CESTAT Delhi Rejects AAI's ₹30.31 Lakh Excess Service Tax Refund Claim Over Delay

The Principal Bench of the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) at New Delhi has dismissed an appeal filed by Airports Authority of India (AAI). The challenge was to an order that had upheld rejection of its refund claim of ₹30.31 lakh, which AAI said was excess service tax paid on lease rent charged to Bharat Petroleum Corporation Limited (BPCL).

A coram of Judical Member Dr. Rachna Gupta, who heard the matter, held that merely claiming payment under mistake does not by itself entitle a party to a refund. If a claim is filed late and without a convincing explanation, it cannot be entertained. The tribunal also stressed that such claims are governed by the statutory framework, including limitations.

“The appellant is denied to be entitled to claim the refund of service tax. Irrespective it is claimed to have been paid under mistake of law,” the order states.

The issue traces back to a lease arrangement under which AAI had allotted land to BPCL at the Kolkata Aviation Fuelling Station. The agreement mentioned an area of 6500 square metres. An audit carried out on February 5, 2019, however, found that the actual area in use was 5169.472 square meters.

Based on this, AAI said it had paid service tax on a higher lease rent than was due for the period between 2013–14 and 2017–18. The refund claim was eventually filed on August 29, 2022.

Tax authorities rejected the claim as time-barred under the applicable law. That view was upheld in appeal, bringing the dispute before the Tribunal.

Before the Tribunal, AAI argued that money paid by mistake cannot be treated as “tax” in the eyes of law, and therefore the time limit should not apply. It also pointed to provisions that allow adjustment of excess service tax.

The tribunal was not persuaded. It noted that AAI had been aware of the alleged excess payment since February 2019, yet waited more than three years to seek a refund. No explanation was offered for this delay. Parties are expected to act with diligence, the Tribunal said, and claims must be made within a reasonable time.

There was another difficulty. The claim itself had been filed under the very provision that carries a limitation period, which meant AAI could not bypass that requirement. The tribunal also relied on the Supreme Court's ruling in the ITC case to underline that a refund cannot be granted unless the underlying assessment is first corrected in accordance with law.

On facts, the bench pointed to inconsistencies in the leased area mentioned across invoices for different years. AAI did not produce material to resolve these discrepancies. Nor was there any evidence to show that the alleged excess rent, or the corresponding tax burden, had been returned to BPCL.

Citing the Supreme Court's ruling in Doaba Co-operative Sugar Mills, the tribunal reiterated that refund claims before tax authorities must remain within the boundaries of the statute, including the prescribed time limits.

With these findings, the tribunal upheld the rejection of the refund claim and dismissed the appeal.

For Appellant: Advocate Prakash Kumar Sinha and Shri Ayush Kumar, Advocate

For Respondent: Anuj Kumar Neeraj