By TIOL News Service

MUMBAI, MAY 05, 2014: THE appellant has rented their premises to CESTAT, Mumbai.

During the period June, 2007 to July, 2008, they paid service tax on the rent received under the category of renting of immovable property service.

However, CESTAT, Mumbai did not pay the service tax to the appellant for the rented premises on the premise that they are seeking clarification from CBEC as to whether they are liable to pay service tax during this period or not.

After the CESTAT received a clarification from the CBEC that CESTAT is not required to pay service tax during the impugned period, the appellant claimed refund of the service tax paid, on 26.12.2008.

The refund claim which was within one year was sanctioned but rest of the refund claim was rejected as time barred as per section 11B of the CEA, 1944.

As the lower appellate authority upheld this order of the original authority, the appellant is before the CESTAT, who incidentally, as mentioned, function from the premises rented out by the appellant!

The appellant submitted that in view of the clarification that they are not required to pay service tax;the provisions of section 11B of the CEA, 1944 are not applicable to the facts of this case and, therefore, their refund claim is not barred by limitation. Support is drawn from the decision in Shankar Ramchandra Auctioneers - 2010-TIOL-632-CESTAT-MUM.

On the other hand, the Revenue representative submitted that all refunds are governed by the provisions of section 11B of the CEA, 1944 in view of the apex Court ruling in Mafatlal Inds. - 2002-TIOL-54-SC-CX.

The Member (Judicial) observed that in view of the clarification by the CBEC, the appellant is not required to pay Service Tax at all and, therefore, what has been paid is not of service tax and hence in view of the cited decision in Shankar Ramchandra Auctioneers the provisions of section 11B of the CEA, 1944 are not applicable; the refund claim is not time barred.

Viewing that the case law relied by the Revenue representative is not relevant to the facts of the case, the Member (J) held that the appellant is entitled for the refund claim as the same has been filed in time.

The order of the lower authority was set aside and the appeal was allowed with consequential relief.

The adjudicating authority was directed to implement the order within thirty days.

(See 2014-TIOL-702-CESTAT-MUM)