CESTAT, CHENNAI BENCH
Commissioner of Service Tax, Chennai
Hardy Exploration & Production (India) Ltd.
STAY ORDER NO. 470 OF 2012
ST/S/408 of 2011
ST/632 OF 2011
Date of Pronouncement – 11.06.2012
Chittaranjan Satapathy, Technical Member –
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2. The respondents, claimed refund of Rs. 13,88,47,930 /-, paid by them to M/s. Aban Offshore Ltd., who in turn have paid the same as service tax to the department for supply and operation of the ‘floating rig’ under the category of Mining Service for the period 01.06.2007 to 15.05.2008. M/s. Aban Offshore Ltd., have neither challenged the levy of service tax nor have filed any refund claim. The refund claim was filed by the respondents on 05.05.2009. The original authority has rejected the refund claim on various grounds including the ground of time bar (for an amount of Rs. 10,42,56,631/ -relating to the period 05.09.2007 to 05.04.2008) and unjust enrichment etc.
3. The lower appellate authority has held that the activity of supply of ‘floating rigs’ by M/s. Aban Offshore Ltd., is covered under “Supply of Tangible Goods” service and the tax on the same is liable to paid only from 16.05.2008 under that Head. Hence, the lower appellate authority has set aside the original order and has directed the original authority to sanction the refund, leading to this appeal by the department. The department has also filed a stay petition along with the appeal in respect of which arguments have been heard from both sides.
4. Learned JCDR, Shri V.V. Hariharan arguing for the department makes the following submissions for grant of stay of operation of the impugned order of the lower appellate authority:-
(1) In this case, the service tax refund has been claimed by the recipient of the service and not the provider of the service. The provider of the service namely, M/s. Aban Offshore Ltd., has paid the tax under the category of Mining Service and they have not disputed the liability to tax. Therefore, as a recipient of the service, the respondents cannot claim any refund of the tax paid by the tax provider. In this regard, the following judgments were cited:-
(i) Commissioner of Customs (Imp.) v. Eurotex Industries & Exports Ltd. 2007 (216) ELT 137 (Trib.-Delhi) (LB).
(ii) Collector of Central Excise, v. Flock (India) (P.) Ltd. 2000 (120) ELT 285 (SC)
(iii) Priya Blue Industries Ltd. v. Commissioner of Customs (Preventive) 2004 (172) ELT.145 (SC)
(2) Further, as the refund claim has been filed under Section 11B of the Central Excise Act (which had been made applicable to levy of service tax also) the provisions of Section 11B including the time-limit prescribed therein would be applicable. In this regard, the judgment of the apex court in the case of Mafatlal Industries Ltd. v. Union of India 1997 (89) ELT 247 may be referred to (see Para 99) wherein it has been clearly laid down that “all claims for refund except where levy is held to be unconstitutional, to be preferred and adjudicated upon under Section 11B of the Central Excise Act, 1944 or under Section 27 of the Customs Act, 1962 and subject to claimant establishing that burden of duty has not been passed on to third party -No civil suit for refund of duty is maintainable -Writ jurisdiction of High Court under Article 226 and of Supreme Court under Article 32 unaffected by the said Section 11B or Section 27 but writ court to have due regard to the provisions of Central Excise and Customs Act and to refuse grant of relief where burden of duty passed on to third party- Favorable order not to result in automatic refund and claimant to prove burden of duty not passed on to third party.
(3) Regarding limitation, the formal order of the Supreme Court in Asstt. Collector of Customs v. Anam Electricals Mfg. Co. 1997 (90) ELT 260 was also referred to.
(4) The case law cited by the Commissioner (Appeals) namely, Natraj & Venkat Associates v. Asstt CST 2010 (249) ELT 337 (Mad.) also does not help the respondents as in that case it was the service provider who approached the court when the refund claim was made by them, was rejected by the lower authority as well as the Commissioner (Appeals). Even the Supreme Court, in the case of Mafatlal Industries Ltd., (supra) has clearly stated that “where a refund is claimed on the ground that the provisions 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 reopened on the basis of a decision on another person’s case; this is the ratio of the opinion of Hon’ble Mr. Chief Justice Hidayatullah in Tilokchand Motichand and we respectfully agree with it”. [ see Para 99 (ii)].
(5) In the present case, the respondent did not approach the High Court but has made a claim under Section 11B of the Act before the excise authorities and, therefore, the provisions of Section 11B of the Act (under which only the claim itself was filed) will be squarely applicable and, therefore, the claim beyond the normal period would be clearly not eligible to them (Rs.10.43 crores). Even for the claim for the normal period, (Rs.3.46 crores) the respondents have no locus standi to claim the refund from the tax authorities since the service provider has not contested the payment made by him.
5. Shri Gajendra, learned advocate appearing for the respondents vehemently opposes the stay petition and states that the operation of the impugned order passed by the lower appellate authority should not be stayed and the respondents should be allowed to take refund of the impugned amount. He supports the impugned order of the lower appellate authority who has relied on the decision of the Hon’ble Madras High Court in the case of Natraj & Venkat Associates (supra). He also places reliance on the decision of the Hon’ble Delhi High Court in the case of Hind Agro Industries Ltd. v. Commissioner of Customs 2008 (221) ELT 336.
6. We have considered the submissions from both sides as well as the case records. We find that the service provider, namely, M/s.Aban Offshore Ltd., has paid the impugned tax amount under the category of Mining Service without disputing the same. As pointed out by the learned JCDR, it is settled law that unless the assessment has been disputed, no refund can be sanctioned vide the Hon’ble Supreme Court’s decision in the cases of Flock (India) (P.) Ltd. (supra) and Priya Blue Industries Ltd. (supra). Prima facie, in this case, the assessments have not. been challenged by the service provider who is the tax payer and, therefore, it cannot be said that the respondents have a prima facie case in their favour for grant of refund of the impugned amount.
7. Secondly, the respondents have filed the refund claim under Section 11B of the Central Excise Act as made applicable in respect of service tax. The original authority and the lower appellate authority being creatures of the statute, prima facie are required to follow the statutory provisions while dealing with a refund claim filed under the same statute under Section 11B. Therefore, prima facie, it appears that the order passed by the lower appellate authority disregarding the provisions relating to limitation and unjust enrichment etc. provided under the said Section 11B may not be legal and proper and beyond his jurisdiction.
8. Reliance placed by the learned JCDR on the judgement of the Supreme Court in the case of Mafatlal Industries Ltd. (supra) that all claims of refund except where the levy is held to be unconstitutional have to be adjudicated as per Section 11B of the Central Excise Act, 1944 (or under Section 27 of the Customs Act, 1962 in respect of Customs cases) cannot also be ignored. Prima facie, the departmental authorities have to function within the ambit of the statute which has created these authorities and they cannot assume powers and jurisdictions of constitutional courts such as the Hon’ble High Court. Hence, prima facie, it seems that the lower appellate authority had no jurisdiction to grant the kind of relief which the Hon’ble Madras High Court has granted in the case of Natraj & Venkat Associates (supra) in exercise of its exceptional powers.
9. In view of the foregoing, we are of the considered opinion that the balance of convenience lies in staying operation of the impugned order passed by the lower appellate authority. We order accordingly. However, we allow liberty to both parties to the dispute to file an application for early hearing considering the high amounts involved in this case.
10. The stay petition filed by the department is allowed.