Service Tax Refund Rejected on Grounds of Limitation and Laches: CESTAT Delhi Rules Against Airports Authority of India

Case Overview

Case: Airports Authority of India Vs Principal Commissioner of CGST
Forum: CESTAT Delhi
Order Date: 15.04.2026

The Customs, Excise and Service Tax Appellate Tribunal (CESTAT), Delhi, recently pronounced its judgment in a dispute involving a service tax refund claim of ₹30,31,839 filed by the Airports Authority of India. The Tribunal upheld the rejection of the refund claim, affirming that it was time-barred under Section 11B of the Central Excise Act, 1944, and that the appellant's prolonged inaction amounted to laches, disentitling it from claiming relief.

Background and Factual Matrix

The Airports Authority of India, a registered service provider, entered into a lease agreement in the year 1983 with M/s. BPCL, under which land measuring 6500 square meters was allotted to the Kolkata Aviation Fuelling Station. On the basis of this agreement, the appellant raised invoices and paid service tax on rent for the said land area throughout the period 2013–14 to 2017–18.

However, during an internal audit conducted on 05.02.2019, it was discovered that the area actually occupied by M/s. BPCL was only 5169.472 square meters, as opposed to the 6500 square meters mentioned in the original agreement. Consequently, the appellant concluded that it had been paying service tax on a larger land area than what was actually being used, resulting in excess payment of service tax amounting to ₹30,31,839.

Despite becoming aware of this discrepancy in February 2019, the appellant waited over three years before filing a refund claim on 29.08.2022.

Show Cause Notice and Adjudication Below

Following the filing of the refund claim, the department issued Show Cause Notice No. 22/2022-23 dated 20.04.2023, proposing rejection of the claim as time-barred under Section 11B of the Central Excise Act, 1944, which is made applicable to service tax by virtue of Section 83 of the Finance Act, 1994.

The adjudicating authority confirmed the proposal vide Order-in-Original No. 02/2024 dated 28.06.2024, rejecting the refund claim. The appellant filed an appeal, which was dismissed by the Commissioner (Appeals) vide Order-in-Appeal No. 05/2025 dated 31.01.2025. The appellant thereafter approached the CESTAT Delhi.

Arguments Advanced by the Appellant

The appellant, represented by Shri Prakash Kumar Sinha and Shri Ayush Kumar, raised the following contentions before the Tribunal:

Excess Payment Not Constituting Lawful Tax

The excess service tax paid was allegedly deposited under a mistake of fact, as the appellant had erroneously calculated service tax on a larger area than what was actually occupied.
Since the excess amount was never legitimately payable, it could not be characterised as "tax" in the true legal sense, and therefore Section 11B of the Central Excise Act, 1944 was incorrectly invoked.

Adjustment Rights Under Service Tax Rules

The appellant contended that Rule 6(3) and Rule 6(4) of the Service Tax Rules expressly permit an assessee to either adjust or take credit of overpaid service tax, and this entitlement is not subject to any limitation period.

Documentation Submitted

The appellant claimed that all necessary documents were duly furnished along with the refund claim, including:

Copy of the lease agreement between M/s. BPCL and Airports Authority of India
Copies of bills and invoices raised
Calculation sheet detailing the basis for the refund claim
Copies of service tax payment challans
A letter from M/s. BPCL confirming non-availment of input tax credit on the disputed amount of ₹30,31,839

Judicial Precedents Relied Upon

The appellant placed reliance on several decisions, including:

Service Tax Refund Claim Barred by Limitation and Laches: CESTAT Delhi Dismisses Airports Authority of India's Appeal