2024 (5) TMI 559 - AT - Service Tax

Refund of service tax deposited by mistake of law - receipt of one time Lumsum payment on grant of long-term lease of 33 years to NTPC - HELD THAT - The service tax is not leviable on the transaction under dispute by virtue of Notification No. 41/2016-ST dated 22.09.2016 which have been further made explicit by amending the provisions of Finance Act 1994 by insertion of Section 104 vide Finance Act 2017. The original Adjudicating Authority is directed to grant the refund subject to verification of unjust enrichment. The Appellant is directed to appear before the Adjudicating Authority with a copy of this Order and seek opportunity of hearing. The Adjudicating Authority shall pass consequential order within a period of 50 days from the date the Appellant appears before him with a copy of this Order. The impugned order set aside - appeal allowed.

Summary

Issues involved: Whether the Appellant is liable to pay service tax on receipt of one time Lumsum payment on grant of long-term lease of 33 years to NTPC.

Summary:

Issue 1: Liability of the Appellant to pay service tax on one-time Lumsum payment for long-term lease.

The Appellant, a Government Authority, allotted land on a long-term lease to NTPC for a Super Thermal Power Plant, receiving an upfront fee. The Appellant paid service tax on this amount but later realized it was not applicable. The refund claim was rejected by the Adjudicating Authority and Commissioner (Appeals) based on various grounds. The Appellant contended that the upfront charges were not for services rendered, and a retrospective provision in the Finance Act 2017 supported their claim for exemption from service tax.

Issue 2: Applicability of Notification No. 41/2016-ST and Section 104 of the Finance Act 2017.

The Tribunal found that service tax was not leviable on the transaction under dispute due to Notification No. 41/2016-ST, exempting the activity of allotment of land for a period of 30 years from service tax. Additionally, Section 104 of the Finance Act 2017 provided a special provision for exemption in cases of long-term lease of industrial plots by Government entities, leading to the allowance of the appeal and direction for refund subject to verification of unjust enrichment.

In conclusion, the Tribunal allowed the appeal, set aside the impugned order, and directed the Adjudicating Authority to grant the refund to the Appellant after verification, within a specified timeframe.