2024 (5) TMI 1059 - AT - Service Tax

Refund of service tax - works contract services provided to government authorities - exempt by virtue of Notification No. 25/2012-ST - entitlement to refund in terms of section 102 of the Finance Act - Whether the contracts, on the basis of which the appellant rendered services, were executed prior to March 01, 2015 or not - HELD THAT - From the record, it is clear that all the contracts were executed before March 01, 2015. The Assistant Commissioner recorded a categorical finding of fact, after examination of all the contracts, that they had been executed before March 01, 2015. It also transpires from the aforesaid chart that the agreements were executed prior to March 01, 2015 and the work orders were subsequently issued to the appellant on March 10, 2015. It also needs to be noted that the appellant had filed the refund claim within six months from the date of enactment of the Finance Bill i.e. May 14, 2016 along with copies of the contracts. What is relevant for the purpose of section 102 of the Finance Act is the date on which the contracts were executed and not the date of the work orders. The Commissioner (Appeals) has considered the date of the work orders as the relevant date and, therefore, recorded a finding in the impugned order that the appellant would not be entitled to refund since the contracts under consideration were executed after March 01, 2015. Thus, the order dated September 19, 2017 passed by the Commissioner (Appeals) cannot be sustained and is set aside. The appeal is, accordingly, allowed.

Summary

Issues involved:
The issue involves the quashing of an order sanctioning the refund of service tax claimed by the appellant, based on the exemption under Notification No. 25/2012-ST dated June 20, 2012, for services provided during a specific period.

Details of the Judgment:

Issue 1 - Refund Claim and Exemption:
The appellant sought a refund of service tax paid on 'works contract services' provided to government authorities, exempted from service tax under Notification No. 25/2012-ST. The Superintendent verified the claim and recommended refund u/s 102(1) of the Finance Act, subject to unjust enrichment principles.

Issue 2 - Show Cause Notice and Reply:
Despite the verification report, a show cause notice was issued proposing to deny the refund. The appellant responded, justifying the refund eligibility based on the Finance Act provisions.

Issue 3 - Adjudication and Appeal:
The adjudicating authority allowed the refund, considering the contracts executed before March 01, 2015. However, the Department appealed, leading to the Commissioner (Appeals) setting aside the refund order, citing post-March 01, 2015 contract execution.

Issue 4 - Appellant's Argument and Department's Stand:
The appellant argued that contracts were executed before March 01, 2015, supported by the Assistant Commissioner's findings. The Department contended that post-March 01, 2015 contracts disqualify the refund u/s 102 of the Finance Act.

Issue 5 - Judgment and Conclusion:
The Court examined the contract execution dates, finding all contracts executed before March 01, 2015. The Commissioner (Appeals) erred in considering work order dates over contract execution dates. Consequently, the Commissioner's order was set aside, and the appeal was allowed, affirming the appellant's entitlement to the refund.

This judgment clarifies the importance of contract execution dates for refund eligibility under the relevant legal provisions.