Jagdish Saran Vs Commissioner (CESTAT Allahabad)
The appeals challenged the Order-in-Appeal dated 29.10.2014, whereby the Commissioner (Appeals) upheld rejection of the appellant’s refund claims for service tax and interest. The appellant, a manufacturer of Ready-Mix Concrete (RMC), had supplied RMC and cement slurry to M/s Rosa Power Supply Company Limited under various work orders. Under a mistaken understanding that the activity was taxable as “Works Contract Service” under Section 65(105)(zzzza) of the Finance Act, 1994, the appellant obtained service tax registration and paid service tax of ₹1,06,31,288 along with interest of ₹2,33,874 while also paying VAT on part of the consideration. During assessment of sales tax returns, the State Commercial Tax Department held that the transactions were sales, requiring payment of sales tax on the total value. That view was upheld by the Joint Commissioner of Trade Tax and subsequently by the Allahabad High Court. Thereafter, the appellant sought refund of service tax of ₹86,18,019 and interest of ₹2,33,874, and issued credit notes dated 01.04.2012 refunding the service tax amount collected from the customer, later supported by a bank guarantee and eventual payment.
The first refund claim was initially rejected on the ground that the activity fell within works contract service. On appeal, the Commissioner (Appeals), by Order-in-Appeal dated 17.09.2012, held that supply of RMC was a pure sale contract involving no taxable service and that service tax refund was admissible, but remanded the matter to examine unjust enrichment. That order was not challenged by the Revenue. On remand, the adjudicating authority rejected the refund on the ground that service tax had initially been collected from the recipient and subsequent refund through credit notes did not overcome unjust enrichment. Separately, the refund claim for interest was rejected as time-barred under Section 11B, and both rejections were affirmed by the impugned common appellate order.
