2024 (3) TMI 403 - AT - Service Tax

Refund of the Service Tax paid on the balance 70% portion - agreement to take on lease with Rajarhat IT Park Ltd. - renting of immovable property or construction services - availment of 70% abatement on construction of complex service - appellant submits that Commissioner (Appeals) has not appreciated the factual details and has dismissed their appeal without proper consideration - violation of principles of natural justice - HELD THAT - On going through the Agreement of Lease between the Appellant and Rajarhat IT Park Ltd, it is found to be a pure Lease Agreement. Nowhere, is it specified that it is a part of any Sale Agreement or Sale Deed. On going through the receipts issued by Rajarhat, it is seen that they have simply mentioned the amount collected by them without mention of any Service Tax component or Service Tax registration taken by the service provider. The Appellant has been charged Service Tax by the service provider under the heading of renting of immovable property for the Lease Agreement entered with them. However, the Appellant has taken a different stand stating that the service provided by the service provider is that of construction of commercial complex and accordingly in that case the, the service provider should have been granted the abatement of 70% in terms of Sl. No. 12 of Notification 26/2012-ST dated 20/6/2012. The Appellant being the service recipient, the Appellant is not allowed to question the classification adopted by the service provider. The service provider in this case has treated the service as renting of immovable property and has collected the Service Tax @ 12.36% (as per the Appellant himself) and has also filed the ST-3 Returns accordingly with their jurisdictional office. The service provider has, at no point of time claimed that this has been done by him by way of mistake and actually they are providing only the service of construction of commercial property . In such a case, the Appellant as a recipient of service is precluded from changing the classification adopted by the service provider to claim the present refund. As a matter of fact, the refund cannot be claimed by him and the Appeal basically fails on this count itself. Both the lower authorities have clearly held that no evidence in a proper form has been provided by the Appellant to satisfy these queries and the Adjudicating Authority has rejected their refund claim on this ground and even the lower Appellate Authority has dismissed their Appeal only on this ground. There are no reason to interfere with the detailed findings given by the Adjudicating Authority as well as by the Commissioner (Appeals), since the Appellant is not in a position to prove anything contrary even at this stage - appeal dismissed.

Summary

Issues involved: Interpretation of service provided as either renting of immovable property or construction service, eligibility for exemption under Notification No. 26/2012, requirement to prove non-availment of Cenvat Credit by service provider, inclusion of land cost in total consideration, rejection of refund claim based on lack of documentary evidence.

Summary:
The Appellants entered into a lease agreement with Rajarhat IT Park Ltd, who charged Service Tax for leasing the property. The Appellants claimed the service was construction services, seeking refund based on Notification No. 26/2012 granting 70% abatement for construction. The Adjudicating Authority rejected the refund claim due to lack of evidence on the service provider's Cenvat Credit and land cost inclusion. The Commissioner (Appeals) upheld the rejection for failure to prove key aspects. The Appellants appealed to the Tribunal, arguing misinterpretation and lack of consideration by lower authorities.

During the hearing, the Appellants' representative contended that the service was construction, not leasing, emphasizing misinterpretation by the Adjudicating Authority. The Appellants failed to provide necessary details, leading to dismissal of their appeal by the Commissioner (Appeals). The learned Chartered Accountant urged the Tribunal to allow the Appeals with consequential relief.

The Adjudicating Authority and Commissioner (Appeals) found the Appellants unable to prove non-availment of Cenvat Credit by the service provider and inclusion of land cost in the total consideration. The Adjudicating Authority rejected the refund claim based on these grounds, not solely on Section 11B provisions. The learned Authorized Representative supported the dismissal of the Appeal by the Commissioner (Appeals), urging the Tribunal to do the same.

After hearing both sides and reviewing the documents, the Tribunal determined that the Lease Agreement was solely for leasing, not part of a sale agreement. The service provider treated the service as renting of immovable property, collected Service Tax, and filed returns accordingly. The Tribunal held that the Appellant, as the service recipient, could not challenge the classification adopted by the service provider. The Appeal failed on this basis, as the Appellant could not change the classification to claim a refund.

While acknowledging that the issue was not part of the Show Cause Notice, the Tribunal noted that the Appellant failed to provide sufficient evidence to prove their case. Both lower authorities concluded that the Appellant did not satisfy the queries regarding Cenvat Credit, Service Tax payment, and land cost inclusion. As the Appellant could not prove otherwise, the Tribunal dismissed all appeals, upholding the decisions of the Adjudicating Authority and Commissioner (Appeals).