Custom, Excise & Service Tax Tribunal
Khanna Construction vs Jodhpur 1 on 23 May, 2019
CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL
NEW DELHI
PRINCIPAL BENCH - COURT NO. - IV
Service Tax Appeal No. 52917 of 2018 [SM]
[Arising out of Order-in-Appeal No.JOD-EXCUS-000-APP - 540(CRM)/ST/JDR-17-
18 dated 06.06.2018 passed by the Commissioner (Appeals), Central Excise &
Central Goods & Service Tax, Jodhpur]
M/s. Khanna Constructions ...Appellant
3-A Public Park, 1 Floor,
Sri Ganganagar-335001
VERSUS
Commissioner of Customs,
CGST & Central Excise, Jodhpur ...Respondent
Plot No. G-105, Road No.5, New Industrial Area, Basni, Opposite Diesel Locomotive Shed, Jodhpur WITH Service Tax Appeal No. 52918 of 2018 [SM] [Arising out of Order-in-Appeal No.JOD-EXCUS-000-APP - 541(CRM)/ST/JDR-17- 18 dated 06.06.2018 passed by the Commissioner (Appeals), Central Excise & Central Goods & Service Tax, Jodhpur] M/s.Dashmesh Buildcon, ...Appellant 3-D-2, Sukharia Nagar, Sri Ganganagar - 335001(Raj.) VERSUS Commissioner of Customs, CGST & Central Excise, Jodhpur ...Respondent Plot No. G-105, Road No.5, New Industrial Area, Basni, Opposite Diesel Locomotive Shed, Jodhpur.
WITH Service Tax Appeal No. 52919 of 2018 [SM] [Arising out of Order-in-Appeal No.JOD-EXCUS-000-APP - 542(CRM)/ST/JDR-17- 18 dated 06.06.2018 passed by the Commissioner (Appeals), Central Excise & Central Goods & Service Tax, Jodhpur] M/s.Pawansut Enterprises ...Appellant Near Bus Stand, Village-Pakkasarna, Distt.-Hanumangarh (Raj.) VERSUS 2 Service Tax Appeal No.52917-52920 of 2018 [SM] Commissioner of Customs, CGST & Central Excise, Jodhpur ...Respondent G-105, Road No.5, New Industrial Area, Basni Opposite Diesel Locomotive Shed, Jodhpur AND Service Tax Appeal No. 52920 of 2018 [SM] [Arising out of Order-in-Appeal No.JOD-EXCUS-000-APP - 539(CRM)/ST/JDR-17- 18 dated 06.06.2018 passed by the Commissioner (Appeals), Central Excise & Central Goods & Service Tax, Jodhpur] M/s.Khanna Enterprises ...Appellant 3-A Public Park, 1 Floor, Sri Ganganagar-335001 VERSUS Commissioner of Customs, CGST & Central Excise, Jodhpur ...Respondent Plot No. G-105, Road No.5, New Industrial Area, Basni, Opposite Diesel Locomotive Shed, Jodhpur APPEARANCE:
Shri Mohit Gohiyan, C.A. for the Appellant Shri K. Poddar, Authorised Representative for the Respondent Coram: HON'BLE MRS. RACHNA GUPTA, MEMBER (JUDICIAL) FINAL ORDER Nos. 50740-50743/2019 DATE OF HEARING : 06/05/2019 DATE OF DECISION: 23/05/2019 RACHNA GUPTA:
Issue involved being common to four of these appeals, details of appeals are as follows:-
Sl. Name of No. & Date of Amount of O-I-O No. & O-I-A No. &
No. Appellant Show Cause refund date date
Notice proposed to
be rejected
1 No.49 dated Rs.1,87,808/- 06/2017-ST 540/2018
ST/52917/2018 12.01.2017 dated dated
M/s.Khanna 31.01.2017 06/06/2018
Constructions
3
Service Tax Appeal No.52917-52920 of 2018 [SM]
2. ST/52918/2018 No.45 dated Rs.20,20,047/- 08/2017-ST 541/2018 M/s.Dashmesh 12.01.2017 dated dated Buildcon 31.01.2017 06/06/2018
3. ST/52919/2018 No.36 dated Rs.29,80,286/- 21/2016-ST 542/2018 M/s. Pawansut 16.01.2017 dated Enterprises 06/06/2018
4. ST/52920/2018 No.47 dated Rs.38,95,489/- 07/2017-ST 539/2018 M/s.Khanna 12.01.2017 dated dated Enterprises 31.01.2017 06/06/2018
2. The common facts of four of these appeal are that the appellants have been providing work contract service to Military Engineering Services (hereinafter referred as MES), Ministry of Defence, Government of India. The same was exempted from tax vide Mega Notification No.25/2012-ST dated 20.06.2012. However, w.e.f. 1st April, 2015 vide Notification No.6/2015-ST dated 1st March, 2015, the exemption from service tax as was granted on services provided to Government/ Governmental authority by way of construction, erection, commissioning, installation, completion, fitting out, repair, maintenance renovation or alteration of a civil structure or any other original work meant predominantly for use other than for commerce was withdrawn. During the said period, the appellant, therefore, had paid the requisite service tax.
However, vide a further Notification No.9/2016-ST dated 1st March, 2016 new entry 12-A as was inserted in mega exemption Notification No. 25/2012-ST dated 20th June, 2012 restoring the exemption as was available prior 1st March, 2015. The same was restored till 30th March, 2020. Resultantly, the services provided during the period from 1st April, 2015 to 29th February, 2016 again became the exempted services out of the ambit of service tax. It is thereafter that the appellant submitted the above mentioned 4 Service Tax Appeal No.52917-52920 of 2018 [SM] respective refund claims. However, during the scrutiny of the refund claim the adjudicating authority observed that no relevant documents were submitted by the assessee/ appellants despite demand, the claim is barred by time and that the assessee/appellant had made a distinct declaration in the affidavit annexed with the refund claim that the amount has been reimbursed to the assessee/ appellants by MES. Hence, the claim is hit by unjust enrichment. Resultantly, the above mentioned respective show cause notices was served upon each of the appellants proposing the rejection of the respective refund claim on three of the aforesaid grounds. The said proposal was accepted by the original adjudicating authority vide order No.06/2017-ST dated 31.01.2017 and the appeal thereof has been rejected vide the order under challenge/ respective order in appeal (as mentioned above) though not on the ground of limitation but on the ground of unjust enrichment to the appellant. Being aggrieved, the appellants are before this Tribunal.
3. We have heard Mr. Mohit Gohlyan, ld. Counsel for the appellant and Mr. Poddar, ld. D.R. for the Department.
4. It is submitted on behalf of the appellant that the service recipient herein is a Government Department. The tax was never collected nor ever was paid for rendering services to the Government Department prior 1st April, 2015, nor it has been paid post February, 2016 due to the restoration of the exemption from payment of service tax as was available to the service provider, 5 Service Tax Appeal No.52917-52920 of 2018 [SM] when he is providing services to the organization, which exists for the purpose other than for commerce industry business or profession. It is submitted that for the period during which the exemption was withdrawn, the appellants have duly paid the service tax after receiving the same from MES, Ministry of Defence. The impugned refund claims have been filed after the exemption stood restored vide the Notification No.9 of 01.03.2016 that too on the request of MES. Initially, the refund was rejected on three grounds by the original adjudicating authority, as were proposed in the show cause notice. However, the appellate authority has held that though the claim is not barred by time, however, apparently the burden of tax has been passed to MES by the applicant, the same amounts to the unjust enrichment of applicant/ appellant herein. The order of rejection was otherwise upheld. It is further impressed upon that the grounds of unjust enrichment are also not applicable to the given facts and circumstances, where the refund has been initiated as per the request of the service recipient, i.e. the MES, Ministry of Defence itself in their letter No.8000/Gen./1266/E8 dated 27.10.2016. The same was very much annexed with the refund claim. In addition, an affidavit was also annexed with the claim that the amount shall be returned to the MES after it is being refunded. Thus, present is not the case of unjust enrichment. Order is, therefore, prayed to be set aside. Appeals are prayed to be allowed.
5. While rebutting these arguments, ld. D.R. has impressed upon Section 11B of Central Excise Act submitting that one of the 6 Service Tax Appeal No.52917-52920 of 2018 [SM] main condition for the sanction of refund is that the element of service tax should not have been passed on to the service recipient or the buyer. Since it is a statutory mandate, there seems no infirmity in the order under challenge where the Commissioner (Appeals), in view of admission that the burden has already been passed on to the MES has held that the appellant being unduly and unjustly enriched is not entitled for refund. Appeal is, accordingly, prayed to be dismissed.
6. After hearing both the parties and perusing the entire record, I observe as follows:-
6.1 The appellants were providing Commercial/Industrial Construction Services to Military Engineering Services (MES). It admittedly is a unit of Ministry of Defence, Govt. of India. MES is observed to be Construction & Maintenance agency for Indian Army. We, therefore, opine that the Construction/ Maintenance Services of MES since being linked to the structures/buildings, which are not to be used for commercial purposes but for Ministry of Defence, any service rendered to MES is not taxable. I draw my support from the earlier decision of this Tribunal in case of National Refrigeration & Air Conditioning Engg. Vs. CCE Ludhiana reported as 2011 (23) STR 247 (Tri.-Del.). 6.2 Further, we observe that Mega Exemption Notification No.25/2012-ST dated 20th June, 2012 had exempted the services as that of construction, erection, commissioning, installation, completion, fitting out, repair, maintenance renovation or alteration 7 Service Tax Appeal No.52917-52920 of 2018 [SM] of a civil structure when provided to a Governmental authority from the ambit of service tax. However, said exemption was recalled vide the Notification No.6/2015 dated 1st March, 2015 whereafter the services provided even to Government were leviable to service tax, therefore the same was borne by MES which Service Tax component was deposited by the appellant with the Service Tax Department. Subsequently, Section 102 as was inserted in Finance Act, 1994 vide Finance Act, 2016, which reads as follows:-
"Section 102. Special provision for exemption in certain cases relating to construction of Government buildings. - (1) Notwithstanding anything contained in Section 66B, no service tax shall be levied or collected during the period commencing from the 1st day of April, 2015 (both days inclusive), in respect of taxable services provided to the Government, a local authority or a Governmental authority."
Accordingly, entry 12A got inserted which reads as follows:-
"12A. Services provided to the Government, a local authority or a governmental authority by way of construction, erection, commissioning, installation, completion, fitting out, repair, maintenance, renovation, or alteration of -
(a) a civil structure or any other original works meant predominantly for use other than for commerce, industry, or any other business or profession;
(b) a structure meant predominantly for use as (i) an educational, (ii) a clinical, or(iii) an art or cultural establishment; or
(c) a residential complex predominantly meant for self-use or the use of their employees or other persons specified in the Explanation 1 to clause (44) of section 65 B of the said Act;8
Service Tax Appeal No.52917-52920 of 2018 [SM] under a contract which had been entered into prior to the 1st March, 2015 and on which appropriate stamp duty, where applicable, had been paid prior to such date:
Provided that nothing contained in this entry shall apply on or after the 1st April, 2020;
7. Thus, by virtue of Section 102 of Finance Act, 2016 incorporating the aforesaid entry No.12A that the services provided by the appellant to MES became exempted retrospectively from 01.04.2015 itself. This observation is sufficient to hold that the intention of the Government had always been to exempt the services being provided to anyone other than commerce industries business or profession i.e. the services provided to Government to remain exempted from the levy of service tax. No doubt for any amendment, which is substantive in nature the same has to be applied prospectively, as it was held by this Tribunal in the case of JSEL Securities Ltd. Vs. CCE, Jaipur reported in 2007 (6) S.T.R. 330 (Tri. Del.). But in the present case, the amendment was restoring the previous benefit, hence, cannot be held to be substantive. The impugned amendment rather speaks of its retrospective nature. The Constitution Bench in New Delhi vs. Vatika Township Pvt. Ltd. Reported in 2015 (1) S.C.C. 1 has observed that once the legislative intent is clear to give enactment a retrospective effect and that the said legislation is for purpose of supplying an obvious omission in a former legislation or to explain the former legislation same has to be taken as retrospective and as the continuation of said former legislation. 9
Service Tax Appeal No.52917-52920 of 2018 [SM]
8. With the amendment of Finance Act, 2016, the amount paid by the appellants as service tax from 1st April, 2015 to 29th February, 2016 though was the duty for the said relevant period but due to subsequent retrospective exemption given even for the said period, the amount paid was no more a duty. In the given circumstances, the amount paid by the appellant is nothing more than the deposit made by the appellant in excess.
9. The Commissioner (Appeals) has referred to Section 11B (2) of Central Excise Act, 1944, while forming an opinion for unjust enrichment by the appellant. But I am of the opinion that the said Section is applicable to whole or any part of duty of excise paid by the applicant. Once any amount is merely a deposit in excess and not the duty as such, the Section 11B (2) of CEA has no applicability. In the present case after Finance Act, 2016, the amount paid as service tax during the period 01.04.2015 to 29.02.2016 is the amount, which is not recoverable as tax /duty. Hence, the Section 11 B (2) is not applicable to the given circumstances.
10. The facts of these appeals are otherwise peculiar for two reasons:-
(1) The refund claim was initiated by the appellants/ the service providers on the request of the service recipient i.e. MES, Ministry of Defence, which is none other than the Government of India (2) There is a clear declaration in the form of Affidavit as was annexed with the refund claim that since the amount of service tax 10 Service Tax Appeal No.52917-52920 of 2018 [SM] prayed to be refund has been reimbursed to the appellants/ applicants by the service recipient/ MES that they acknowledged to return the same to MES after the amount is sanctioned and disbursed.
10.1 These two peculiar facts take care of appellants to be out from the ambit of the principle of unjust enrichment. Above all, since the service recipient is none other than the Government of India, rejection of refund claim which is liable to be refunded, but the refund claim is rejected only on the ground that the service recipient/ the Department of Government of India has born the burden of said service tax, will ultimately cause the loss to the Exchequer of the said Department of Government of India.
11. In view of the above discussion, I hold that:
(1) The order passed by Commissioner (Appeals) Central Excise & Service Tax, Central Excise & Service Tax Division, Jodhpur to the extent it holds that it is a case of unjust enrichment, and therefore, the rejection of the refund claim and depositing of the said sum of Rs. 29,80,286/- to be credited in the Consumer Welfare Fund is hereby declared to be against the existing principles of law and also is in ignorance of relevant facts. The order is hereby set aside.
12. The proceedings are placed back before the Assistant Commissioner of Central Excise & Service Tax, Central Excise & Service Tax Division, Jodhpur (Rajasthan) directing that without disturbing the findings and observations on the allowability of the 11 Service Tax Appeal No.52917-52920 of 2018 [SM] refund claim he shall reconsider the claim. We also hold that not the petitioner, but the MES to pursue the refund claim. MES shall join as co-applicant. If so done within one month, the Competent Authority shall decide the applications within one month thereafter.
13. As a result of entire above discussion, respective orders under challenge are hereby set aside. Four of these appeals stand allowed, by way of remand but for the aforesaid limited purpose.
[Order pronounced in the open Court on 23/05/2019] (RACHNA GUPTA) MEMBER (JUDICIAL) Anita