2010 (6) TMI 175 - AT - Service Tax

Refund- Erroneous Payment- the respondents are in the business of providing services under the category of Commercial and Industrial Construction and are holding valid registration. The respondents filed an application for refund for Rs.2,99,462/- on 17.10.2007 before the JAC on the grounds that they had paid it wrongly for the construction of road which is exclude from the category of Commercial and Industrial Construction. Since necessary documents evidencing exact nature of the services rendered, period of refund and amount of claim were not submitted a show cause notice was served to the appellants on 31.12.2007 on various grounds. The Assistant Commissioner adjudicated the said show cause notice vide impugned order wherein he rejected the claim for refund. Held that- Chartered accountant s certificate stating service tax not received. Unjust enrichment not attracted and refund admissible.

Summary

Issues:
Refund claim for service tax paid on construction of road under "Commercial and Industrial Construction" service category; Interpretation of law provisions and circulars regarding exclusion of road construction from service tax liability; Applicability of principle of unjust enrichment in refund claim.

Analysis:
The case involved a refund claim for service tax paid on the construction of a road under the "Commercial and Industrial Construction" service category. The respondents contended that the road construction was excluded from the purview of service tax as per law provisions and circulars. The Commissioner (Appeals) allowed the refund, emphasizing that construction of roads does not require payment of service tax and that the refund was not hit by the principle of unjust enrichment, supported by relevant invoices and certificates from the client. The Revenue challenged this decision on the grounds that the construction of a driveway at a petrol pump did not qualify as road construction for public utility and that the exclusion of road construction was intended for public interest. However, the Tribunal noted that the construction of road did not require service tax payment, and the construction of a driveway, even if not for public utility, was considered separate from road construction under the contract. Therefore, the benefit of exemption was allowed based on the contract recognizing the two activities as distinct.

The Tribunal referred to a Board's Circular stating that if the construction of a road is not recognized as a separate activity under a contract for a commercial complex, the service tax would apply to the total construction value, including the road. Since the contract in this case was specifically for road construction, the Tribunal upheld the Commissioner's decision. Regarding unjust enrichment, it was noted that no separate service tax was indicated in the invoices, and certificates from the client and a chartered accountant confirmed that no service tax amount was recovered from the customer. Consequently, the Tribunal rejected the Revenue's appeal, affirming the decision to grant the refund based on the legal provisions and evidence presented.

In conclusion, the Tribunal upheld the refund claim for service tax paid on road construction under the "Commercial and Industrial Construction" service category, citing the exclusion of road construction from service tax liability as per law provisions and circulars. The decision also emphasized the absence of unjust enrichment based on supporting documentation.