ST - Once it is admitted that levy itself came into force w.e.f 01.07.2010, amount collected without authority of law is refundable: High Court
By TIOL News Service
NEW DELHI, SEPT 16, 2016: 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, the CBEC 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, by writing a letter to the Supdt. Service Tax, Division I, Delhi contending that the amounts paid by them were not covered by the levy and that they had to be refunded the said amounts.
On 26.02.2009, they filed a refund claim disclosing all the particulars, in the prescribed format, i.e. Form-R under Section 11B of the CEA, 1944. This claim was rejected in its entirety by the Asstt. Commr. as being time barred and inadmissible. Inasmuch as it was observed that the assessee had voluntarily obtained registration and deposited amounts without protest and much later claimed that such amounts were not leviable.
The Commissioner (A) relied upon the decisions viz. M/s. Martin Lottery Agency Ltd. - 2009-TIOL-60-SC-ST; Indian National Shipowners' Association v. UOI - 2009-TIOL-150-HC-MUM-ST and while setting aside the order and allowing the appeal with consequential relief offered the following reasoning -
"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 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."
In Revenue appeal, the CESTAT opined 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 24.04.2007.
The appellant is before the Delhi High Court.
After considering the succinct submissions made by both sides, the High Court observed -
++ 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 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).
++ In fine, the order of the CESTAT to the extent that it remitted the matter for calculation of only part of the amounts to be paid, was set aside. The order of the first appellate authority - Commissioner (Appeals) dated 06.05.2011 was restored.
The appeal was allowed.
(See 2016-TIOL-2139-HC-DEL-ST)
