{"id":4883,"date":"2025-07-16T17:07:35","date_gmt":"2025-07-16T11:37:35","guid":{"rendered":"https:\/\/www.centaxonline.com\/blog\/?p=4883"},"modified":"2025-07-16T17:07:35","modified_gmt":"2025-07-16T11:37:35","slug":"refund-of-service-tax-paid-by-mistake-on-exempted-services-allowed-with-12-interest-cestat","status":"publish","type":"post","link":"https:\/\/www.centaxonline.com\/blog\/refund-of-service-tax-paid-by-mistake-on-exempted-services-allowed-with-12-interest-cestat","title":{"rendered":"Refund of Service Tax Paid by Mistake on Exempted Services Allowed With 12% Interest | CESTAT"},"content":{"rendered":"<pre><strong>Case Details: <a href=\"https:\/\/www.centaxonline.com\/latest-news-updates\/excise-service-tax\/101010000000400570\/service-tax-paid-under-mistake-of-law-on-exempted-construction-services-refundable-with-12-interest-cestat\">Meenu Builders Versus Commissioner of Central Excise, Central Goods &amp; Service Tax, Jaipur (2025) 31 Centax 356 (Tri.-Del)<\/a><\/strong><\/pre>\n<h2><em>Judiciary and Counsel Details<\/em><\/h2>\n<ul>\n<li><strong>Ashok Jindal<\/strong>, Member (J)<\/li>\n<li><strong>Shri Bipin Garg<\/strong>, Adv., for the Appellant.<\/li>\n<li><strong>S\/Shri Vishwajeet Saharan<\/strong> &amp; <strong>Rohit Issar<\/strong>, Authorised Representatives (DR), for the Respondent.<\/li>\n<\/ul>\n<h2><em>Facts of the Case<\/em><\/h2>\n<p>The appellant, a service provider, paid service tax on exempted construction services under the mistaken belief that such services were taxable. Upon realising the error, the appellant filed refund claims, which were partially allowed by the Commissioner (Appeals). The Commissioner (Appeals) sanctioned 50% of the refund claim with interest at 6% per annum, while rejecting the remaining 50% on the ground of lack of documentary evidence. The appellant contended that service tax paid under a mistake of law on exempted services does not attract the limitation period under Section 11B of the Central Excise Act, 1944, and that interest at 12% per annum was legally due instead of the 6% granted.<\/p>\n<p>The appellant further submitted that the show cause notice itself recorded that the service recipient, Rajasthan Housing Board, had deducted and deposited 50% of the service tax under the reverse charge mechanism, and hence, the rejection of the remaining refund on the ground of absence of documentary evidence was unwarranted. The matter was accordingly placed before the Customs, Excise and Service Tax Appellate Tribunal (CESTAT), Delhi.<\/p>\n<h2><em>CESTAT Held<\/em><\/h2>\n<p>The CESTAT Delhi held that service tax paid by mistake of law on exempted services does not constitute \u2018duty\u2019 within the meaning of Section 11B of the Central Excise Act, 1944, and any payment made without legal obligation cannot be treated as duty merely because it was accepted by the Department. It further held that the limitation period under Section 11B is not applicable to refund claims arising from payments made under a mistake of law. The Tribunal observed that when the show cause notice itself records that a portion of the service tax had been deposited by the service recipient under the reverse charge mechanism, the requirement of additional documentary evidence does not arise. Accordingly, the appellant was held entitled to a refund of the entire service tax amount paid by them and by the service recipient, along with interest at 12% per annum.<\/p>\n<h2><em>List of Cases Cited<\/em><\/h2>\n<ul>\n<li><a href=\"https:\/\/www.centaxonline.com\/search?searchData=2012%20(26)%20S.T.R.%20195%20(Kar.)&amp;itemType=AP\">Commissioner v. K.V.R. Construction<\/a> \u2014 2012 (26) S.T.R. 195 (Kar.) \u2014 Relied on [Para 12]<\/li>\n<li>Dinesh Tobacco Industries v. Commissioner \u2014 Final Order Nos. 57990-57991\/2024, dated 9-8-2024 by CESTAT, New Delhi \u2014 Distinguished [Para 6]<\/li>\n<li>Gejendra Singh Sankhla v. Commissioner \u2014 Final Order Nos. 50597-50599\/2025, dated 6-5-2025 by CESTAT, New Delhi \u2014 Relied on [Para 13]<\/li>\n<li><a href=\"https:\/\/www.centaxonline.com\/search?searchData=1997%20(89)%20E.L.T.%20247%20(S.C.)&amp;itemType=AP\">Mafatlal Industries Ltd. v. Union of India<\/a> \u2014 1997 (89) E.L.T. 247 (S.C.) \u2014 Distinguished [Para 6]<\/li>\n<li><a href=\"https:\/\/www.centaxonline.com\/search?searchData=2020%20(371)%20E.L.T.%20701%20(Del.)&amp;itemType=AP\">Nino Chaks (P) Ltd. v. Commissioner<\/a> \u2014 2020 (371) E.L.T. 701 (Del.) \u2014 Referred [Para 6]<\/li>\n<li>Triumph International (India) Pvt. Ltd. v. Commissioner \u2014 2024 (7) TMI 300-CESTAT Chennai \u2014 Distinguished [Para 6]<\/li>\n<li><a href=\"https:\/\/www.centaxonline.com\/search?searchData=1993%20(67)%20E.L.T.%203%20(S.C.)&amp;itemType=AP\">Union of India v. I.T.C. Ltd.<\/a> \u2014 1993 (67) E.L.T. 3 (S.C.) \u2014 Referred [Para 6]<\/li>\n<\/ul>\n<h2><em>List of Departmental Clarification Cited<\/em><\/h2>\n<ul>\n<li>Circular dated 27-2-2017 [Para 1]<\/li>\n<\/ul>\n<h2><em>List of Notifications Cited<\/em><\/h2>\n<ul>\n<li><a href=\"https:\/\/www.centaxonline.com\/search?searchData=Notification%20No.%2025%2F2012-S.T.&amp;itemType=AP\">Notification No. 25\/2012-S.T.<\/a>, dated 20-6-2012 [Para 4]<\/li>\n<li><a href=\"https:\/\/www.centaxonline.com\/search?searchData=Notification%20No.%2030%2F2012-S.T.&amp;itemType=AP\">Notification No. 30\/2012-S.T.<\/a>, dated 20-6-2012 [Para 4]<\/li>\n<\/ul>\n","protected":false},"excerpt":{"rendered":"<p>Case Details: Meenu Builders Versus Commissioner of Central Excise, Central Goods &amp;&hellip;<\/p>\n","protected":false},"author":8,"featured_media":4903,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[49,51,63],"tags":[],"class_list":["post-4883","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-excise-service-tax","category-news-excise-service-tax","category-est-case-chronicles"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v25.9 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>Refund of Service Tax Paid by Mistake on Exempted Services Allowed With 12% Interest | CESTAT<\/title>\n<meta name=\"description\" content=\"CESTAT held refund of service tax paid under mistake of law on exempted construction services is allowed with 12% interest; 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