M/S Way2 Wealth Brokers PVT.LTD. vs. Commissioner Ofcentral Tax

Held

The Court held that Section 11B of the Central Excise Act, 1944, is not applicable to the present case. The service tax paid on Late Payment Charges (LPC) was collected under a mistaken notion and was not 'duty' as defined under Section 3 of the Act. Therefore, the limitation period prescribed under Section 11B does not bar the refund claim. The Court relied on the co-ordinate bench's decision in *KVR Construction*, which held that Section 11B applies only to refund of 'duty of excise' and not to amounts collected without the authority of law. The judgment in *Anam Electrical Manufacturing Co.* was distinguished as it dealt with claims within the ambit of Section 11B, whereas this case involved a refund of service tax paid voluntarily under a mistaken notion. The Court also found the Revenue's argument regarding lack of evidence to be misconceived, noting that the Commissioner (Appeals) had considered the chartered accountant's certification. Consequently, the impugned order of the Tribunal and the authorities rejecting the refund for the period April 2009 to September 2010 were set aside, and the authorities were directed to refund the amount within four weeks without interest.

Facts

M/s Way2wealth Brokers Pvt. Ltd. (appellant) paid service tax on Late Payment Charges (LPC) collected from customers for delayed payments between April 2009 and March 2011. Upon realizing service tax was not leviable on LPC, especially after a clarificatory circular dated August 3, 2011, the appellant sought a refund of Rs. 37,72,354/-. The adjudicating authority rejected the refund claim. The Commissioner (Appeals) partly allowed it, remanding the period October 2010 to March 2011 and rejecting April 2009 to September 2010 as time-barred. The Tribunal upheld the rejection for the latter period. The appellant appealed to the High Court against the Tribunal's order concerning the period April 2009 to September 2010.

Key Issues

1. Whether the Tribunal erred in misinterpreting Section 11B of the Central Excise Act, 1944, concerning the facts of the case? The appellant argued that Section 11B, which deals with refund of duty, is not applicable as the service tax paid on LPC was not 'duty' payable under Section 3 of the Act, but an amount collected without the authority of law, violating Article 265 of the Constitution. They relied on *Commissioner of Central Excise v. KVR Construction* and argued that a beneficial circular should be applied retrospectively, as done for the period October 2010 to March 2011. The Revenue contended that Section 11B is applicable, citing *Asst. Collector v. Anam Electrical Manufacturing Co.* and *MDP Infra (India) Pvt. Ltd. v. Commissioner of Customs, C.EX. & CGST*. They also argued that the appellant failed to provide evidence that LPC was separately indicated in invoices, as per the circular.