Jupiter Buildtech Pvt. Ltd. Vs Commissioner of State Tax – UP (GSTAT Agra)
Summary: The GST Appellate Tribunal, Agra, dismissed Jupiter Buildtech Pvt. Ltd.’s appeal against the first appellate order dated 18 June 2025, which had upheld a demand arising from the adjustment of previously deposited service tax against GST liability. The taxpayer, a company engaged in constructing and selling residential buildings, had received advances of Rs. 1,28,80,050 for booking ten residential flats during 2013-14, 2014-15 and 2015-16. It collected and deposited service tax of Rs. 3,82,350 on those advances. The buyers subsequently cancelled their bookings during 2018-19 and 2019-20, after GST had been introduced. The taxpayer refunded the advances together with the service tax collected from the buyers and claimed the service tax amount as input tax credit in its GST returns, using that credit to adjust its GST liability.
The proper officer held that the service tax amount was inadmissible as GST input tax credit and determined tax of Rs. 3,82,350, penalty of Rs. 38,235 and interest of Rs. 3,39,401 under Section 73, resulting in a total demand of Rs. 7,59,986. The Additional Commissioner (Appeal) upheld the demand, reasoning that even if the previously deposited service tax was refundable, the taxpayer could not claim it as GST input tax credit and had to follow Section 142(5).
Before the Tribunal, the taxpayer argued that cancellation of the bookings created a substantive vested right to recover the service tax and that procedural requirements could not defeat that right. It contended that retention of tax on cancelled services violated Article 265 of the Constitution, that the adjustment was revenue neutral, and that denial of credit unjustly enriched the State. It relied on Section 142(2)(b) read with Rule 6(3) of the Service Tax Rules, asserted that its adjustment right was protected by Section 174(2)(c), and maintained that Section 142(5) did not prohibit self-adjustment. It also challenged the interest and penalty, alleged that the appellate authority had travelled beyond the show cause notice, and submitted that Rs. 36,30,000 had been paid as CGST and SGST when the flats were resold. Commissioner of Central Excise Vs. Motorola India Pvt. Ltd., M/s Kanika Species reality pvt. Ltd., Final order no. 85349-85351/2024, and M/s Credence property developers pvt. Ltd were cited in support.
The department maintained that refundability under the former service tax law did not make the amount eligible for GST input tax credit. It submitted that Section 142(5) expressly prescribed the applicable refund route and that the taxpayer could not devise its own refund mechanism.
The Tribunal examined the definitions of input tax and input tax credit in Sections 2(62) and 2(63), together with the credit provisions in Sections 16 to 21. It held that service tax deposited under the erstwhile Finance Act, 1994 did not constitute input tax under the GST legislation and therefore could not be claimed as GST input tax credit. Although the facts of the Kanika Species and Credence Property Developers cases appeared similar, the Tribunal distinguished them because the question requiring determination differed from the present dispute.
The Tribunal further held that Section 142(5) governed refund claims for tax paid under the existing law on services that were ultimately not provided. Such claims had to be disposed of under the existing law, with any amount eventually accruing payable in cash, subject to the statutory exception concerning Section 11B(2) of the Central Excise Act, 1944. The taxpayer could not substitute an entry in its GST electronic credit ledger for that statutory refund process. Accordingly, the first appellate order was upheld and the appeal was dismissed. The Tribunal made no order as to costs, recorded that no interim application remained pending, and pronounced the order on 24 September 2026.
Cases Discussed
- Commissioner of Central Excise Vs. Motorola India Pvt. Ltd. — Cited by the taxpayer for the proposition that cancellation of a contract and refund of consideration extinguish the taxable event and make the service tax refundable. The supplied text does not contain a reporter citation, proceeding number, decision date or forum, and records no separate determination of this precedent.
- M/s Kanika Species reality pvt. Ltd., Final order no. 85349-85351/2024 — Cited by the taxpayer in support of its contentions; distinguished by the Tribunal because, despite apparent factual similarity, the question for determination differed from the present case.
- M/s Credence property developers pvt. Ltd — Cited by the taxpayer; distinguished by the Tribunal on the ground that the question for determination differed from the present dispute concerning entitlement to GST input tax credit.
FULL TEXT OF THE JUDGMENT/ORDER OF GSTAT
1. Present appeal has been preferred by M/S JUPITER BUILDTECH PRIVATE LIMITED, 118/8, 3RD FLOOR, MARUTI PLAZA SANJAY PLACE, AGRA (GSTIN-09AACCJ4330M1ZF), against order dated 18-06-2025 passed by Additional Commissioner Gr. II (Appeal), III State Tax, Agra, in appeal no. ARN: 2425AAGR001085/AD091124132393B/2024 M/s JUPITER BUILDTECH PRIVATE LIMITED Vs State, whereby tax of Rs. 382350/- penalty of Rs. 38235/- and Interest of Rs. 339401total sum of Rs. 759986/- imposed by Adjudicating officer u/s 73 of CGST/UPGST, Act has been affirmed. For shake of convenience here-in-after in the order, appellant and respondent will be addressed as taxpayer and department, respectively.
2. Factual matrix of the present case is delineated below:
2.1- The taxpayer is a Pvt. Ltd. Company, registered under SGST/CGST act and has constructed and sold residential buildings after booking them under an agreement with perspective buyers. 2
2.2-The taxpayer received an advance of Rs. 1,28,80,050 for booking of 10 residential flats in the years 2013- 14, 2014-15 and 2015-16 and collected and deposited service tax of Rs. 3,82,350 on the same.
2.3- Subsequently, in the years 2018-19 and 2019-20 (GST Regime), the bookings were cancelled by the buyers and the advance money received from them was refunded by the taxpayer along with the service tax collected.
2.4- Thus, the amount of service tax refunded to the buyers, which had already been deposited by the taxpayer in the Central Exchequer as service tax, was claimed by the taxpayer as input tax credit in the GST return and the GST liability was adjusted against it.
2.5- The proper officer held that this amount was not admissible as input tax credit and determined a liability of Rs. 3,82,350 and imposed penalty of Rs. 38,235 and created a liability of interest of Rs. 3,39,401 under section 73 of the act.
2.6- Aggrieved by this order, the taxpayer filed an appeal before the first appellate authority, Additional
2.7- The Additional Commissioner Appeal, by his impugned order dated 18-06-2025, dismissed the appeal of the taxpayer and held that even though the amount deposited as service tax may be refundable, it could not be claimed as input tax credit and the taxpayer was required to proceed as per the provisions of section 142(5).
2.8- Aggrieved by the impugned order dated 18-06-2025 of the First Appellate Authority, this Second Appeal has been filed by the taxpayer before the Tribunal.
3. Learned counsel Shri Brajesh Verma along with his associate Ms. Prerna Jain appearing for the taxpayer, reiterated facts of the case and advanced the following submissions.
3.1- The impugned order is against natural justice and contrary to law and equity.
3.2- Since the booking of the flats was cancelled during the GST period, the service tax paid on it is refundable and this substantive vested right cannot be defeated by mere procedural technicalities.
3.3- Retention of tax on cancelled services is violative of the article 265 of the constitution and to get the refund availing input tax credit is merely a mechanism to adjust the refundable amount against the GST liability.
3.4- Transaction is revenue neutral and denial of ITC results in unjust enrichment of the state.
3.5- Section 142(2)(b) of CGST Act read with rule 6(3) of service tax rules validates this adjustment.
3.6- Appellant cannot be penalized for systematic/legislative lacunae (Lex Non Cogit Ad Impossibilia).
3.7- Imposition of interest and penalty is wholly unjustified and illegal.
3.8- Learned Appellate authority has exceeded jurisdiction by travelling beyond show cause notice and failed to appreciate the vested right of adjustment saved U/S 174(2)(c).
3.9- Section 142(5) is an enabling provision and does not bar self-adjustment.
3.10- While reselling these flats Rs 36,30,000 is paid to the government exchequer as CGST and SGST and hence there is no loss to the revenue.
3.11- In the case Commissioner of Central Excise Vs. Motorola India Pvt. Ltd. It has been decided that once a contract is cancelled and the consideration is refunded the taxable event ceases to exist and hence service tax paid on such transaction is refundable.
3.12- To buttress his contentions learned counsel for appellant has cited several case laws titled- M/s Kanika Species reality pvt. Ltd. Final order no. 85349-85351/2024 and M/s Credence property developers pvt. Ltd
4. Mukesh Kumar D.C. appearing as departmental representative reiterated the facts determined in the first appellate order and advanced the following submissions. 4.1-The first appellate order has been passed after due interpretation of the facts in the light of the legal provisions and there is no legal or factual error in it.
4.2- Input tax is clearly defined in the CGST / SGST Act, credit of which can be claimed under the provisions of the Act.
4.3-Service tax paid before the implementation of GST, if refundable, can be refunded as per legal provisions. It cannot be claimed as input tax credit.
4.4- The refund claim for previously paid service tax is clearly provided for in sub-section 5 of Section 142 of the CGST Act. The refund to the dealer is fully covered by the provisions of Section 142(5).
4.5- Appellant cannot create its own refund mechanism but any refund can be made only in accordance with the procedure established by law.
4.6- The first appellate order has been passed after due analysis of the facts and in accordance with the legal provisions and is maintainable.
Analysis and Conclusion
5. We have heard the learned counsel and authorised representative appearing for the parties and perused the material on record.
5.1- In this case, the taxpayer had deposited service tax on advance money received against booking of flats before the commencement of the CGST Act, as per the provisions of Chapter V of the Finance Act, 1994. That law (Act32 of 1994) was amended by section 173 of CGST Act 2017 and Chapter V of the Finance Act 1994 was omitted w.e.f. 01-07-2017.
5.2- As booking of some flats was cancelled after 01-07-2017 i.e. after appointed date under CGST, Act. the booking amount received from them along with the service tax collected was returned to the allottees.
5.3- Now the moot question is whether such refundable service tax amount can be claimed by the taxpayer as input tax credit or is there any other provision for such cases in the CGST Act 2017.
5.4- Input tax credit is defined in sections 2(62) and 2(63) as follows: 2(62) “Input tax” in relation to a registered person, means the central tax, State tax, integrated tax or Union territory tax charged on any supply of goods or services or both made to him and includes—
1. The integrated goods and services tax charged on import of goods;
2. The tax payable under the provisions of sub-sections (3) and (4) of section 9;
3. The tax payable under the provisions of sub-sections (3) and (4) of section 5 of the Integrated Goods
4. The tax payable under the provisions of sub-sections (3) and (4) of section 9 of the respective State Goods and Services Tax Act; or
5. The tax payable under the provisions of sub-sections (3) and (4) of section 7 of the Union Territory Goods and Services Tax Act,
but does not include the tax paid under the composition levy;
2(63) “Input tax credit” means the credit of input tax; Its admissibility and claim procedure have been provided in Chapter V of the Act from Section 16 to Section 21.
5.5- So far, Principle laid down in case laws cited by learned counsel for appellant is concerned. Though, in cases M/s Kanika Species (Supra), M/s Credence property developers (Supra) facts of case in hand seem to be similar with the case cited but question for determination is at all distinguishable to the present case therefore, principle laid down therein would not be applicable here.
5.6- In our view, the service tax deposited by the taxpayer under the existing Act i.e. Finance Act, 1994 is not input tax and hence its credit is not allowed as input tax credit.
5.7- As far as other provisions are concerned, detailed transitional provisions regarding the existing acts which have been repealed or amended by the CGST Act have been made in Chapter XX of the CGST Act 2017.
5.8-Section 142(5) provides for refund of tax paid on services which were not ultimately provided, as follows: 142(5) Every claim filed by a person after the appointed day for refund of tax paid under the existing law in respect of services not provided shall be disposed of in accordance with the provisions of existing law and any amount eventually accruing to him shall be paid in cash, notwithstanding anything to the contrary contained under the provisions of existing law other than the provisions of sub-section (2) of section 11B of the Central Excise Act, 1944 (1 of 1944).
5.9- Since the services promised through bookings were not ultimately provided by the taxpayer in this case, the refund of service tax deposited has to be dealt with under the existing Act (Finance Act 1994). The taxpayer cannot avail input tax credit as a mode of refund under the Finance Act 1994 and the amount of service tax previously deposited cannot be claimed as input tax credit in GST returns. Taxpayer can not adopt his own mechanism which is not supported by Law. Under the GST regime, a taxpayer cannot unilaterally pass an entry in its electronic credit ledger to absorb or adjust a service tax refund claim without
5.10-In light of the foregoing discussion, we are of the considered opinion that the impugned order passed by the First Appellate Authority is in full compliance with the legal provisions. Accordingly, the first appellate order is upheld and the taxpayer’s appeal is dismissed as under GST regime appellant is not entitled to claim refundable amount of service tax paid under erstwhile finance Act 1994 as input tax credit under SGST/CGST, Act, 2017.
5.11- Under facts and circumstances of the case no order has to cost.
5.12- There is no pending interim application in the appeal.
5.13- Order is pronounced in open court on this day of 24th September 2026.
5.14- Copy of order be communicated to all concerned, as per rules.
