2024 (3) TMI 638 - AT - Service Tax

Refund claim of service tax paid on cancelled transactions - Post GST era - Rejection of refund under Rule 6(3) of Service Tax Rules read with Sec 142(5) of CGST Act - payment of service tax and GST on a transaction where no service was ultimately provided - HELD THAT - The issue herein is squarely covered in favour of the appellant by the decision of the Coordinate Bench of this Tribunal at Delhi in M/S RATNAWAT INFRA CONSTRUCTION COMPANY LLP VERSUS COMMISSIONER, CENTRAL EXCISE CGST-JAIPUR I 2023 (2) TMI 479 - CESTAT NEW DELHI , wherein, there being no dispute with regard to booking, cancellation and the refunds made by the appellant/builder to the buyer including the amount of service tax, in such circumstances, it was held that the appellant/builder is entitled to credit under Rule 6(3) of ST Rules read with Sec 142(3) of CGST Act, the assessee is entitled to refund due to change of regime to GST. The impugned OIA is erroneous and against the provisions of Rule 6(3) of Service Tax Rules read with Sec 142(5) of CGST Act. Accordingly, the appeal is allowed and the impugned order is set aside. The Adjudicating Authority is directed to grant the refund within a period of 45 days from the date of receipt of copy of this Order along with interest, as per Rules. Appeal allowed.

Summary

Issues Involved:
The judgment involves the issue of whether the claim of refund under Rule 6(3) of Service Tax Rules read with Sec 142(5) of CGST Act has been rightly rejected.

Details of the Judgment:

Issue 1: Refund Claim Rejection
The appellant, engaged in construction and sale of units, collected advances from customers and registered units upon full payment and construction completion. A customer cancelled a booking, leading to return of the amount with service tax and GST. The refund claim was rejected citing non-submission of agreement copy, lack of invoice, unreported advance payments, and time bar.

Issue 2: Adjudication and Appeal
The Adjudicating Authority rejected the refund claim based on non-disclosure of advance payments and time bar. The Commissioner (Appeals) upheld this decision. The appellant appealed, arguing they rightly paid tax on received instalments, returned the amount with service tax upon cancellation, and were entitled to refund under Rule 6(3) of ST Rules and Sec 142(5) of CGST Act.

Issue 3: Tribunal Decision
The Tribunal found in favor of the appellant, citing a similar case precedent. It held that the appellant was entitled to credit under Rule 6(3) of ST Rules read with Sec 142(5) of CGST Act due to the change in tax regime. The impugned order was set aside, directing the Adjudicating Authority to grant the refund within 45 days with interest.

Conclusion:
The Tribunal allowed the appeal, setting aside the impugned order and directing the refund of the disputed amount within a specified time frame.