2022 (11) TMI 1147 - AT - Service Tax

Rejection of refund of Service tax - service tax paid wrongly at the time of purchase of the said shops/ flats, to the exchequer through service provider - service was exempt as per the entry 13 (c) of the Notification No 25/2012-ST, which was denied - interpretation of the word building , used in the notification - principles of natural justice - HELD THAT - In the case of COMMISSIONER OF CUSTOMS (IMPORT) , MUMBAI VERSUS M/S. DILIP KUMAR AND COMPANY ORS. 2018 (7) TMI 1826 - SUPREME COURT , Hon ble Supreme Court has itself rejected the argument advanced to the effect that strict interpretation and literal interpretation are the same. The entry at S No 13 (c) of the Exemption Notification No 25/2012-ST., what has been exempted from payment of the service tax by the said entry is a building owned by an entity registered under section 12 AA of the Income tax Act, 1961(43 of 1961) and meant predominantly for religious use by general public. Undisputedly the appellant is an entity registered under section 12AA of Income Tax Act, 1961 (43 of 1961), and the premises held by them are meant predominantly for religious use by general public. Thus the appellant are entity who are eligible to claim the benefit of this exemption. revenue also do not dispute this aspect. The only objection which has been raised is to the word building used in the notification whereas appellant are claiming exemption in respect of shop and flats purchased by them from the M/s Yog Reality. In the impugned order and during the course of arguments learned authorized representative has sought to distinguish the decisions of ASHA MURARKA AND ORS. VERSUS THE KOLKATA MUNICIPAL CORPORATION AND ORS. 2015 (4) TMI 1349 - CALCUTTA HIGH COURT and in the case of NOTIFIED AREA COMMITTEE NANGAL TOWNSHIP VERSUS BHAKRA MANAGEMENT BOARD, CHANDIGARH AND ORS. 1999 (8) TMI 1016 - SUPREME COURT from the facts of following case and have argued that as per this decision a flat in a building should be construed as separate unit. A flat is in building. Multi storey buildings are divided into flats or units. Thus, the word building used in entry at Sl No 13 (c) of the Notification No 25/2012-ST is wide enough cover the shop and flats purchased by the appellant in the project being developed by the M/s Yog Reality. That being so benefit of exemption under the said entry cannot be denied to the appellant on this ground. Principles of natural justice - HELD THAT - Authorized representative has raise the issue of unjust enrichment. However he has failed to specify how the same can be applied in the present case where the claimant is recipient of the services and the consumer of service. Appeal allowed.

Summary

Issues Involved:
1. Interpretation of the term "building" in entry 13(c) of Notification No. 25/2012-ST.
2. Eligibility for exemption under Notification No. 25/2012-ST.
3. Timeliness of the refund claim.
4. Application of the principle of unjust enrichment.

Detailed Analysis:

1. Interpretation of the term "building" in entry 13(c) of Notification No. 25/2012-ST:
The primary issue in this appeal is the interpretation of the word "building" as used in entry 13(c) of the Mega Exemption Notification No. 25/2012-ST. The appellant argued that the term "building" should include flats and shops within a multi-storey structure. The appellant relied on dictionary definitions and judicial precedents, including the Kolkata High Court's decision in Asha Murarka and the Supreme Court's decision in Notified Area Committee Nangal Township, which considered individual flats and shops as buildings for property tax purposes. The tribunal agreed with this interpretation, noting that multi-storey buildings are divided into flats or units, and thus, the term "building" in the notification is broad enough to cover the flats and shops purchased by the appellant.

2. Eligibility for exemption under Notification No. 25/2012-ST:
The appellant, registered under Section 12AA of the Income Tax Act, 1961, claimed exemption from service tax on the purchase of flats and shops, arguing that these were meant predominantly for religious use by the general public. The original authority and Commissioner (Appeals) had rejected the refund claim on the grounds that the exemption was only applicable to a "building" and not individual flats or shops. The tribunal, however, concluded that the appellant's flats and shops should be considered as part of a "building" and thus eligible for the exemption under entry 13(c) of the notification.

3. Timeliness of the refund claim:
The Commissioner (Appeals) had already determined that the refund claim was filed within the permissible time frame and was not barred by limitation as per Section 11B of the Central Excise Act, 1944. The tribunal upheld this finding, noting that the revenue had not appealed against this aspect of the decision, making the finding final.

4. Application of the principle of unjust enrichment:
The authorized representative for the revenue raised the issue of unjust enrichment, suggesting that the appellant might have passed on the service tax burden to another party. However, the tribunal found no merit in this argument, emphasizing that the appellant, being the recipient and consumer of the services, could not have passed on the tax burden to another entity.

Conclusion:
The tribunal allowed the appeal, concluding that the flats and shops purchased by the appellant fell within the definition of "building" as per entry 13(c) of Notification No. 25/2012-ST, thereby entitling the appellant to the claimed exemption. The tribunal also dismissed the arguments related to unjust enrichment and upheld the timeliness of the refund claim. The appeal was thus decided in favor of the appellant.