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Excess Service Tax paid by mistake can’t be refunded under Finance Act, 1994

In Service Tax APPEAL No. 31055 of 2018, Oil India Limited vs Commissioner of Central Tax, the appellant is engaged in the business of exploration of mineral oil and natural gas. During the relevant period, they availed services of M/s B.J. Services in relation to drilling of exploratory in respect of which, the latter discharged appropriate service tax to the department. However, on the same services, the appellant also paid service tax under reverse charge mechanism to the extent of Rs.20,43,584/- under various challans. On realizing that the service tax was paid wrongfully, the appellants claimed refund of the same from the department. 

The claim was rejected by the department as being time barred. 

The Tribunal noted that the refund application was filed beyond a period of one year. It was further noticed that the refund jurisdiction of the Officers of Central Excise and Service Tax emanates from Section 12E and Section 11B of Central Excise Act, 1944 and Section 83 of the Finance Act, 1994 and the Officers have no jurisdiction to decide matters which fall beyond the scope of the law itself. In such cases, the appropriate legal remedy as held by Hon’ble Apex Court is Civil Suit under Section 72 of the Contract Act and the Officers have no jurisdiction to decide on such Civil Suits.

The Tribunal decided that the appeal is rejected as a refund claim under Section 11B of Central Excise Act,1944 read with Section 83 of the Finance Act, 1994 is not maintainable for any amount paid beyond the scope of the Finance Act, 1994 itself but the appellant is free to pursue other remedies as has been held by Hon’ble Supreme Court in the case of Mafatlal Industries Limited (supra) to recover the amount wrongly paid by them beyond the scope of Finance Act, 1994.

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