2020 (12) TMI 317 - AT - Service Tax

Refund of Service Tax - Service Tax paid for construction of residential complex before 30.06.2012 - rejection on the ground that appellant failed to establish that it comprised of less than 12 residential units so as to be covered under exemption clause - October, 2011 and March, 2012 - principles of unjust enrichment - appellant also agreed to discharge the tax liability during investigation. Non-establishment of number of units by the appellant that was cited as the main ground in the Order-in-Appeal was not a ground in the show-cause notice - HELD THAT - Meeting the requirement of law, which is the paramount consideration for establishment of tax liability, need not necessarily be made a ground in the show-cause notice since everyone is presumed to know the law/rules governing the affair of the State. Unjust Enrichment - HELD THAT - Customers were not charged Service Tax for Bandra unit. Appellant agreed to discharge the tax liability during investigation - HELD THAT - This issue which is raised by the learned respondent-department is hit by Rule 10 of the CESTAT Procedure Rule, 1982 as has not been argued during the hearing of the petition. Therefore, the only aspect that is required to be dealt in this appeal is the establishment of construction of less than 12 units by the appellant in the disputed complex. Thus, it can be inferred that because of availability of 13 floors, learned Commissioner (Appeals) had failed to reach at a conclusion that the complex had less than 12 residential units to admit refund as the said was not taxable. However, going by the Architect certificate at annexure 3, floor plan referred above and the full occupation certificate issued by the Executive Engineer (building proposal) of the Municipal Corporation of Greater Mumbai dated 02.08.2013 would clearly indicate that the complex comprised of 9 residential units, taking each duplex to be counted as one unit. Therefore, the appellant is entitled to get the refund sought for. Appeal allowed - decided in favor of appellant.

Summary

Issues:
Rejection of refund claim on Service Tax paid for construction of residential complex before 30.06.2012 based on failure to establish less than 12 residential units for exemption.

Analysis:
1. The appellant sought a refund of &8377;45,13,475 for the period between October 2011 and March 2012 for the service category of "construction of complex service - residential complex" but faced rejection by the Assistant Commissioner of Service Tax, Division - IV, Mumbai-II. The rejection was based on the appellant's failure to prove that the complex had less than 12 residential units, a requirement for exemption.

2. The Commissioner (Appeals) upheld the rejection, emphasizing the appellant's inability to establish the construction of less than 12 residential units through documentary evidence. However, the appellant argued that documents including BMC approval plan, architect certificate, and occupation certificate clearly indicated that the complex consisted of only 9 residential units, countering the Commissioner's decision.

3. The appellant's counsel contended that the appellant had not charged Service Tax from customers for selling a specific unit, indicating no unjust enrichment. The respondent-department argued against the refund, citing incomplete ground plans and the appellant's admission of receiving Service Tax in advance from customers as reasons for disentitlement.

4. The Tribunal identified three primary issues: non-establishment of the number of units by the appellant, the failure to address the issue of unjust enrichment by the Commissioner (Appeals), and the appellant's agreement to discharge the tax liability during the investigation. The Tribunal opined that the main issue was establishing the construction of less than 12 units in the complex.

5. The Tribunal observed that the Commissioner (Appeals) had not conclusively determined the number of residential units due to the presence of 13 floors, leading to the rejection of the refund claim. However, after reviewing the architect certificate, floor plan, and occupation certificate, it was evident that the complex comprised 9 residential units, thereby entitling the appellant to the refund.

6. Consequently, the Tribunal allowed the appeal, setting aside the Commissioner of GST & CX (Appeals-III), Mumbai's order and directing the respondent-department to refund &8377;45,13,475 with applicable interest within three months of the order.