2021 (9) TMI 510 - AT - Service Tax

Refund of Service Tax - electrical works contract - relevant date for determining limitation under section 11B of Central Excise Act, 1944 - N/N. 25/2012-ST dated 20th June 2012 - HELD THAT - The restoration, with special enablement of refund, acknowledges the historical existence, and necessity, of exemption of the specified activities from tax that stretch back in time and the claim of the appellant is predicated upon availment of the exemption at the time of contracting with the recipients; and even earlier. There is nothing on record to establish that the denial of refund had been followed up with instituting of proceedings for recovery of tax that had not been paid. The ineligibility of the activity of the appellant for exemption after 1st March 2015, as held by the lower authorities, implied evasion of tax for the period before that. This inconsistency of approach to tax liability would make it appear that that ineligibility for exemption has been contrived solely for denial of refund. The appellant was engaged in erection, installation, testing and commissioning of electrical works and it belies logic to expect electrical works to generally exist independent of civil structure as well as in disregarding the critical indispensability of electrical installation in civil structures. To segregate one component out of the entirety of civil structure does not appear to be the intendment of law. The retrospective effect of the exemption is applicable to the electrical works executed, and the maintenance undertaken, by the appellant for Goa State Industrial Development Corporation (GSIDC) and Goa Medical College (GMC) - Appeal allowed.

Summary

Issues:
Claim for refund of tax under section 66B of Finance Act, 1994 on works contract and maintenance services between 1st April 2015 and 29th February 2016, retrospective effect of levy nullification, determination of limitation under section 11B of Central Excise Act, 1944, eligibility for exemption, rejection of refund claim based on interpretation of 'civil work' and 'original works', compliance with conditions of eligibility in section 102 of Finance Act, 1994, applicability of principles laid down by the Supreme Court, denial of refund based on pre-requisite conditions, application of previous judgments, restoration of exemption and special refund provision, historical exemption of specified activities from tax, denial of refund leading to implication of evasion of tax, interpretation of taxable services and works contract, critical indispensability of electrical installation in civil structures, interpretation of exemption for activities related to civil or original structures.

Analysis:
The appellant sought approval for a refund of tax paid under section 66B of Finance Act, 1994 for works contract and maintenance services provided between 1st April 2015 and 29th February 2016. The retrospective effect of levy nullification was considered, and the determination of limitation under section 11B of Central Excise Act, 1944 was noted. The eligibility for exemption was a key issue, with the appellant claiming that the exemption withdrawal disturbed the certainty of tax on services contracted before the withdrawal, which the retrospective exemption sought to rectify.

The rejection of the refund claim was primarily based on the interpretation of 'civil work' and 'original works' under the Service Tax Rules. The appellant argued that their activities fell within the scope of the restored exemption, emphasizing compliance with conditions of eligibility under section 102 of Finance Act, 1994. The denial of refund was challenged, citing the principles laid down by the Supreme Court regarding the modification of assessment orders for refund claims.

The Tribunal considered previous judgments and the applicability of the exemption provisions under the Finance Act, 1994. The historical exemption of specified activities from tax was acknowledged, and the denial of refund without pursuing recovery of unpaid tax raised concerns about the inconsistency in tax liability treatment. The interpretation of taxable services, works contract, and the critical indispensability of electrical installation in civil structures were debated, highlighting the scope of exemption for activities related to civil or original structures.

In conclusion, the Tribunal set aside the impugned order and allowed the appeal, recognizing the retrospective effect of the exemption on the appellant's electrical works and maintenance services. The judgment emphasized the need to interpret the exemption provisions in a manner that aligns with the historical context and the critical role of electrical installations in civil structures.