2019 (2) TMI 208 - HC - Service Tax

Rejection of refund claim of service tax - construction of Government buildings - refund arising as a result of restoration of exemption benefit of N/N/. 12/2012 and 25/2012 dated 20/06/2016 - Prospective effect or retrospective effect - Rule 173-S of the Central Excise Rules, 1944. Whether an amount paid under the mistaken belief that the service is liable to service tax when the same is actually exempt, be considered as service tax paid? - Held that - Evidently, the notification No. 12/2012 25/2012 ceased to exist w.e.f. 01/04/2015. The exemption was revived by notification dated 01/03/2016. But since it was prospective in effect, the appellant was not entitled for any exemption, which the appellant was aware of and with open mind and eyes deposited the service tax due with interest. Evidently, the works contract undertaken by the appellant during said period was not exempted. Therefore, the question that, the service tax and interest was paid under misconception does not arise, as would give rise for the proposed substantial question. Rejection of refund on the ground of time limitation - Held that - There was thus no ambiguity nor any dispute as would have prevented the appellant from seeking refund within the period of limitation. On these given facts the substantial question also does not arise for consideration. Whether service tax paid mistakenly under construction service although actually exempt, is payment made without authority of law? - Held that - The contention that the service tax was paid mistakenly is also not borne out from the facts - the question do not arise for consideration. As no substantial question of law arises for consideration, the appeal stands dismissed.

Issues Involved:
1. Whether the amount paid under mistaken belief that service is liable to service tax can be considered as service tax paid.
2. Whether the Tribunal was justified in rejecting the refund claim as time-barred.
3. Whether service tax paid mistakenly under construction service, although actually exempt, is payment made without authority of law.

Issue-Wise Detailed Analysis:

1. Mistaken Belief and Service Tax Payment:
The appellant contended that the amount of ?25,49,317/- towards service tax and ?57,716/- as interest for the period 01/03/2015 to 30/09/2015 was deposited under the mistaken belief that the service was liable to service tax. However, the court found no cogent material to support this claim. The works contract undertaken during the said period was not exempted, and therefore, the question of misconception does not arise. The court concluded that the service tax and interest were not paid under misconception, thus rejecting the proposed substantial question of law.

2. Justification of Tribunal's Rejection of Refund Claim:
The appellant argued that the substantial benefit should not be denied as the payment of service tax was on contracts exempted during the relevant period. The court noted that the exemption notifications (No. 12/2012 and 25/2012) ceased to exist w.e.f. 01/04/2015 and were revived prospectively by notification dated 01/03/2016. The retrospective exemption was granted by Section 102 of the Finance Bill 2016, which prescribed a six-month period for refund claims from the date of Presidential assent (14/05/2016). The appellant filed the refund claim on 24/03/2017, beyond the six-month period, leading to its rejection by the Tribunal. The court upheld this decision, stating that there was no ambiguity or dispute preventing the appellant from seeking a refund within the specified period. Therefore, the substantial question of law at 'B' does not arise for consideration.

3. Service Tax Paid Mistakenly:
The appellant's contention that the service tax was paid mistakenly was not supported by the facts. The court observed that the appellant was aware of the non-exemption status post 01/04/2015 and paid the service tax with interest accordingly. The subsequent retrospective exemption did not alter the requirement to file for a refund within the specified period. The court found no merit in the argument that the payment was made without authority of law, thus dismissing the substantial question of law at 'C'.

Conclusion:
The court dismissed the appeal, stating that no substantial question of law arises for consideration. The decisions cited by the appellant were deemed inapplicable to the present case as they turned on their own facts. The appellant's arguments regarding mistaken belief, justification for delay, and payment without authority of law were all rejected based on the clear stipulations of the relevant notifications and legislative provisions.

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