2010 (10) TMI 482 - Commissioner - Service Tax

Refund - Commercial or Industrial construction - Board vide Circular F. No. 332/16/2010-TRU dated 24th May 2010 has clarified that as per definition, the residential complex (for service tax purposes) does not include a complex which is constructed by a person directly engaging any other person for designing/planning/construction and is intended for personal use as residence by such person - whether it is mistake of law or not is governed by the provisions of Section 11B and hence limitation of one year period is applicable to every refund claim - refund claim was not verified at any point of time by the Lower Adjudicating Authority and hence the same needs to be verified before sanctioning - Principles of Natural Justice should be followed while sanctioning the claim - Appeal is disposed of

Summary

Issues:
Refund claim eligibility based on Service Tax payment for construction services.

Analysis:
The appeal was filed by a company against the Order-in-Original rejecting their refund claim of Service Tax paid through a construction contractor for building residential quarters. The company argued that since the construction was for personal use, it did not attract Service Tax. The Lower Adjudicating Authority rejected the claim citing reasons like correct payment by the contractor, time bar for refund claims, and no exclusion from Service Tax levy. The appeal was based on the High Court's direction, emphasizing the definition of "Residential Complex" and the concept of "personal use" as per relevant laws and circulars.

The Commissioner analyzed the case and found that the company's construction project fell under the exclusion clause of the definition of "Residential Complex" as it was directly engaged for personal use. Referring to circulars clarifying the exclusion criteria, the Commissioner held that the company was eligible for the refund. However, the Commissioner highlighted the applicability of Section 11B of the Central Excise Act, mandating a one-year limitation for refund claims. Citing judicial precedents, the Commissioner emphasized that all refund claims, including those due to mistake of law, must adhere to Section 11B.

The Commissioner directed the Lower Adjudicating Authority to verify and sanction the refund while ensuring compliance with the law and principles of natural justice. The decision set aside the earlier rejection and instructed a thorough verification process before refund approval, emphasizing the importance of following legal procedures and time limits for such claims.

This detailed analysis of the case highlights the legal intricacies surrounding the eligibility of the company for a Service Tax refund, the interpretation of relevant laws and circulars, and the application of Section 11B in governing refund claims. The judgment underscores the significance of legal provisions, precedents, and procedural fairness in resolving tax-related disputes.