CESTAT Denies ₹30.31 Lakh Refund to AAI, Cites Delay and Lack of Evidence

April 15, 2026 : The Principal Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) in New Delhi has dismissed an appeal filed by the Airports Authority of India (AAI), upholding the rejection of its ₹30.31 lakh service tax refund claim on lease rent. The Tribunal ruled that merely asserting that tax was paid under a mistake does not automatically entitle an assessee to a refund, especially when the claim is filed after a substantial delay without adequate justification.

The decision was delivered by Judicial Member Dr. Rachna Gupta on April 15, 2026, while examining the validity of an Order-in-Appeal dated January 31, 2025.

The dispute traces back to a long-standing lease agreement executed in 1983 between AAI and Bharat Petroleum Corporation Limited (BPCL) for land at the Kolkata Aviation Fuelling Station. The agreement recorded the leased area as 6,500 square metres. However, a joint audit conducted on February 5, 2019 revealed that the actual area under occupation was only 5,169.472 square metres. Based on this discrepancy, AAI claimed it had paid excess service tax on inflated lease rent for the period between 2013–14 and 2017–18.

AAI filed a refund claim on August 29, 2022, seeking ₹30,31,839, contending that the tax had been paid under a mistake and therefore did not qualify as “tax” under the law. It also argued that limitation under Section 11B of the Central Excise Act, 1944 should not apply in such circumstances.

The Tribunal rejected these arguments. It noted that AAI became aware of the alleged excess payment in February 2019 but waited over three years to file the refund claim. The Bench held that such delay, in the absence of a convincing explanation, amounted to negligence and laches. It emphasized that even in cases involving mistaken payments, claims must be pursued within a reasonable timeframe.

Further, the Tribunal pointed out that AAI had itself filed the refund under Section 11B, which carries a statutory limitation period. Having invoked that provision, the appellant could not subsequently argue that its requirements, including limitation, were inapplicable.

On the merits, the Tribunal found inconsistencies in the records. Invoices for different financial years reflected varying leased areas, including figures higher than those mentioned in the agreement. AAI failed to reconcile these discrepancies with supporting evidence. The Bench also noted the absence of proof that the alleged excess rent or corresponding service tax had been returned to BPCL, the service recipient.

Relying on the Supreme Court’s ruling in ITC Ltd. v. Commissioner of Central Excise, the Tribunal reiterated that refund claims cannot be entertained unless the underlying assessment is modified through appropriate legal proceedings. It also reaffirmed the principle laid down in Doaba Co-operative Sugar Mills that refund claims must strictly comply with statutory limitation provisions.

Summing up its findings, the Tribunal held that AAI was not entitled to the refund “irrespective [of whether] it is claimed to have been paid under mistake of law,” and accordingly dismissed the appeal.

Case Title: Airports Authority of India v. Principal Commissioner of CGST, Delhi East
Case No.: Service Tax Appeal No. 51270 of 2025