Refund Claim On Service Tax For Cancelled Property Bookings Maintainable: CESTAT
The New Delhi Bench of Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) has stated that refund claim on service tax for cancelled property bookings maintainable. The Tribunal stated that the assessee had issued credit notes in respect of service which is not rendered to the customers on account of cancellation of the agreement and hence there was no scope of rendering...
The New Delhi Bench of Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) has stated that refund claim on service tax for cancelled property bookings maintainable.
The Tribunal stated that the assessee had issued credit notes in respect of service which is not rendered to the customers on account of cancellation of the agreement and hence there was no scope of rendering any services on which the service tax could be levied.
Binu Tamta (Judicial Member) and P.V. Subba Rao (Technical Member) were addressing the issue of whether the assessee is entitled to refund on the service tax paid on credit notes which were issued to their customers due to cancellation of agreement without meeting the condition of limitation as prescribed under Section 11B of Central Excise Act.
The appellant/assessee is engaged in providing construction service, other than residential complex, including commercial, industrial building or civil structures along with other services such as contract service, legal consultancy service, etc. The assessee was developing a project named as “Wave City Centre”.
The assessee raised demand notes to customers/clients for booking of property. The assessee charged service tax on the demand notes and collected the said amount and also deposited the same with the government exchequer.
Later on, various customers/clients cancelled their bookings and the entire sum collected on account of booking was refunded inclusive of service tax by issuing credit notes to the customers.
The assessee filed refund claim for the refund made to the customers on account of cancellation of the bookings.
The adjudicating authority rejected the refund claim. The assessee filed an appeal to Commissioner (Appeals) against the order passed by adjudicating authority which was dismissed.
The assessee submitted that the time limit of one year as given under Section 11B is applicable only in respect of refund of duty, tax and interest and not in the case of amount deposited. The assessee had not rendered any services to the customers, as the booking of the flats were cancelled and they had refunded the entire amount including the service tax.
The Tribunal observed that when there is no incidence of service there cannot be any leviability of service tax. Once the booking has been cancelled and the amount has been refunded, there is no scope for rendering any service on which the Department can hold the amount towards service tax.
The Tribunal further stated that there is no doubt that the assessee was entitled to the credit as the case falls within the ambit of Rule 6 since the assessee had received the amount against the service to be provided, however, the same could not be provided by him, and the amount of invoice was to be returned back to the customers, the assessee therefore could have taken the credit of such excess service tax paid by him subject to the conditions specified in the rules. For the said reason also, the refund needs to be allowed.
The bench opined that no services have been rendered by the assessee and, therefore, the refund is not of any tax or duty. In effect, the refund sought is merely of a “deposit”.
In view of the above, the Tribunal allowed the appeal.
Case Title: M/s. Wave Megacity Centre Private Limited v. Commissioner (Appeals-I), Central Tax Goods And Service Tax and Central Excise
Case Number: Service Tax Appeal No.54979 of 2023
Counsel for Appellant/ Assessee: A.K. Batra and Sakshi Khanna
Counsel for Respondent/ Department: S.K. Meena