Navodhayakuries Private Limited (represented by its Chairman and Managing Director, Jos. K. Francis) v. Union of India and others

# **`IN THE HIGH COURT OF KERALA AT ERNAKULAM`** ## **`PRESENT`** ``` THE HONOURABLE MR. JUSTICE DINESH KUMAR SINGH ``` ``` THURSDAY, THE 21[ST] DAY OF MARCH 2024 / 1ST CHAITHRA, 1946 ``` ## **`WP(C) NO. 2089 OF 2020`** ## **`PETITIONER/S:`** ``` JOSE K. FRANCIS AGED 58 YEARS ``` ``` (S/O. FRANCIS, CHAIRMAN AND MANAGING DIRECTOR OF NAVODHAYA KURIES PRIVATE LIMITED, RESIDING AT KUTTIKKADAN HOUSE, EAST FORT, THRISSUR.) SUBSTITUTED ** NAVODHAYAKURIES PRIVATE LIMITED,REPRESENTED BY ITS CHAIRMAN AND MANAGING DIRECTOR, JOS.K.FRANCIS, AGED 58 YEARS, S/O.FRANCIS, KUTTIKKADAN HOUSE, EAST FORT, THRISSUR. (SUBSTITUTED AS PER ORDER DATED 16-11-2021 IN IA 1/2021 IN WP(C). ``` ``` BY ADVS. ``` ``` K.S.BHARATHAN ABEL ANTONY CHRISTINE MATHEW ``` ## **`RESPONDENT/S:`** - **`1 THE UNION OF INDIA REPRESENTED BY THE SECRETARY TO GOVERNMENT, DEPARTMENT OF REVENUE, MINISTRY OF FINANCE, NORTH BLOCK, NEW DELHI, PIN - 110 001.`** - **`2 THE CENTRAL BOARD OF EXERCISE AND CUSTOMS DEPARTMENT OF REVENUE, MINISTRY OF FINANCE, 156, NORTH BLOCK -1, NEW DELHI, PIN - 110 001.`** - **`3 THE CHIEF COMMISSIONER OF CENTRAL EXERCISE AND CUSTOMS CENTRAL REVENUE BUILDING, I.S.PRESS ROAD, KOCHI,PIN - 682 018.`** - **`4 THE SUPERINTENDENT OF CENTRAL TAX AND CENTRAL EXERCISE AYYANTHOLE RANGE, THRISSUR DIVISION, PIN - 680 003.`** - **`5 THE ASSISTANT COMMISSIONER OF CENTRAL EXERCISE AND CUSTOMS THRISSUR DIVISION, S.T. NAGAR, THRISSUR - 1, PIN - 680 001.`** - **`BY ADVS. SRI.M.N.MANMADAN, CGC`** ``` SRI.THOMAS MATHEW NELLIMOOTTIL, SC, CENTRAL BOARD OF EXCISE & CUSTOMS ``` ``` OTHER PRESENT: ``` ``` 2 ``` ## **`WP(C) NO. 2089 OF 2020`** ## **`SRI. THOMAS MATHEW NELLIMOOTTIL-SC`** ``` THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 21.03.2024, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: ``` ``` WP(C) NO. 2089 OF 2020 ``` ``` 3 ``` ## **JUDGMENT** ## **Dated this the 21[st] day of March, 2024** The petitioner, a company registered under the Companies Act, 1956 is engaged in conducting Chitty business under the provisions of the Chit Funds Act, 1982 (‘the Act’ for short) and the Kerala Chit Funds Rules, 2012. A batch of writ petitions came to be filed before this court, challenging the imposition of the service tax by the Central Government with effect from June 2007 on subscription of chit fund. A Division Bench of this court in W.P (C) No. 11018 of 2015 dated 14.03.2018, held imposition of service tax on subscription of Chit Fund as illegal. It was said that the amendment brought in 2015 was not clarificatory and would not have any retrospective operation to such an amendment. The legislature felt the need for inclusion of the transaction within the fold of service, and hence amended the Finance Act, 1994 by Finance Act, 2015. The Division Bench of this court specifically held that prior to the amendment of Finance Act, 2015, transaction relating to the chit funds were not exigible for service tax and the amount already paid demanded by the authorities was to be refunded to the assesses. 2. However, if an assessee claims refund of the amount already paid, it would be required to make necessary application ``` WP(C) NO. 2089 OF 2020 ``` ``` 4 ``` for refund on the basis of the judgment of the Supreme court in the case of **CIT v. Vatika Township Pvt. Ltd., [2015 (1) scc 1]** . The said applications have to be considered specifically looking into the aspect that whether the tax was collected from mutual subscribers and if so collected whether there could be any refund effected. If no refund could be effected to the actual payee, then the State would retain such amounts. 3.The Division Bench merely stated the principle and directed that the individual applications should be considered by the authorities based on the evidence as furnished by the assessees. In respect of the limitation it was said that if any prescribed, for filing refund application, the limitation would be accounted by the date of the judgment, that is 14.03.2018. 4. Section 11B of the Central Excise Act 1944, prescribes one year time for filing an application for claiming of refund of any duty of excise and interest, if any paid from the relevant date in prescribed form and manner, accompanied by such documentary or other evidence including the documents referred to in Section 12A of the Central Excise Act, 1944. In the present case, the petitioner has filed the application for refund admittedly after one year period got expired from the date of the judgment. In view thereof the petitioner's application was not maintainable for ``` WP(C) NO. 2089 OF 2020 ``` ``` 5 ``` refund in view of the express provision of Section 11B the Central Excise Act, 1944 and the judgment in W.P(C) No. 11018 of 2015 dated 14.03.2018. 5.As the petitioner was in arrears of service tax in pursuance to the rejection of his application for refund, a show cause notice in Ext.P3 was issued to the petitioner on 02.07.2019, asking the petitioner to show cause why the refund claimed to the extent of Rs.11,41,363/- should not be rejected on the ground of filing the application beyond the period of limitation prescribed under Section 11B r/w judgment in W.P(C) No. 11018 of 2015 dated 14.03.2018 passed by the Division Bench of this court. The petitioner filed reply to the said application and thereafter the impugned order in original in Ext.P6 dated 27.09.2019 came to be passed, rejecting the claim of the petitioner for refund, in view of the express provision of Section 11B(2) and Section 12B of the Central Excise Act, 1944. 6.Learned counsel for the petitioner submit that in respect of the refund of tax paid under the mistake of law, is not governed by the limitation prescribed for claiming refund of tax which was held to be not payable. Learned counsel also placed reliance on the judgment of the Delhi High Court in **Delhi Metro Rail** **Corporation Ltd Vs. The Additional Commissioner, Central** ``` WP(C) NO. 2089 OF 2020 ``` ``` 6 ``` **Goods and Services Tax Appeals II and Ors( W.P(C) No. 6793 of 2023)** and has placed reliance on the judgment of Gujarat High Court in **M/s. Comsol Energyprivate Limited vs** ## **State of Gujarat (C/SCA/11905/2020).** 7 _**.**_ In the present case, the petitioner did not pay any service tax under the mistake of law, but he paid the tax on demand made to him by the tax authorities. The tax authorities considered the amendment of 2015 brought in the Finance Act, 1994 as clarificatory. However, the Supreme court and this court held that it was not a clarificatory amendment but it was substantive amendment, and therefore, in absence of any retrospective operation under the Act, the provision brought in by the amendment as in 2015 have prospective effect. Therefore, the tax paid prior to the amendment in the Finance Act, 1994 was liable to be refunded on moving appropriate applications as per the law, however the limitation was extended by one year from the date of judgment. Therefore, I find no substance in the submission of the learned counsel for the petitioner as the petitioner did not pay the service tax under the mistake of law. The petitioner admittedly did not file the application within the extended time of limitation as prescribed by this court in its judgment in W.P(C) No. 11018 of 2015 dated 14.03.2018, I find no ``` 7 ``` ## **`WP(C) NO. 2089 OF 2020`** error in the impugned order in original in Ext.P6, which requires this court to interfere with in the present writ petition. Thus, the writ petition having no merit in substance, which is hereby dismissed. **Sd/DINESH KUMAR SINGH JUDGE** **SJ** ``` WP(C) NO. 2089 OF 2020 ``` ``` 8 ``` ## **`APPENDIX OF WP(C) 2089/2020`** ``` PETITIONER EXHIBITS EXHIBIT P1TRUE COPY OF THE JUDGMENT OF THIS HON'BLE COURT IN WP(C) NO.11018/2015 DATED 14.3.2018. EXHIBIT P2TRUE COPY OF THE CERTIFICATE DATED 10.5.2019 ISSUED BY THE CHARTERED ACCOUNTANTS OF THE PETITIONER COMPANY. EXHIBIT P3TRUE COPY OF THE SHOW CAUSE NOTICE DATED 2.7.2019 BEARING NO.33/2019-20 (ST) EXHIBIT P4TRUE COPY OF THE REPLY TO EXHIBIT P3 SUBMITTED BY THE PETITIONER DATED 10.7.2019. EXHIBIT P5TRUE COPY OF THE ACKNOWLEDGMENT CARD DATED 13.7.2019. EXHIBIT P6TRUE COPY OF THE ORDER DATED 27.9.2019 BEARING NO.44/2019-20/ST(R). ```