected from the appellants during the periods 1998-99 and 1999-2000 shall be refunded to the appellants forthwith.
12. The judicial authorities cited above support the finding of the original authority that the refund claim by the appellants not barred by limitation. The amount was paid under protest. In any case, the amount was not to be treated as tax as the same was collected without the authority of law. In the circumstances, the appeal filed by M/s. Wardex Pharmaceuticals Ltd is allowed. The stay application also gets disposed of.
(Order pronounced in open court on 18.01.08)