Ayyappa Construction Co vs Commissioner Of Service Tax, Mumbai
- CitationAppeal No. SB(30-31)30-31/STC/2010 dated 25.3.2010 passed by Commissioner of Central Excise
Ratio decidendi
The rule this decision rests on
A refund claim of service tax paid under a mistaken view of liability is not maintainable where the claimant was aware, from the Board's clarificatory circular and from the collection of tax from its customers, that no tax was chargeable, so that the mistake cannot be said to have been made without knowledge. A High Court decision allowing refund in similar circumstances, rendered in writ jurisdiction, does not bind the Tribunal where the facts differ, particularly where the claimant consistently recovered the tax from its customers, and the Tribunal, as a creature of the Customs, Excise and Service Tax Acts, must compute the refund period strictly under the time limit prescribed by Section 11B. Where the claimant has itself admitted that the tax was recovered from customers, the doctrine of unjust enrichment bars refund of that amount; and a residual sum said to have been paid from the claimant's own resources is likewise not refundable at that stage, because the unjust enrichment bar applies to it.
Written by Miss Lucy from the judgment below, not taken from a headnote.
Judgment
As delivered
(Arising out of Order-in-Appeal No. SB(30-31)30-31/STC/2010 dated 25.3.2010 passed by Commissioner of Central Excise (Appeals), Mumbai-I)
For approval and signature:
Honble Mr. P.K. Jain, Member (Technical)
======================================================
1. Whether Press Reporters may be allowed to see : No the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982?
2. Whether it should be released under Rule 27 of the :
CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not?
3. Whether Their Lordships wish to see the fair copy : Seen of the Order?
4. Whether Order is to be circulated to the Departmental : Yes authorities?
======================================================
Ayyappa Construction Co. Appellant Vs. Commissioner of Service Tax, Mumbai Respondent
Appearance: Shri Sagar Shah, C.A., for appellant Shri A.B. Kulgad, Assistant Commissioner (AR), for respondent
CORAM: Honble Mr. P.K. Jain, Member (Technical)
Date of Hearing: 28.8.2015 Date of Decision: 7.9.2015
ORDER NO
Brief facts of the case are that the appellant is engaged in the construction of flats and commercial property and thereafter selling the same to the prospective buyer. They were paying service tax under the category of commercial or industrial construction service and construction of complex service. It appears that the appellant themselves were not doing the construction work or getting it done from the contractors. The appellant was paying the service tax despite the CBEC circular dated 1.8.2006 clarifying that the contractor who undertakes the construction work is required to pay the service tax and not the developer. The appellant was not only paying service tax but were also recovering from their customers. In August 2007, a consolidated circular was issued by the Board wherein the earlier position was reinstated. Thereafter the appellant filed two refund claims, one dated 28.12.2007 and the other on 11.4.2008. The two refund claims were amounting to Rs.14,25,927/- and Rs.5,42,335/-. It appears that out of the said amount barring Rs.1,74,949/- in the first case and Rs.1,16,774/- in the second case, other amounts were recovered from their customers. According to the appellant, the remaining amount was paid by them their own account as certain customers refused to pay the service tax. The refund claims of the appellant were rejected by the original and first appellate authority on the consideration of limitation as also unjust enrichment.
2. Learned counsel for the appellant submits that the Honble High Court of Karnataka in the case of KVR Constructions vs. CCE, Bangalore reported in 2010-TIOL-68-HC-KAR-ST, has allowed refund of the amount in similar circumstances. The learned counsel also submitted that the said order of the Honble Karnataka High Court has also been followed by this Tribunal in number of cases. He further submitted that the limitation of period is not invokable in that situation. However, the learned counsel said the limitation period commences from the date of knowledge of mistake as held by the Honble Delhi High Court in the case of Hind Agro Industries Ltd. vs. CC reported in 2008 (221) ELT 336 (Del.) and Sunrays Engineers Pvt. Ltd. vs. CCE, Jaipur reported in 2015-TIOL-48-SC-CX. The learned counsel also submitted that the doctrine of unjust enrichment is not applicable as held by the Honble Madras High Court in the case of CCE, Chennai-III vs. Saralee Household & Bodycare India (P) Ltd. reported in 2007 (216) ELT 685 (Mad.).
3. Learned AR reiterated the order of the Commissioner (Appeals).
4. I have considered the submissions made by both the sides. It is not disputed that the Board has clarified as early as on 1.8.2006 that no service ax is chargeable under the circumstances. The appellant was aware of the said circular. In 2007, the said circular was only reiterated. Further, it is noticed that majority of the service tax has been collected by the appellant from their customer and only few customers have disputed. This would also indicate that the appellant was also aware from their customer that service tax is not leviable. Under the circumstances, it cannot be said that the appellant was not aware of the fact that no service tax was chargeable. The case law in the case of KVR Constructions (supra) is not applicable to the facts of the present case as the appellant has been consistently collecting the service tax from their customers. Moreover, the said decision of the Honble Karnataka High Court has been passed in the writ jurisdiction. This Tribunal is the creature of Customs, Excise and Service Tax Acts and has to work within the boundaries of the sections provided therein. Section 11B is the section relating to refund which prescribes the time limit and hence that time limit has to be computed. The appellant has also quoted the Honble Madras High Courts decision in the case of Saralee Household & Bodycare India (P) Ltd. In the present case barring an amount of Rs.3 lakhs, the appellant themselves were admitting that the remaining amount has been recovered from their customers. Even the amount of Rs.3 lakhs which according to them has been paid by from their own resources cannot be considered for refund as the doctrine of unjust enrichment would be applicable at this stage.
5. Under the circumstances, the appeals filed by the appellant are dismissed.
(Pronounced in Court on 7.9.2015)
(P.K. Jain) Member (Technical)
tvu 1 5
This page reproduces a public judgment and a summary of it. It is research material, not legal advice, and it is no substitute for advice from an advocate on your own facts.
Research this judgment with Miss Lucy
Ask what it holds, what has followed it, and what it means for your matter — in plain English, with the citations.
Try Miss Lucy free