2018 (11) TMI 93 - AT - Service Tax

Construction of Residential Complex - advances received from the customers - liability of service tax - Held that - There were doubts in the field at the relevant time about the liability for payment of service tax in respect of the advances received by such builders for construction of residential apartments. Finally with the insertion w.e.f. 01.07.2010 of Explanation in the definition of Section 65(105) (zzzh), the matter was laid to rest with the conclusion that any amount received by the builders prior to the issuance of completion certificate will be liable to payment of service tax under the category of construction of residential complex - Admittedly, the dispute in the present case is prior to the date of insertion of explanation - appellant not liable to service tax. Refund claim - time limitation - Section 11B of CEA - Held that - In order to decide whether the appellant s claim for refund will be hit by time bar under Section 11B, it is required to be verified from records whether any letter of protest has been filed by the appellants with the jurisdictional authorities and obtained acknowledgement - Original Authority will verify the records whether any letter of protest has been filed by these appellants either before him or before jurisdictional Commissioner. Appeal allowed by way of remand.

Summary

Issues:
1. Liability for service tax on advances received for construction of residential complex.
2. Rejection of refund claims on the ground of time bar.
3. Filing of refund claims under protest and verification of protest letters.

Analysis:
1. The appellants were engaged in constructing residential complexes and received advances from buyers. Initially, the revenue contended that service tax was payable on these advances. However, an amendment introduced an explanation restricting tax liability to amounts received before the completion certificate. The appellants filed refund claims, which were rejected by the original authority and upheld by the Commissioner (Appeals). The issue was whether service tax was payable by the appellants prior to the amendment. The appellants argued that the CBEC clarification supported their position and cited a relevant court case. The Tribunal found that before the amendment, the appellants were not liable for service tax.

2. The refund claims were rejected mainly due to being time-barred under Section 11B, which requires filing within one year of tax payment unless paid under protest. The appellants claimed they were forced to pay tax not due and referenced a protest letter. The Tribunal noted the lack of evidence for protest letters by all appellants. To determine if the claims were time-barred, verification of protest letters was deemed necessary. As only one protest letter was presented, the Tribunal remanded the matter to the original authority for verification. It was clarified that if protest letters were found, the refund claims would not be time-barred, and appellants would be entitled to refunds on merit.

3. The Tribunal emphasized the importance of verifying protest letters to assess the time-bar status of refund claims. As only one protest letter was provided, the matter was remanded for further verification. The decision to set aside the impugned order and remand the case was made to ensure proper examination of the protest letters and eligibility for refunds based on merit.

This detailed analysis of the judgment highlights the issues of service tax liability, time-barred refund claims, and the significance of protest letters in determining refund eligibility, as addressed by the Appellate Tribunal CESTAT KOLKATA.