2017 (7) TMI 800 - AT - Service Tax

Refund claim - rental income from the residential premises - rejection on the ground of time bar - Held that - the appellant being registered with the departmental authority should have considered of the provisions before discharging the service tax liability and having not claimed the benefit of available notification and after discharging the service tax liability cannot now claim that the department has withheld the tax which they are not supposed to collect - the first appellate authority has categorically recorded how the appellant is eligible for part of the refund claim - appeal dismissed - decided against appellant.

Summary

Issues:
1. Rejection of refund claim on the ground of being time-barred.
2. Eligibility for refund of service tax discharged on residential rent for specific periods.
3. Application of Section 11B of the Central Excise Act, 1944.
4. Test of unjust enrichment for refund claims.

Analysis:
1. The appellant sought a refund of service tax amounting to ?1,60,868 for the financial years 2013-14 and 2014-15, contending that rental income from residential property is exempt from tax. The adjudicating authority rejected the refund claim, leading to an appeal. The first appellate authority partially allowed the appeal, granting a refund for the period 21.07.2014 to 31.03.2015, subject to the test of unjust enrichment and Section 11B provisions.

2. The appellant argued that rental income from residential premises should not be included in the turnover for tax assessment as it is exempt from service tax. The appellant claimed that the tax paid was without legal authority since the income was not taxable. The first appellate authority acknowledged the eligibility for part of the refund claim, specifically for the period mentioned earlier, based on the provisions of Section 11B.

3. Section 11B of the Central Excise Act, 1944 was crucial in determining the time limitation for refund claims. The first appellate authority noted that the claim related to the financial year 2013-14 was time-barred due to the limitation under Section 11B, while the claim for the financial year 2014-15 was admissible, subject to clearing the test of unjust enrichment.

4. The test of unjust enrichment was applied to the refund claim, ensuring that the appellant was not unjustly enriched by the refund. The appellate tribunal upheld the decision of the first appellate authority regarding the admissibility of the refund claim for the specific period and rejected the appeal, finding the impugned order legally sound and correct, devoid of any infirmity.