Karinje Sripathi Bhat Vs Commissioner of Central Excise (CESTAT Bangalore)
The appeal before the CESTAT Bangalore concerned the rejection of a refund claim of service tax paid on rental income received from letting out a multi-storeyed building containing 129 rooms to an educational institution for use as hostel accommodation for students and staff. The appellant had registered under the category of “Renting of Immovable Property Services” and rented the building to Alvas Educational Foundation for the period from 1 June 2014 to 30 May 2015. Although service tax had been paid after declaring the rental income under the taxable category, the appellant later claimed that the income was exempt under Section 66D(m) of the Finance Act, 1994 and Notification No. 33/2012. Accordingly, a refund claim for ₹6,47,490 along with interest was filed on 27 April 2015.
The department issued a show cause notice proposing rejection of the refund claim. The notice stated that the appellant had failed to establish that the rented premises constituted a residential dwelling under Section 66D(m). It also observed that the building had been rented for running a hostel rather than for residential purposes and noted that several supporting documents, including ledger extracts, financial statements, income tax returns, and reconciliation statements, had not been produced to substantiate the refund claim.
