Reliance in this regard can be placed on the judicial pronouncement of Hon’ble Kerala High Court in case of GEOJIT BNP PARIBAS FINANCIAL SERVICES LTD [WP(C) No.18126 of 2015 (M)] wherein the assesse is a company inter alia engaged in providing retail financial services. The assesse provided certain financial services to a Bank located outside India and paid service tax on the fees received thereon. The assesse was apprised that the said service shall be treated as export and shall not attract the levy of Service Tax. The assesse duly applied for refund of service tax paid, but the same was rejected by the revenue on the premise that the refund cannot be allowed after a period of 1 year in terms with Section 11B ibid.

Per contra, the counsel for the department argued that even if such excess payment was on account of mistake, the refund would be processed under Section 11B of the Act. It was further stated that the mistake was not on account of law, but the mistake in the instant case was on account of fact. The assessee assumed that the transaction for which he has paid tax, is covered under the law. The law does not cover such transaction for payment of service tax. Therefore, it is not on account of any mistake of law but mistake of fact the service tax was paid. Hon’ble Court held that the distinguishing feature for attracting the provisions under Section 11B is that the levy should have the colour of validity when it was paid and only consequent upon interpretation of law or adjudication, the levy is liable to be ordered as refund. When payment was effected, if it has no colour of legality, Section 11B is not attracted. This Court is also of the view that levy is not in accordance with the provisions of the service tax and therefore, such payment cannot be taken as a payment made relatable to Section 11B of the Central Excise Act. The Writ petition was answered in favour of the assesse.

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Author CA Nischal Agarwal

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