Quality Builders & Contractor Vs Commissioner of Central Excise (CESTAT Delhi)
In a seminal decision, the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT), Delhi, ruled in favor of the appellant, Quality Builders & Contractor. This case was filed against the order passed by the Commissioner (Appeals) upholding the rejection of a service tax refund claimed by the original authority. The crux of the case revolved around the overpayment of service tax and the subsequent denial of the refund.
Analysis
Quality Builders & Contractor had applied for a refund of service tax of Rs. 1,88,463/- paid on services provided by them on the grounds of an excess tax deposit. After several rounds of appeal, their refund claim was rejected by the Commissioner (Appeals), leading to the filing of the instant appeal with CESTAT.
The appellant’s counsel convincingly argued that they had deposited the full tax payable @ 4.944%, although, under the reverse charge mechanism, they were liable to deposit only 50% of it. The appellant also demonstrated that they had borne the incidence of tax and, therefore, were eligible for a refund.
Upon detailed examination of the case and related documents, CESTAT found that the appellant had indeed borne the incidence of tax. They also observed that the authenticity of ST-3 returns and the difference in the registration number were satisfactorily addressed by the appellant’s counsel.
Conclusion
Contrary to the orders passed by the lower authorities, CESTAT allowed the refund of service tax to Quality Builders & Contractor, stating that there was no unjust enrichment. The ruling affirmed that a refund cannot be denied to any person who has borne the incidence of tax. This landmark judgment serves as a precedent for future cases involving service tax refund claims and stands as a beacon of justice for taxpayers.
FULL TEXT OF THE CESTAT DELHI ORDER
The appellant has filed this appeal against the order in appeal dated 28.07.2016 passed by the Commissioner (Appeals) upholding the rejection of the refund claim by the original authority.
2. M/s Quality Builders & Contractor, Jodhpur (hereinafter referredto as ‘the appellant’) applied for refund of service tax of Rs. 1,88,463/- on 02.06.2014 paid on services provided by them on the grounds that excess tax was deposited by them.
3. The appellant was issued on show cause notice dated 20.08.2014 for rejecting the refund on merits. The adjudicating authority has vide order-in-original No. 18/2014-R (ST) dated 01.09.2014 rejected the refund claim for Rs. 1,88,463/-. Being aggrieved with above order in original, the appellant filed an appeal before the Commissioner (Appeals), Customs and Central Excise, Jaipur who vide his order in appeal No. 291-293/AK/ST/JPR/2016 dated 28.07.2016 rejected the appeal.
4. Aggrieved with above order in appeal rejecting the refund claim for Rs. 1,88,463/-, the appellant filed the instant appeal.
5. The learned counsel appearing for the appellant submitted that they had constructed multi stories buildings as per work orders (No. 100 dated 20.04.2022) given by Rajasthan Housing Board, which is taxable service under the category of ‘works contract service’. The total amount received against such construction during the period from 01.10.2012 to 31.12.2012 was Rs. 86,63,344/- which is as per Form No. 16A and is inclusive of VAT of Rs. 1,29,970/-. The work involves both goods and services as is evident from copies of work orders and is covered under works contract services and is liable to service tax @ 4.94%. Further, such works contracts are also covered under reverse charge mechanism as per Notification No. 30/2012-ST dated 20.06.2012 (effective from 01.07.2012) according to which Rajasthan Housing Board was liable to deposit 50% of the tax payable i.e. 2.472% (tax payable is 4.944%) on such services and that the appellant were liable to deposit the remaining 50% i.e. 2.472%. However, the appellant deposited the entire tax payable @ 4.944% instead of 2.472% and RHB has also deducted 2.472%.
6. The excess tax deposited by the appellant computed is as under:
