Case Law Details
Rare Townships Private Limited Vs Commissioner of CGST & Central Excise (CESTAT Mumbai)
In the case of Rare Townships Private Limited vs Commissioner of CGST & Central Excise, the CESTAT Mumbai overturned the rejection of a ₹15,30,978 refund claim related to works contract services from April to September 2015. The dispute arose over compliance with stamp duty requirements outlined in Notification No. 9/2016-ST, which reinstated the exemption withdrawn in 2015. The lower authorities had denied the refund, citing the appellant’s failure to provide evidence of stamp duty payment before 1st March 2015. However, Rare Townships argued that their activity was exempt from stamp duty, making this condition inapplicable. The Tribunal found that the requirement to furnish stamp duty evidence was solely for authenticating the contract date, not mandatory if stamp duty was exempt. Furthermore, the appellant had not passed the tax burden to the recipient, satisfying the conditions under Section 11B of the Central Excise Act. Concluding that the lower authorities had erred in rejecting the refund, CESTAT set aside the denial and granted the refund with consequential relief.
The matter was argued by Ld. Counsel Mahesh Raichandani
FULL TEXT OF THE CESTAT MUMBAI ORDER
This appeal lies against rejection of refund claim of ₹15,30,978/-paid for the period from 1st April 2015 to 30th September 2015 when, inter alia, ‘works contract service’ was made liable to tax by notification no. 06/2015-ST dated 1st March 2015 rendered exemption under notification 25/2012-ST dated 20th June 2012 came to be withdrawn by notification no. 06/2015-ST dated 1st March 2015 only for reinstatement, with retrospective effect, by notification no. 9/2016-ST dated 1st March 2016, for all services rendered in connection with construction, erection, installation and commissioning, etc for ‘local authority’ or government authority. Upon reinstatement of the exemption, special provision had been made in Finance Bill, 2016 for tax thus collected to be refunded subject to the condition that a contract had been entered into prior to 1st March 2015 and stamp duty paid prior to that. The refund claim was sought to be rejected on the ground that the evidence of compliance with the stamp duty requirement had not been furnished and that the said tax had not been recovered from the recipient of the service and the original authority, holding that the noted deficiencies had not been made good by the appellant, rejected the claim.
2. Learned Counsel for the appellant submits that the lower authorities had insisted upon furnishing of the notification of the State Government exempting their activity from coverage under the relevant statute and that as no bills/invoice had been raised on the recipient of the service there was no question of having passed on the burden of tax to any person.
3. Learned Authorised Representative submits that it is all too obvious, as recorded in the orders of the lower authorities, that the evidence of exemption from stamp duty had not been furnished.
4. The issue devolves itself into determination of compliance with the entitlement for refund, as prescribed in notification no. 9/2016 dated 1st March 2016, and compliance with the requirements of section 11B of Central Excise Act, 1944 for further processing of refund claim. It is seen that the lower authorities had not come to any conclusion that the appellant had discharged onus thrust upon them to establish that burden of tax had not been passed on. In such circumstances, the consequences of rejection of the refund claim would be to deposit the amount claimed as refund in the Fund referred to in section 11B of Central Excise Act, 1944 which was not adhered to. In the facts and circumstances of the dispute, including the admitted non-recovery of cash consideration supported by invoices, the presumption of tax liability having been passed on does not sustain.
5. As far as the requirement in said notification for eligibility to refund is concerned, that a contract had been entered into prior to 1st March 2015 is not in dispute as far as the lower authorities are concerned. It is the second leg of the condition, , evidence of appropriate stamp duty having been paid prior to the date indicated therein that is an issue. As pointed out by the Learned Counsel for the appellant, it is seen that in every case such evidence was not required to be adduced where the notification provided for circumstances in which liability to stamp duty did not arise. It is the claim of the appellant that they were covered by the exemption, and, therefore, there was no requirement for compliance with that condition.
6. It would appear from the terms and conditions of notification that the prescription, evidencing appropriate stamp duty having been discharged, was intended to authenticate the date on which the contract had been entered into. No other purpose appears to be served insofar as the legislative enactment of Union of India is concerned. From perusal of the relevant agreement, it is seen that the State of Maharashtra, represented by His Excellency the Governor, is one of the parties and it would appear that, in the absence of any examination of the provisions under which stamp duty liability arises on any transaction of the State Government, the lower authorities erred in not accepting the claim of the appellant in the absence of finding that such exemption was not available. It would appear that the refund claim had complied with the requirement of law as set out in the notification as well as section 11B of Central Excise Act, 1944.
7. Accordingly, rejection of the claim is set aside and appeal is allowed with consequential relief.
(Dictated and Pronounced in Open Court)
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