Credence Property Developers Pvt. Ltd Vs Commissioner of CGST & Central Excise (CESTAT Mumbai)
The CESTAT, Mumbai in Credence Property Developers Pvt. Ltd v. Commissioner of CGST & Central Excise [Service Tax Appeal No. 85780 of 2020 dated January 5, 2023] has held that once the buyer of a flat cancelled the booking and the consideration for service was returned, the service contract got terminated and once it is established the no service is provided, then refund of tax for such service becomes admissible.
Facts:
Credence Property Developers Pvt. Ltd. (“the Appellant”) is engaged in providing Construction of Residential Complex Service and had filed two refund claims under Section 11B of the Central Excise Act, 1944 (“the Central Excise Act”) read with Section 83 of the Finance Act, 1994 (“the Finance Act”) amounting to INR 1,09,367/- and INR 55,123/- respectively, seeking refund of Service Tax paid in respect of two flats which were booked by a buyer but were later cancelled. Upon cancellation, the Appellant refunded advance amount paid by the buyer along with Service Tax amount collected by them.
The Revenue Department (“the Respondent”) issued a deficiency memo regarding the refund claim filed by the Appellant and vide Order-in-Original dated October 17, 2018 rejecting the refund claim on the ground that the refund of Service Tax does not arise as the Appellant has not paid any excess Service Tax but has paid only that much which they were liable to pay for consideration received by them on the invoice issued. Thereafter, the Appeal filed by the Appellant was dismissed vide order dated February 28, 2020. The Appellant submitted that the cancellation of flat is considered as non-provision of service as specified by Rule 6(3) of Service Tax Rules, 1994 (“the Service Tax Rules”) and thus, they cannot be burdened with any Service Tax liability.
Hence, this appeal has been filed.
Issue:
Whether the Appellant is entitled to receive the refund of Service Tax in case of booking of flat was cancelled and advance amount received on booking was refunded by the Appellant?
Held:
The CESTAT, Mumbai in Service Tax Appeal No. 85780 of 2020 held as under:
