Custom, Excise & Service Tax Tribunal
Venkatraman Guhaprasad vs Commissioner Of Gst&Amp;Cce (Chennai ... on 26 September, 2019
IN THE CUSTOMS, EXCISE & SERVICE TAX
APPELLATE TRIBUNAL, CHENNAI
REGIONAL BENCH - COURT NO. - III
Service Tax Appeal No. 40672 of 2019
(Arising out of Order-in-Appeal No.658/2018 (CTA-II) dated 28.12.2018 passed by
the Commissioner of Central Excise (Appeals - II), Chennai)
M/s. Venkatraman Guhaprasad Appellant
Flat No. 4G, Block 2, Ceebros Orchid
263/33, Velachery Main Road, Velachery
Chennai - 600 042.
Vs.
Commissioner of GST & Central Excise Respondent
Chennai South MHU Comlpex, 692, Anna Salai Nandanam, Chennai - 600 035.
With Service Tax Appeal No. 40674/2019 (Arising out of Order-in-Appeal No.659/2018 (CTA-II) dated 28.12.2018 passed by the Commissioner of Central Excise (Appeals - II), Chennai) M/s. B. Prakash & Charumathi Balakrishnan Appellant Flat No. 1E, Block 4, Ceebros Orchid 263/33, Velachery Main Road, Velachery Chennai - 600 042.
Vs. Commissioner of GST & Central Excise Respondent Chennai South MHU Comlpex, 692, Anna Salai Nandanam, Chennai - 600 035.
And Service Tax Appeal No. 40675/2019 (Arising out of Order-in-Appeal No.660/2018 (CTA-II) dated 28.12.2018 passed by the Commissioner of Central Excise (Appeals - II), Chennai) V. Jothi Ramalingam Appellant Flat No. 1E, Block 3, Ceebros Orchid 263/33, Velachery Main Road, Velachery Chennai - 600 042.
Vs. 2 Commissioner of GST & Central Excise Respondent Chennai South MHU Comlpex, 692, Anna Salai Nandanam, Chennai - 600 035.
APPEARANCE:
Ms. S. Sridevi, Advocate for the Appellants Shri L. Nandakumar, AC (AR) for the Respondent CORAM Hon'ble Ms. Sulekha Beevi C.S., Member (Judicial) Final Order Nos. 41132-41134 / 2019 Date of Hearing: 26.09.2019 Date of Decision: 26.09.2019 The issue involved in all these appeals being the same, they are heard together and are disposed by this common order.
2. Brief facts are that the appellants individually purchased residential flats constructed by the builder M/s. Ceebros during the year 2006. The appellants had entered into separate agreements for construction with the builder for construction of flats. The contract for construction was a composite one which included supply of goods and services. The flats were handed over to the appellants prior to 12.4.2007. Service tax was collected from the appellants under the category of 'Residential Complex Service' by the service provider and paid to the Government. Later, the levy of service tax on composite contracts in respect of the construction activities including construction of residential complex service was held to be unconstitutional as per the decision of the Hon'ble Apex Court in the case of Commissioner of Central Excise, Kerala Vs. Larsen & Toubro Ltd. - 2015 (39) STR 913 (SC). The levy of service tax on composite 3 contracts prior to 1.6.2007 was struck down by the Hon'ble Apex Court. Circular No. 108/02/2009 dated 29.1.2009 was issued by the Board clarifying that the construction services undertaken by the builders on behalf of the flat owners which are for personal use are excluded from the definition of residential complex. Based on the circular, the appellant filed refund claim for the refund of the service tax paid by them to the service provider. Department issued Show Cause Notice proposing to reject the refund claims alleging that the appellants are not covered under the circular issued by the department and also alleging that the refund claims are time-barred. After due process of law, the original authority rejected the refund claims which were upheld by the Commissioner (Appeals). Hence these appeals.
3. On behalf of the appellants, ld. counsel Ms. S. Sridevi appeared and argued the matter. She referred to Circular dated 29.1.2009 and submitted that in the present appeals construction was done for the personal use of the appellants which is not disputed by the department; agreements were executed between the service provider and the appellants herein; later the flats were constructed and handed over to the appellants. Therefore, the clarification in para 3 of the circular correctly applies to the facts in the cases of the appellants and therefore the levy and collection of service tax from the appellants cannot sustain.
3.1 It is also argued by the ld. counsel that the Hon'ble Apex Court vide the decision in Larsen & Toubro (supra) has held that no service tax can be levied on composite contracts prior to 1.6.2007. Construction of residential complex is included in works contract 4 service. Thus, while discussing the works contract service, the Hon'ble Apex Court has also referred to construction of residential complex service which are in the nature of composite contracts and held that prior to 1.6.2007, the levy of service tax on such construction is unconstitutional. For this reason, the levy cannot sustain and the appellants are eligible for refund. 3.2 The appellants had paid the service tax only by mistake and therefore are eligible for the refund. To support this argument, she relied upon the decision of the Hon'ble jurisdictional High Court in the case of 3E Infotech Vs. CESTAT, Chennai - 2018 (19) GSTL 410 (Mad.). The decision of the Tribunal in the case of AP Enterprises Vs. Commissioner of Service Tax, Chennai - 2019 (6) TMI 18 - CESTAT Chennai was also relied by the ld. counsel for the appellants.
4. The ld. AR Shri L. Nandakumar supported the findings in the impugned order. He referred to section 11B of the Central Excise Act, 1944 which is made applicable to Finance Act, 1994 and argued that the limitation prescribed for filing a refund claim is applicable to the present cases. The appellants have paid the service tax in 2006 - 07 and the refund claims were filed only in 2009 - 10. It is therefore barred by limitation and has been rightly rejected by the authorities below. He emphasized on the decision of the Hon'ble Apex Court in the case of Sarita Handa Exports (P) Ltd. Vs. Union of India - 2015 (321) ELT A206 (SC) and argued that Commissioner (Appeals) has referred to the above judgment and held that the statutory period prescribed for filing a refund as discussed in Mafatlal Industries Ltd. - (1997) 5 SCC 536 is applicable to any refund claim and therefore the appellants are not eligible for refund.
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5. Heard both sides.
5.1 The first ground on which the authorities below have rejected the refund claim is that the Circular dated 29.1.2009 is not applicable to the appellants. From the facts, it is seen that the appellants have individually entered into an agreement with the service provider for construction of flat and thereafter the construction was started and after completion of construction, the flats were handed over to the appellants prior to 12.4.2007. These facts have not been disputed by the department. Para 3 of Circular No. 108/02/2009 dated 29.1.2009 clarifies that if the purchaser enters into an agreement for construction of residential complex with the builder and the builder provides the services for construction and after such construction, the purchaser received such property for his personal use, then such activity would not be subjected to service tax because the exclusion provided in the definition of residential complex would apply to such a situation. Thus, it is very much clear that the exclusion clarified in the circular applies to the appellants. For this reason, I find that the service tax paid by them is under mistake of law. 5.2 It is also argued by the ld. counsel that later by the judgment in the case of Larsen & Toubro Ltd. (supra), the Hon'ble Apex Court had held that prior to 1.6.2007, levy of service tax on composite contracts is unconstitutional. Thus, the service tax collected from the appellants prior to 1.6.2007, in all these appeals, therefore cannot sustain.
5.3 The second ground for rejection of refund claim is on the ground of limitation. Section11B prescribes a period of one year for filing the refund claim. However, the Hon'ble jurisdictional High Court 6 in the case of 3E Infotech (supra) had occasion to analyse the issue of levy when service tax is paid under mistake of law. The ld. Counsel has also placed on record the decision of the Hon'ble Apex Court in the case of Commissioner of Central Excise, Bangalore Vs. KVR Constructions - 2018 (14) GSTL J70 (SC). The said decision arises out of an appeal filed by the department against the judgment of the Hon'ble High Court of Karnataka, wherein it was held that the provisions of limitation under section 11B of Central Excise Act, 1944 would not apply for refund of service tax paid by mistake. 5.4 In Shravan Banarasilal Jejani - 2014 (35) STR 587 (Tri. Mum.), the Tribunal had occasion to analyse a similar issue and held that erroneous payment of service tax has to be refunded to the applicant. The Hon'ble High Court of Bombay in Parijat Construction Vs. Commissioner of Central Excise - 2018 (359) ELT 113 (Bom.) had also taken a similar view.
6. After appreciating the facts and also following the decisions cited above, I am of the view that the rejection of refund claim is unjustified. The impugned orders are set aside and the appeals are allowed with consequential benefits if any.
(Dictated and pronounced in open court) (SULEKHA BEEVI C.S.) Member (Judicial) Rex