2014 (1) TMI 1941 - AT - Service Tax

Taxability - service provided by the SBL is chargeable to service tax or otherwise - Commercial or Industrial Construction Service or not - whether provisions of section 11B are applicable in case it is held that no service tax was chargeable on the services provided by SBL? - HELD THAT - The Commercial or Industrial Construction Service includes within its scope construction of a new building or a civil structure or a part thereof. Construction of rooms for educational institutions would ordinarily be covered under the description of construction of new building or a civil structure or a part thereof. In that sense, ordinarily Erection, Commissioning or Installation of rooms would fall under the category of construction of new building or a civil structure or part thereof. The said activity would become taxable only if the same is provided for use for Commerce or Industries. In the instant case, there is no dispute that the said rooms were not used for commerce/ industry and therefore, the appellant s service could not be classified under the head of Commerce or Industrial Construction Service. In view of above, it is clear that the tax has been paid wrongly. Applicability of provisions of Section 11B to the refund claim - HELD THAT - Hon ble Apex Court in MAFATLAL INDUSTRIES LTD. VERSUS UNION OF INDIA 1996 (12) TMI 50 - SUPREME COURT has clearly underlined that unless tax has been collected under a provision which has been held to be unconstitutional in the appellant s own case all refunds would be covered by Section 11B of the Central Excise Act or Section 27 of the Customs Act, 1962. In view of above, the decisions cited by the appellant cannot be applied to the instant case, therefore, the provisions of unjust enrichment as provided under Section 11B become applicable to the case. The appeal filed by the Revenue as well as the appeal filed by the Sintex BAPL Limited are dismissed.

Summary

Issues Involved:

1. Chargeability of service tax on services provided by SBL.
2. Applicability of Section 11B of the Central Excise Act, 1944, to the refund claim.

Detailed Analysis:

1. Chargeability of Service Tax:

The primary issue was whether the services provided by SBL were chargeable to service tax. SBL, a service provider of various taxable services, including construction services, filed a refund claim for Rs. 1,45,53,618/- for the period March 2011 to November 2011. They argued that the construction services provided to government and semi-government organizations involved in education or health services were non-commercial and thus not subject to service tax. The original adjudicating authority rejected the refund claim based on merit and unjust enrichment. The Commissioner (Appeals) held that the services were non-commercial and thus not taxable, but the refund should be credited to the consumer welfare fund as per Section 11B of the Central Excise Act, 1944. Both SBL and the Revenue appealed this decision.

The Tribunal noted that the Commissioner (Appeals) believed service tax could only be levied if services were provided for commerce or industry. The Tribunal disagreed, stating that the exemption for services provided to government institutions in non-commercial activities under the "Commercial or Industrial Construction Service" category does not apply to all services provided to the government. The Tribunal concluded that the construction of rooms for educational institutions does not fall under the "Erection, Commissioning or Installation Service" category as defined under Section 65 (39A) of the Finance Act. Instead, it falls under "Commercial or Industrial Construction Service" as defined under Section 65 (25b), which is taxable only if used for commerce or industry. Since the rooms were not used for commerce or industry, the tax was wrongly paid.

2. Applicability of Section 11B:

The second issue was whether Section 11B of the Central Excise Act, 1944, applied to the refund claim. SBL argued that since the tax was paid by mistake, Section 11B was not applicable. They cited various case laws, including Natraj and Venkat Associates vs Assistant Commissioner, Service Tax, and Joshi Technologies International, Inc India Projects vs UOI. The Revenue relied on the Supreme Court decision in Mafatlal Industries Limited, which stated that refunds must be claimed under the respective enactments and within the prescribed limitation period unless the tax was collected under a provision held unconstitutional in the appellant's own case.

The Tribunal concluded that the decisions cited by SBL could not be applied to the instant case. Since the tax was not collected under an unconstitutional provision, the provisions of unjust enrichment under Section 11B were applicable. Therefore, the refund claim must adhere to the provisions of Section 11B.

Conclusion:

Both the appeal filed by the Revenue and the appeal filed by SBL were dismissed. The Tribunal upheld that the services provided by SBL were wrongly classified and thus not taxable, but the refund claim must comply with Section 11B of the Central Excise Act, 1944, including the doctrine of unjust enrichment.