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October 2013

2013 (31) STR 343 (Tri.– Bang) Ambience Constructions India Ltd vs. Comm. of ST, Hyderabad

By Puloma Dalal, Jayesh Gogri, Chartered Accountants
Reading Time 1 mins
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Refund of service tax paid under mistake of law – limitation period of section 11B is applicable.

Facts:
The Appellant, engaged in providing services of lodging and boarding in a hotel, paid service tax on 16-01-2008 under the category of “Renting of immovable property”. Since the taxing entry specifically excluded the said activity, the Appellant filed a refund claim on 28-01-2009 by virtue of payment under mistake of law.

Held:
The Hon. Tribunal relying on Mafatlal Industries vs. UOI 1997 (89) ELT 247 (SC) dismissed the appeal and held that since the provisions of law excluding the said activity existed while the payment was made and also when the refund claim was filed, the provisions of section 11B relating to time bar cannot be ruled out on the pretext of “payment under mistake of law” and the refund was eligible for rejection.

(Note: When tax was paid where there was no liability to pay, the Hon. High Courts have decided in favour of the assessees in Natraj & Venkat Associates 2010 (17) STR 3 (Mad.) and in KVR Constructions 2012 (26) STR 195 (Kar.))

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