2024 (12) TMI 794 - AT - Service Tax

Refund of service tax - Liability of builders/developers for service tax - principles of unjust enrichment - whether the appellant is entitled to refund of service tax of Rs.1,19,146/- paid on Works Contract Service? - HELD THAT - The learned Commissioner(Appeals) has rightly held that the appellant had registered under Works Contract Service and not registered under the Construction of Residential Complex Service . It has been held by the Hon ble Supreme Court in the case of CCE, Kanpur Vs. Flock (India) Pvt. Ltd. 2000 (8) TMI 88 - SUPREME COURT that the refund claims directly cannot be filed without challenging the assessment. The judgments cited by the learned advocate for the appellant are different from the fact and circumstance from the present case in as much as in none of the cases the issue for consideration was whether refund could be admissible without changing the classification of the service ; hence not applicable. The impugned order is upheld and the appeal filed by the appellant is rejected.

Summary

Issues:
- Appeal against rejection of refund claim
- Liability of builders/developers for service tax
- Unjust enrichment

Analysis:

Issue 1: Appeal against rejection of refund claim
The appellant, a partnership firm engaged in the business of builder or developer of residential complexes, filed a refund claim of Rs.1,19,146/- under Works Contract Service. The claim was based on Circulars exempting builders and developers from service tax liability before a certain date. However, the Revenue contended that the appellant had paid service tax under a composition scheme for Works Contract Service and not for the construction of residential complexes. The Tribunal held that the appellant could not claim a refund without challenging the classification of services and following the principles laid down by the Supreme Court in various cases. The Tribunal emphasized that a refund claim cannot be made without challenging the assessment and classification of services.

Issue 2: Liability of builders/developers for service tax
The appellant argued that they were not liable to pay service tax based on Circulars and judgments supporting their position. They cited several cases where the liability of builders and developers for service tax was discussed. However, the Revenue contended that the appellant had been paying service tax under Works Contract Service and not under the Construction of Residential Complex Service. The Tribunal held that the appellant's argument was not applicable to the present case as they had not challenged the classification of services and had paid tax under a different category.

Issue 3: Unjust enrichment
The appellant claimed that they had paid service tax over and above the advance amounts received from customers, thereby avoiding unjust enrichment. However, the Revenue argued that the appellant had paid service tax under a composition scheme for Works Contract Service, not for the Construction of Residential Complex Service. The Tribunal agreed with the Revenue's argument and rejected the appellant's claim for refund, emphasizing the importance of challenging the assessment and classification of services before claiming a refund.

In conclusion, the Tribunal upheld the rejection of the appellant's refund claim, stating that the appellant had paid service tax under Works Contract Service and not under the Construction of Residential Complex Service. The Tribunal emphasized the need to challenge the assessment and classification of services before claiming a refund, following the principles laid down by the Supreme Court. The appeal filed by the appellant was rejected.