2016 (12) TMI 601 - AT - Service Tax

Refund claim - commercial or industrial construction services - construction of complex services - unjust enrichment - time bar - Held that - In the impugned order, the Commissioner (Appeals) has taken the view that the service rendered by the assessee is rightly classifiable under the category of works contract service, since the service rendered was in the nature of a composite contract involving supply of goods as well as rendering of service. We are in agreement with the findings of the Id. Commissioner (Appeals). This view finds support in the decision of the Hon ble Supreme Court in the case of CCE vs. Larsen & Toubro Ltd, 2015 (8) TMI 749 - SUPREME COURT . Since the disputed period is prior to the date of introduction of works contract services, no service tax will be payable by the assessee. Consequently, the refund claim is admissible on merits. Time bar - Held that - The original adjudicating authority has taken the view that an amount of ₹ 3,26,770/- has been deposited by the assessee on 21.11.2005. The refund claim stands filed on 12.3.2007. Therefore, the claim will be hit by time bar as per Section 11B (i) of the Central Excise Act, 1944, since the period is beyond one year. Consequently, we uphold this portion of the order of the Commissioner (Appeals). Unjust enrichment - Held that - the amount deposited is in the nature of service tax. Consequently, the refund will be governed by the provisions of Section 11B. Inasmuch as the assessee has not submitted any proof to the effect that the burden of tax has not been passed on to the customers, the refund, which otherwise merits sanction, will need to be credited to the Consumer Welfare Fund. Appeal disposed off - decided in favor of Revenue partly.

Summary

Issues:
Refund claim rejection on merits and unjust enrichment, time bar under Section 11B, classification of service under works contract, admissibility of refund on merits, crediting refund to Consumer Welfare Fund.

Refund Claim Rejection on Merits and Unjust Enrichment:
The appellant, engaged in construction services, filed a refund claim for service tax paid under the construction of a residential complex. The claim was rejected on merits and unjust enrichment grounds. The Commissioner (Appeals) upheld the refund partially, crediting the rest to the Consumer Welfare Fund due to unjust enrichment. The Revenue appealed against the admissible refund portion, while the appellant sought the entire amount in cash. The Tribunal agreed with the classification of service under works contract, citing the Supreme Court's decision. As the disputed period predates works contract services' introduction, no service tax is payable, rendering the refund claim admissible on merits.

Time Bar Under Section 11B:
The original adjudicating authority held that a part of the refund claim was time-barred as it exceeded one year from the deposit date. The Tribunal upheld this decision under Section 11B of the Central Excise Act, 1944, confirming the time limitation for refund claims exceeding one year.

Classification of Service Under Works Contract:
The Tribunal concurred with the Commissioner (Appeals) that the appellant's service falls under works contract service, involving the supply of goods and services. Citing the Supreme Court's ruling, the Tribunal found no service tax payable by the appellant for the disputed period, supporting the admissibility of the refund claim on merits.

Admissibility of Refund on Merits and Crediting to Consumer Welfare Fund:
The Commissioner (Appeals) ordered a portion of the admissible refund to be credited to the Consumer Welfare Fund due to unjust enrichment, as the burden of proof lay with the appellant to show the tax burden was not passed on to consumers. Despite the appellant's claims, no documentary evidence was provided to support this contention. As per Section 11B, the refund's time limit applies, and without proof of non-passing of the tax burden, the refund must be credited to the Consumer Welfare Fund, as ordered by the Tribunal.

Conclusion:
Both the Revenue and the appellant's appeals were disposed of, with the Tribunal upholding the admissibility of the refund claim on merits, while crediting a portion to the Consumer Welfare Fund based on unjust enrichment grounds.