- 1 - NC: 2025:KHC-K:1827 WP No. 203278 of 2019 IN THE HIGH COURT OF KARNATAKA, KALABURAGI BENCH DATED THIS THE 21ST DAY OF MARCH, 2025 BEFORE THE HON'BLE MR. JUSTICE R.NATARAJ WRIT PETITION NO. 203278 OF 2019 (T-RES) BETWEEN: M/S HELIOCON AGRO CHEMICALS LIMITED PLOT NO.222, COTTON MARKET, NEHRU GUNJ, KALABURAGI-585104 THROUGH ITS MANAGING DIRECTOR KISHANSINGH S/O SITARAMSINGH MULIMANI AGE: 55, OCCP: MANAGING DIRECTOR M/S HELIOCON AGRO CHEMICALS LIMITED KALABURAGI - 585104. …PETITIONER (BY SRI. GANESH V. DESHPANDE, ADVOCATE FOR SRI. ANANTH S. JAHAGIRDAR, ADVOCATE) AND: 1. UNION OF INDIA MINSTER OF FINANCE DEPARTMENT OF DEPARTMENT NEW DELHI-110001 2. THE COMMISSIONER OFFICE OF THE COMMISSIONER OF CENTRAL TAX AND CENTRAL EXCISE (APPEALS) GROUND FLOOR, 71 CLUB ROAD, BELGUM-590001 3. THE ASSISTANT COMMISSIONER CENTRAL EXCISE AND SALES TAX DIVISION BEHIND TV STATION KAPNOOR KALABURAGI-585104. …RESPONDENTS (BY SRI. SUDHIRSINGH R. VIJAPUR, DEPUTY SOLICITOR GENERAL OF INDIA FOR RESPONDENT NO.1; Digitally signed by SUMA Location: HIGH COURT OF KARNATAKA - 2 - NC: 2025:KHC-K:1827 WP No. 203278 of 2019 SRI. SHIVARAJ S. BALLOLI, ADVOCATE FOR RESPONDENT NOS.2 AND 3) THIS WRIT PETITION IS FILED UNDER ARTICLES 226 AND 227 OF THE CONSTITUTION OF INDIA PRAYING TO QUASH THE ORDER DATED 27.11.2018 PASSED BY THE COMMISSIONER OF CENTRAL TAX (APPEALS) BELGAUM, IN FILE NO.A.NO.135/18/BM/ST, 136/18/BM/ST AND 137/18/BM/ST THE CERTIFIED COPY OF WHICH IS AT ANNEXURE-G, AND SET ASIDE THE ORDER DATED 26.03.2018 IN FILE NO.BGM-EXCUS-000-GULB-ASC-MUK-010-17-18(R), BGM- EXCUS-000-GULB-ASC-MUK-011-17-18 (R), AND BGM-EXCUS-000- GULB-ASC-MUK-012-17-18(R), PASSED BY THE ASSISTANT COMMISSIONER FOR CENTRAL EXCISE AND CENTRAL TAX, KALABURAGI THE COPY OF WHICH IS AS PER ANNEXURE E, E1 AND E2 AND ETC. THIS PETITION HAVING BEEN HEARD AND RESERVED FOR ORDER ON 24.02.2025 AND COMING ON FOR PRONOUNCEMENT OF ORDER THROUGH VIDEO CONFERENCE THIS DAY, THE COURT MADE THE FOLLOWING:- CORAM: HON'BLE MR JUSTICE R. NATARAJ CAV ORDER The petitioner has challenged an order dated 27.11.2018 passed by respondent No.2 in A.Nos.135/18/BM/ST, 136/18/BM/ST and 137/18/BM/ST and to set aside the orders of even dated 26.03.2018 in file Nos.BGM-EXCUS-000-GULB- ASC-MUK-010-17-18(R), BGM-EXCUS-000-GULB-ASC-MUK- 011-17-18(R) and BGM-EXCUS-000-GULB-ASC-MUK-012-17- - 3 - NC: 2025:KHC-K:1827 WP No. 203278 of 2019 18(R) passed by respondent No.3. The petitioner has also sought for a writ in the nature of mandamus to direct the respondent No.3 to allow the applications of even dated 22.01.2018 filed with Form - R to claim refund of wrongly paid service tax of Rs.1,38,860/- during the year 2013-14, Rs.3,72,435/- during the year 2014-15 and Rs.3,63,836/- during the year 2015-16. 2. The petitioner contends that it is registered under the provisions of the Central Excise and Service Tax. It claims that it was providing service to two different agencies for loading and unloading chemical fertilizers. It had paid the service tax to the department during the years 2013-14, 2014- 15 and 2015-16 and had raised bills on the said agencies charging service tax. During the course of business, it demanded the receivers of service to pay the service charges. However, they refused to pay it on the ground that transportation of chemical fertilizers by goods transportation agencies was exempt from service tax, in view of a Notification No.3/2013 dated 01.03.2013. The petitioner therefore, filed applications of even dated 22.01.2018 with Form - R before the respondent No.3 requesting the refund of the wrongly paid - 4 - NC: 2025:KHC-K:1827 WP No. 203278 of 2019 service tax for the years 2013-14, 2014-15 and 2015-16. The respondent No.3 rejected the claim of the petitioner vide impugned orders of even dated 26.03.2018 on the ground that the applications for refund were belated. Being aggrieved by the said orders, the petitioner filed appeals before the respondent No.2. The respondent No.2 also rejected the appeals on the ground that the appeals were filed beyond the period of limitation and that it cannot condone the delay. 3. Being aggrieved by the said orders, this writ petition is filed. 4. The learned counsel for the petitioner contended that the service tax was paid under a wrong impression of law and therefore, the respondent No.3 could not have rejected the claim for refund by applying Section 11B(1) of the Central Excise Act, 1944 (henceforth referred to as 'Act of 1944'). In support of his contention, he relied upon the Order dated 21.01.2020 passed by a Coordinate Bench of this Court in W.P.No.53664/2016 [Mr. Shashidhar Bhat vs. Union of India and others], where this Court relying upon the judgment of the Division Bench of this Court in Commissioner - 5 - NC: 2025:KHC-K:1827 WP No. 203278 of 2019 of Central Excise (Appeals) vs. M/s. KVR Construction (W.A.Nos.2992-93/2009), had held that the claim for refund cannot be negatived on the ground of delay in claming refund. The Coordinate Bench therefore, held that the impugned order refusing to refund the service charges paid was contrary to law and unsustainable. 5. Per contra, the learned counsel for respondent Nos.2 and 3 submitted that any refund has to be sought for, within the time prescribed under Section 11B(1) of the Act of 1944. He therefore, contended that the respondent No.3 cannot travel beyond the provisions of the Act of 1944 to condone the delay. He submitted that when once the petitioner had paid the service tax, even under a mistaken impression of law, it was bound to make a claim within the time prescribed. He contends that the impugned orders passed by respondent No.3 are just and proper. He also contends that the appeals before the respondent No.2 were belated and the respondent No.2 did not have the power to condone the delay in filing the appeals. He therefore, contended that the impugned order passed by respondent No.2 is also just and proper. - 6 - NC: 2025:KHC-K:1827 WP No. 203278 of 2019 6. The learned Deputy Solicitor General of India appearing for respondent No.1 supported the contentions of the learned counsel for respondent Nos.2 and 3. 7. I have considered the submissions of the learned counsel for the petitioner and learned counsel for respondent Nos.2 and 3 as well as the learned Deputy Solicitor General of India appearing for respondent No.1. 8. The impugned orders of even dated 26.03.2018 passed by respondent No.3 dealt with the claim of the petitioner for refund of service tax paid. The respondent No.3 held that the applications in Form - R filed by the petitioner for refund of service tax were beyond the time prescribed under Section 11B of the Act of 1944 and therefore, rejected the same. The appeals filed by the petitioner before the respondent No.2 were also rejected on the ground that the appeals were not filed within the time prescribed under Section 85 of the Finance Act, 1994. The respondent No.2 has relied upon the judgment of the Hon'ble Supreme Court in the case of Singh Enterprises vs. CCE, Jamshedpur & Ors. [2008 (221) E.L.T 163], where it was held that the Commissioner - 7 - NC: 2025:KHC-K:1827 WP No. 203278 of 2019 (Appeals) has no power to condone the delay beyond thirty days. Similar reference is made in the case of Bengal Investments Ltd., vs. Assistant Commissioner [2016 (42) S.T.R. J274], where it was held that Section 85(3A) of the Finance Act, 1994 has to be strictly construed. 9. It is the claim of the petitioner that it had paid the service tax for loading and unloading chemical fertilizers and raised corresponding invoices on the receivers of the service, who refused to pay the service tax on the ground that transportation of chemical fertilizers by transportation agencies is exempt from service tax. However, there is no mention in the impugned orders whether transportation of chemical fertilizers by goods transportation agencies was exempt from service tax in view of the Notification bearing No.3/2013 dated 01.03.2013. Be that as it may, since the respondent No.3 has rejected the claim of the petitioner on the ground that the same was not filed within the limitation as prescribed under Section 11B(1) of the Act of 1944, it is appropriate to refer to the said provision and the same is extracted below:- " 11B. Claim for refund of duty and interest, if any, paid on such duty.— (1) Any person claiming - 8 - NC: 2025:KHC-K:1827 WP No. 203278 of 2019 refund of any duty of excise and interest, if any, paid on such duty may make an application for refund of such duty and interest, if any, paid on such duty to the Assistant Commissioner of Central Excise or Deputy Commissioner of Central Excise before the expiry of one year from the relevant date in such form and manner as may be prescribed and the application shall be accompanied by such documentary or other evidence including the documents referred to in Section 12A as the applicant may furnish to establish that the amount of duty of excise and interest, if any, paid on such duty in relation to which such refund is claimed was collected from, or paid by, him and the incidence of such duty and interest, if any, paid on such duty in relation to which such refund is claimed was collected from or paid by him and the incidence of such duty and interest if, any, paid on such duty had not been passed on by him to any other person: Provided that where an application for refund has been made before the commencement of the Central Excises and Customs Laws (Amendment) Act, 1991 (40 of 1991), such application shall be deemed to have been made under this sub-section as amended by the said Act and the same shall be dealt with in accordance with the provisions of sub- section (2) as substituted by that Act: - 9 - NC: 2025:KHC-K:1827 WP No. 203278 of 2019 Provided further that the limitation of one year shall not apply where any duty and interest, if any, paid on such duty has been paid under protest." 10. A perusal of the above provision shows that it deals with the claims for refund of service tax paid based on the exemptions provided under the Act of 1944. It does not deal with a situation where an assessee has paid the service tax under a mistaken impression of law or without realizing that a particular activity is exempted from service tax. In this regard, it is apposite to refer to the judgment of the Hon'ble Supreme Court in the case of Mafatlal Industries Limited vs. Union of India [1997 (89) ELT 247 SC], which laid down the parameters for entertaining an application under Section 11B of the Act of 1944. The Hon'ble Supreme Court classified the various claim for refund into three categories, which are as follows:- I) The levy is unconstitutional-outside the provisions of the Act or not contemplated by the Act. II) The levy is based on misconstruction or wrong or erroneous interpretation of the - 10 - NC: 2025:KHC-K:1827 WP No. 203278 of 2019 relevant provisions of the Act, Rules or Notifications: or by failure to follow the vital or fundamental provisions of the Act or by acting in violation of the fundamental principles of judicial procedure III) Mistake of law – the levy or imposition was unconstitutional or illegal or not exigible in law (without jurisdiction) and, so found in a proceeding initiated not by the particular assessee, but in a proceeding initiated by some other assessee either by the High Court or the Supreme Court, and as soon as the assessee came to know of the judgment (within the period of limitation), he initiated action for refund of the tax paid by him, due to mistake of law. 11. At para 137 of the said judgment, the Hon'ble Supreme Court held as follows:- “137. Applying the law laid down in the decisions aforesaid, it is not possible to conclude that any and every claim for refund of illegal/unauthorised levy of tax can be made only in accordance with the provisions of the Act (Rule 11,Section 11B etc. as the case may be), and an action by way of suit or writ petition under Article 226 will not be maintainable under any circumstances. An action by way of suit or - 11 - NC: 2025:KHC-K:1827 WP No. 203278 of 2019 a petition under Article 226 of the constitution is maintainable to assail the levy or order which is illegal, void or unauthorised or without jurisdiction and/or claim refund, in cases covered by propositions No.(1), (3) (4) and (5) in Dulalbhai’s case, as explained hereinabove, as one passed outside the Act and ultra vires. Such action will be governed by the general law and the procedure and period of limitation provided by the specific statute will have no application. (Collector of Central Excise, Chandigarh v. M/s. Doaba Co-operative Sugar Mills Ltd., Jalandhar (1988 (37) ELT 487 (SC) = 1988 Supp. SCC 683); Escorts Ltd v. Union of India & Ors. (1994 Supp (3) SCC 86) Rule 11 before and after amendment, or Section 11B cannot affect Section 72 of the Contract Act or the provisions of Limitation Act in such situations. My answer to the claims for refund broadly falling under the three groups of categories enumerated in Paragraph 6 of this judgment is as follows:- Where the levy is unconstitutional – outside the provisions of the Act or not contemplated by the Act:- In such cases, the jurisdiction of the civil courts is not barred. The aggrieved party can invoke Section 72 of the Contract Act, file a suit or a petition under Article 226 of the Constitution and pray for - 12 - NC: 2025:KHC-K:1827 WP No. 203278 of 2019 appropriate relief inclusive of refund within the period of limitation provided by the appropriate law. (Dulabhai’s case(supra) – para 32 – clauses (3) and (4).” (Underlining by me) 12. Therefore, it can safely be held that the limitation prescribed under Section 11B of the Act of 1944 would not strictly apply to a claim for refund of service tax wrongly paid and a writ petition under Article 226 of the Constitution of India is maintainable. In such an event, the principles of restitution as provided under Section 72 of the Contract Act, 1872, is applicable and the respondent No.3 is bound to refund it notwithstanding the delay in filing the application for refund. This is however, subject to the condition that there is an exemption from collection of service tax from transportation agencies, when they transport chemical fertilizers. In that view of the matter, the following order is passed. ORDER (i) The writ petition is allowed. (ii) The impugned order dated 27.11.2018 passed by respondent No.2 in - 13 - NC: 2025:KHC-K:1827 WP No. 203278 of 2019 A.Nos.135/18/BM/ST, 136/18/BM/ST and 137/18/BM/ST and the orders of even dated 26.03.2018 passed by respondent No.3 in file Nos.BGM-EXCUS-000-GULB-ASC-MUK- 010-17-18(R), BGM-EXCUS-000-GULB-ASC- MUK-011-17-18(R) and BGM-EXCUS-000- GULB-ASC-MUK-012-17-18(R) are set aside. (iii) The respondent No.3 is directed to consider the case of the petitioner and if the payment of service tax on transportation of chemical fertilizers by transportation agencies is exempted in terms of the Notification bearing No.3/2013 dated 01.03.2013, referred supra, the respondent No.3 shall forthwith allow the claim of the petitioner for refund of the service charges paid, as mentioned supra. (iv) This shall be complied within a period of three months from the date of receipt of a certified copy of this Order, failing which the petitioner would be entitled to interest at - 14 - NC: 2025:KHC-K:1827 WP No. 203278 of 2019 the rate of 9% per annum from the date of this petition till payment, which shall be recovered from the salary of the officer/s responsible for the delay in refunding the amount. Sd/- (R.NATARAJ) JUDGE PMR List No.: 19 Sl No.: 1