Quality Builders and Contractor vs Commissioner of Central Goods and Service Tax - (Customs, Excise and Service Tax Appellate Tribunal) (05 Sep 2022)

A refund can be claimed by a person who has borne the incidence of tax

MANU/CE/0305/2022

Service Tax

Appellant has filed present Appeal to assail the order passed by the Commissioner (Appeals), by which the order passed by the adjudicating authority rejecting the refund claim of Rs. 21, 33,490 filed by the Appellant has been upheld.

The period involved in instant appeal is from 2015-16 and the issue is as to whether the Appellant is entitled to claim refund of the service tax deposited by the Appellant on construction of individual/independent residential houses and whether the refund is hit by the principles of unjust enrichment.

The definition of a "residential complex" leaves no manner of doubt that, it would be a complex comprising of a building or buildings, having more than twelve residential units. In other words, a complex may have a building having more than twelve residential units or a complex may have more than one building each having more than twelve residential units. Independent buildings having twelve or less than twelve residential units would not be covered by the definition of "residential complex"

The contention of the Appellant is that independent residential houses were built, each having a separate entry with separate electricity and water connection and a single building did not have more than twelve residential units. It is for this reason that the Appellant contends that the houses constructed by it for the Rajasthan Housing Board will not be covered by the definition of a "residential complex" and, therefore, would not be taxable as the contract executed with the Housing Board was not in relation to construction of a complex.

It is true that, w.e.f July 01, 2012 “construction of complex” is a declared service, but the Exemption Notification exempts services by way of construction, erection, commissioning or installation of original works pertaining to a single residential unit otherwise than as a part of a residential complex have been exempted. The Commissioner (Appeals) was not justified in holding that, the Appellant would not be entitled to the benefit of the Exemption Notification.

The Commissioner (Appeals) was also not justified in holding that, the refund was hit by the principles of unjust enrichment. As per the work orders, service tax was to be borne by the Appellant and the Commissioner (Appeals) has also found, as a fact, that the contract awarded by the Housing Board to the Appellant mentions that service tax shall be borne by the contractor. The Allahabad High Court in Indian Farmers Fertilizers Coop. Ltd. held that, a refund can be claimed by a person who has borne the incidence of tax. Even in accordance with the Exemption Notification dated June 20, 2012, 50% of the tax to be deposited by the Housing Board under the reverse charge mechanism was deducted by the Housing Board from the amount payable to the Appellant. The Commissioner (Appeals) was, therefore, not justified in rejecting the refund claim of the Appellant on the ground of unjust enrichment. The order passed by the Commissioner (Appeals), therefore, cannot be sustained and is set aside. The Appellant would be entitled to refund in accordance with law. Appeal allowed.

Tags : REFUND CLAIM REJECTION LEGALITY