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Mera Baba Realty Associate (P) Ltd. Vs. Commissioner Of Service Tax, Delhi
October, 04th 2016

                                                      Decided on: 07.09.2016

+      SERTA 26/2016, C.M. APPL.32831/2016
       MERA BABA REALTY ASSOCIATE (P) LTD. ..... Appellant
                      Through : Sh. Ruchir Bhatia, Advocate.
                      Through : Sh. Pramod Kumar Rai, Sr.Standing
                      Counsel with Sh. Deepak Anand, Jr. Standing
1.   Following question of law arises for consideration:
       "Did the Tribunal fall into error in holding that the refund claim
       made by the appellant was not maintainable?"

2.     Admit.
3.     Issue notice. Sh. Pramod Kumar Rai, Advocate accepts notice.
4.     The facts of the case are that the appellant is a builder engaged in
construction activity. The levy of Service Tax was imposed by an
amendment in the Finance Act, 1994 with effect from 01.07.2010. However,
prior to that, apparently, the Service Tax Department had issued a Circular
dated 16.02.2006, the effect of which was to advise all construction
companies to pay Service Tax. The appellant complied and started
depositing amounts for the periods in question, i.e. from 2006 onwards. On
24.04.2007, the appellant protested, contending that the amounts paid by

SERTA 26/2016                                                               Page 1
them were not covered by the levy and that they had to be refunded the said
amounts. The said letter reads as follows:

              The Superintendent,
       Service Tax Division I

       Sub: Payment of service tax in protest as per the Judgment
       dated 23.07.2007 in Revised Civil Mis. Writ Petition No.997 of
       2006 decided by Allahabad High Court in case OF ASSOTECH


             We are paying Service Tax as a builder a lieu of decision
       of K. Reheja Development Corporation case. The Allahabad
       High Court has turned down the said Judgment in Revised Civil
       Misc. Writ Petition No.997 of 2006 decided on 23.03.2007 in
       case of Assotech Reality Pvt. Ltd. Vs. State of U.P. Accordingly
       being a builder, we are not liable to pay the service tax.
       However, we are depositing the service tax in protest with the
       condition that in case it is decided in favour of builder, the same
       would be refunded to us.

               It is further submitted that, it is not applicable to the case
       at hand in as much as this decision was rendered on the facts of
       its own case, in our case, the company has not undertaken any
       construction work for and on behalf of proposed customer and
       the title, in the property so constructed, passes to the customer
       only on the execution of sale deeds and registration thereof.
       Until the time the sale deed is executed, the title and interest,
       including the ownership and possession in the construction
       made, remain with the company. The payment made by
       prospective purchasers, in instalments are aimed at facilitating
       purchase of the property by these probable purchasers so that
       they may not be required to pay whole of the price at a time.

SERTA 26/2016                                                                   Page 2
       Form the above, it cannot be inferred that the company us
       making construction for and on behalf of the probable

             In view of the position explained above, you are
       requested to look into the matter and refund the service tax.

                Thanking you,"

5.     The appellant filed a refund claim on 26.02.2009, disclosing all the
particulars, in the prescribed format, i.e. Form-R under Section 11B of the
Central Excise Act, 1944. This claim was rejected in its entirety. The order-
in-original observed as follows:
              In view of the above discussions & findings, I reject the
       refund claim of Rs.72,21,075/- (including interest amount
       Rs.47,633/-) being time barred and inadmissible, and also reject
       the rest of the amount Rs.32,67,569/- being inadmissible out of
       total refund claim amount Rs.1,04,88,644/- filed on 26.02.2009
       under Section 11B of the Central Excise Act, 1944, which is also
       made applicable in the Service Tax matters by virtue of Section
       83 of the Finance Act, 1994."

                                              (SAHIL INAMDAR)
                                      ASSISTANT COMMISSIONER"

6.     The primary adjudicating authority was of the opinion that the
application was time-barred. He took into account the fact that the assessee
had voluntarily obtained registration and deposited amounts without protest
and much later claimed that such amounts were not leviable. The order-in-
original further observes that in the circumstances, there is no question of
any amount being refunded. The first appellate authority took note of

SERTA 26/2016                                                             Page 3
previous orders of Central Excise and Service Tax Appellate Tribunal
(CESTAT), notably in M/s. Rubberwood India Pvt. Ltd. v. Commissioner of
Customs 2006 (206) ELT 536 and other decisions to say that the levy should
be calculated from the date when the refund claim was originally filed and
not from the date when the refund claim is subsequently filed in proper
format before the appropriate authority. The appellate authority also noted
that since the services in question, i.e. "construction" did not exist prior to its
inclusion in Sections 65(105)(zzq) and (zzh) of the Finance Act, 1994 with
effect from 01.07.2010, the amounts could be recovered only prospectively
and not from a prior period. To this end, the CESTAT relied upon the
decision reported as Union Bank of India v. M/s. Martin Lottery Agency Ltd.
2009-TIOL-60-SC-ST; Indian National Shipowners' Association v. UOI
2009 (14) STR 289 (Bom) etc. The appellate authority also took into
consideration the Central Board of Excise and Customs Circular
No.108/02/2009-ST dated 29.01.2009 and then concluded as follows:
       "The Hon'ble Bombay High Court vide judgment in the case of
       Indian National Shipowners' Association Vs. Union of India
       2009 (14) STR 289 (Bom) and specifically held as under:-

       "38....Introduction of new entry and inclusion of certain
       services in that entry would presuppose that was no earlier
       entry covering the said services. Therfore, prior to introduction
       of entry (zzzz), the services rendered by the members of the 1 st
       petitioner were not taxable. Creation of new entry is not by way
       of amending the earlier entry. It is not a carve out of the earlier
       entry. Therefore, the services rendered by the members of the 1 st
       petitioner cannot be brought to tax under that entry.

             In view of the above explanations inserted in the Section
       65(105)(zzq) and (zzzh) w.e.f. 01.07.2010 and clarifications
       given by CBEC vide Letter D.O.F. No.334/03/2010-TRU dated

SERTA 26/2016                                                                Page 4
       1-7-2010, it is amply clear that if an agreement is entered into
       or any payment is received, for sale of complex or apartment in
       residential complex, service tax will be leviable on such
       transaction since the builder provides the construction service
       w.e.f. 01.07.2010 only in terms of principle laid down in the
       above mentioned judgments that Service Tax levied by virtue of
       new entry and explanation would be applicable prospectively
       only. In view of the above, I hold that the activities undertaken
       by the appellants were chargeable to Service Tax w.e.f.
       01.07.2010 by virtue of Explanation inserted Section
       65(105)(zzq) and (zzzh) on 01.07.2010 and were not taxable
       during the period prior to 01.07.2010 and the Service Tax paid
       by them during the period prior to 01.07.2010 was liable to be
       refunded to the appellants in terms of provisions of Section 11B
       of the Central Excise Act, 1944 as made applicable to like
       matters of Service Tax by virtue of Section 83 of the Finance
       Act, 1994.

       8.    In view of the above, I set aside the impugned order and
       allow the appeal with consequential relief.

                                           (V.K. SINGH KUSHWAH)
                                        COMMISSIONER (APPEALS)
                                        CENTRAL EXCISE, DELHI-I"

6.     The revenue appealed to the CESTAT which was of the opinion that
since the appellant continued to deposit the amounts with the Service Tax
Department after lodging protest, per se no question of refund of amounts for
the prior period, i.e. payments made before 24.04.2007 arose. It, however,
remitted the matter for calculation of amounts, and refund in respect of the
period after the refund particulars had been made over in Form-R, i.e. after
7. It is contended on behalf of the appellant that the amounts deposited SERTA 26/2016 Page 5 prior to 24.04.2007 were covered by the refund claim and that the letter of the appellant made it clear that the amounts deposited in the past and payable thereafter were also under protest. It was submitted that since there is no denial of the fact that the levy was imposed for the first time by the amendment to the Finance Act, 1994 with effect from 01.07.2010, the amounts collected under the colour of a lawful expression could not be retained by the Service Tax authorities on the ground that the time for claiming the refund had expired. Learned counsel relied upon the second proviso to Section 11B and stated that if a protest is lodged, then the time period of one year provided for by Section 11 would be inapplicable. 8. Learned counsel for the respondent, on the other hand, contended that the impugned order of the CESTAT should not be interfered with since it had merely corrected the first appellate authority's order. That the appellant had made a refund claim in the appropriate form for the first time in 2009 is not denied. That it had also deposited and continued to deposit service tax amounts despite its understanding and claim that they were not liable is also not disputed. In the circumstances, there was no question of applicability of proviso to Section 11B and refund claim ought to have been made within the time prescribed. Since the refund claim here was neither in appropriate format nor unequivocal about the disclaimer of liability, the assessee was not entitled to refund of amounts for the period prior to 24.04.2007. 9. This Court is of the opinion that the CESTAT clearly fell into error of law. The proviso to Section 11B clearly indicates that if the amounts are paid under protest ­ (in this case, the protest was filed before the expiry of one year) - the limitation prescribed by the main portion, i.e. Section 11B(1) would not apply. Even otherwise, once it is admitted that the levy itself came SERTA 26/2016 Page 6 into force with effect from 01.07.2010 per se, amounts collected without authority of law fall beyond the imprint of expression or expropriation under pretence of authority of law. In these circumstances, the fundamental question of the appellant or any other assessee seeking recourse being restricted by the period of limitation under the statute authorising levy and its recovery should not arise. Furthermore, even if that reasoning were to be perused, the fact remains that the protest was lodged within reasonable time of the appellant becoming aware that the amounts were not recoverable as Service Tax. That is sufficient to attract proviso to Section 11B(1). 10. In the circumstances, we are of the opinion that the order of the CESTAT to the extent that it remitted the matter for calculation of only part of the amounts to be paid, is accordingly set aside. The order of the first appellate authority ­ Commissioner (Appeals) dated 06.05.2011 is restored. The appeal is allowed in the above terms. S. RAVINDRA BHAT (JUDGE) DEEPA SHARMA (JUDGE) SEPTEMBER 7, 2016 SERTA 26/2016 Page 7
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