2021 (3) TMI 671 - AT - Service Tax

Refund of Service Tax - construction services provided by them to Haryana Housing Board - government/local authority or not - Revenue has sanctioned the refund claim for the period 2014-15 which was filed too late in 2018 holding that Haryana Housing Board is a government or local authority and the service provided to them are exempt from service tax - HELD THAT - As the Revenue during the earlier period has entertained the refund claim filed by the appellant, therefore, balance of convince lies in favour of the appellant that when the issue whether the activity provide by the appellant to Haryana Housing Board is exempt being a government or local authority was pending before the Hon ble High Court of Punjab and Haryana in the case of M/S BHARAT BHUSHAN GUPTA AND COMPANY VERSUS STATE OF HARYANA AND OTHERS 2016 (8) TMI 722 - PUNJAB AND HARYANA HIGH COURT and the same was settled by the Hon ble High Court holding that the services provided to Haryana Housing Board are exempt from payment of service tax being a local/government authority. Thereafter, the appellant was eligible to file the refund claim. In these circumstances, the time limit prescribed under Section 11B of the Act is not applicable to the facts of this case and under Notification No. 09/2016 dt. 01.03.2016 as the course of action arose after the decision of the Hon ble High Court in the case of M/s Bharat Bhushan Gupta Company. Further, Haryana Housing Board has also filed refund claim which was entertained by the Revenue and the same has been granted and no appeal has been filed against the said order, therefore, on the principle of equity also requires that the appellant is entitled to claim the refund of the service which is exempt on which they have paid service tax. Appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Whether the refund claim filed by the appellant for the period 2015-16 is barred by limitation or not?

Analysis:
The appellant, a service provider registered as a contractor, constructed low-cost houses for the EWS against a tender floated by Haryana Housing Board. Initially, the appellant paid service tax as Haryana Housing Board was not considered a government or local authority. However, after a High Court decision confirming Haryana Housing Board's status as a government authority, the appellant filed a refund claim for the period 2015-16. The Revenue sanctioned a part of the claim for 2014-15 but rejected the claim for 2015-16 as time-barred under Notification No. 09/2016. The appellant argued that the limitation period is not applicable due to the pending issue before the High Court and the treatment of similarly situated assesses. The Revenue contended that the activity was taxable during 2015-16 and relied on case laws to support their stance.

The appellant's counsel argued that the issue of whether the activity provided to Haryana Housing Board is exempt from service tax was pending before the High Court, justifying the delay in filing the refund claim. They highlighted the treatment of other assesses and the fact that 50% of the service tax was borne by Haryana Housing Board. The Revenue maintained that the time limit prescribed under Notification No. 09/2016 applies as the activity was taxable during the period in question.

The Tribunal analyzed the case laws cited by the Revenue and found them inapplicable to the current scenario. It emphasized that there was no ambiguity in the Notification regarding the exemption of construction services provided to government or local authorities. The Tribunal noted that the Revenue had accepted the refund claim for 2014-15, indicating a change in their view post the High Court decision. Considering the equity principle and the treatment of Haryana Housing Board's refund claim, the Tribunal ruled in favor of the appellant, setting aside the rejection of the refund claim for 2015-16 and ordering its refund with interest.

In conclusion, the Tribunal allowed the appeal, granting consequential relief to the appellant.