9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2025 (5) TMI 1134 - AT - Service TaxLevy of service tax - conversion charges paid by the respondent to the Rajasthan State Industrial Development and Investment Corporation Ltd. (RIICO) for change of land use from industrial to commercial - refund of service tax paid on such conversion charges under Section 104 of the Finance Act 1994 - principles of unjust enrichment - HELD THAT - It is found that the refund claim has been allowed as it has been held that no service tax is leviable on conversion charges paid to RIICO for change of land use from industrial to commercial and hence the same was refundable in terms of Section 104(2) of the Act. From the reading of Section 104(1) it is apparent that it starts with a non-obstante clause Notwithstanding anything contained in Section 66 as it stood prior to the 1st day of July 2012 or in Section 66B and then provides that no service tax is leviable on one time upfront amount in nature of premium Salaami cost price development charge or any other amount by whatever name called for part of cost of industrial plot in respect of taxable service provided or agreed to be provided by a state government industrial development corporation or undertaking or industrial units by way of grant of long-term lease of 30 years or more of industrial plots during the period commencing from 1st day of June 2007 and ending with the 21st day of September 2016. Further Clause (2) provides that refund shall be made of all such service tax which has been collected but would not have been so collected if sub-section (1) had been in force at all material times. In terms of the said provisions there is no iota of doubt that the conversion charges were towards the change in the nature of the land use for which RIICO has merely granted an approval and it cannot be linked to providing any activity resulting in performing of service. Hence no service tax can be levied on these conversion charges and since the respondent has already paid the service tax in respect thereof they are entitled to seek refund of it. The last date for filing the refund claim falls on 30.09.2017 whereas the respondent had already filed the refund claim on 15.05.2015 i.e. before the insertion of Section 104 and well before the cut-off date. In view of the statutory provisions of Section 104 the Commissioner (Appeals) has concluded that the respondent is eligible to claim refund both on the ground of merit as well as on limitation and there are no error in the same. Reliance has been placed on the decision in RIICO Ltd. versus CCE Jaipur I 2017 (5) TMI 673 - CESTAT NEW DELHI where the Tribunal has held that lumpsum payments received from the allottees of plots in industrial area by RIICO for grant of long-term lease of 30 years or more is not liable to service tax in view of Section 104 of the Finance Act 1994. Principles of unjust enrichment - HELD THAT - The respondent has submitted the certificate dated 31.10.2017 issued by the Chartered Accountant certifying that the said amount of Rs.1, 50, 44, 629/- paid to RIICO has not been passed on to any other person. Further as per the books of accounts of the company the said amount has been shown as recoverable from the Government. In the balance sheet for the financial year 2013 14 and 2016 17 the said amount has been shown as Service Tax Refundable in the Note No.1.09 as Loans and Advances . On that basis it was concluded that the incidence of service tax has not been passed on to any other person and consequently the refund is admissible to the respondent. The controversy of eligibility to claim refund stands allowed in terms of the statutory provisions and the Department has not been able to justify as to why the relief is not admissible under the provisions of Section 104 of the Act. Conclusion - i) Service tax is not leviable on one-time upfront conversion charges for change of land use from industrial to commercial paid to State Government industrial development corporations for long-term leases exceeding 30 years within the specified period. ii) Refund claims under Section 104 must be filed within six months from the Finance Bill 2017 s presidential assent but claims filed earlier are valid. iii) Refund is admissible only if the claimant has borne the incidence of service tax and has not passed it on to others. There are no reason to interfere with the impugned order and hence the same is affirmed. The appeal filed by the Revenue is accordingly dismissed.
1. ISSUES PRESENTED and CONSIDERED
- Whether service tax is leviable on conversion charges paid by the respondent to the Rajasthan State Industrial Development and Investment Corporation Ltd. (RIICO) for change of land use from industrial to commercial. - Whether the respondent is entitled to refund of service tax paid on such conversion charges under Section 104 of the Finance Act, 1994. - Whether the refund claim filed by the respondent is within the prescribed limitation period under Section 104(3) of the Finance Act, 1994. - Whether the respondent has passed on the incidence of service tax to any other person, thereby affecting the eligibility for refund on the ground of unjust enrichment. - Whether the Revenue's appeal challenging the refund order is sustainable. 2. ISSUE-WISE DETAILED ANALYSIS Issue 1: Levy of Service Tax on Conversion Charges for Change of Land Use Relevant legal framework and precedents: Section 104 of the Finance Act, 1994, inserted w.e.f. 31.03.2017, provides a special exemption from service tax on one-time upfront amounts (including premium, salami, cost, price, development charge, or by whatever name called) in respect of taxable services provided by State Government industrial development corporations to industrial units by way of grant of long-term lease (30 years or more) of industrial plots. The exemption applies for the period from 1st June 2007 to 21st September 2016. The Tribunal in RIICO Ltd. versus CCE, Jaipur-I held that lump-sum payments received by RIICO from allottees for long-term leases of industrial plots are not liable to service tax under Section 104. Court's interpretation and reasoning: The Court interpreted Section 104(1) as a non-obstante clause overriding Section 66 and Section 66B regarding service tax liability on such one-time payments. It held that conversion charges paid to RIICO for change of land use from industrial to commercial do not constitute a taxable service but merely an approval for change of land use. Therefore, service tax cannot be levied on these conversion charges. Key evidence and findings: The respondent was allotted industrial land by RIICO under a 99-year lease and later paid conversion charges for change of land use. The payment included service tax, which was deposited by RIICO to the Government exchequer. The Tribunal noted the amended lease deed dated 21.04.2014 was for more than 30 years, falling within the period covered by Section 104. Application of law to facts: Since the conversion charges relate to change of land use approval and not a taxable service, and the lease period exceeds 30 years within the specified period, the service tax paid is not leviable under Section 104. Treatment of competing arguments: The Revenue argued that the service tax was correctly paid and deposited by RIICO and that the respondent could not claim refund. However, the Tribunal rejected this, relying on the statutory exemption and prior judicial precedent. Conclusion: No service tax is leviable on conversion charges paid for change of land use under Section 104 of the Finance Act, 1994. Issue 2: Eligibility and Limitation for Refund Claim under Section 104 Relevant legal framework: Section 104(2) provides for refund of service tax collected in contravention of the exemption under Section 104(1). Section 104(3) prescribes a limitation period of six months from the date the Finance Bill, 2017 received presidential assent (31.03.2017), i.e., refund claims had to be filed by 30.09.2017. Court's interpretation and reasoning: The Tribunal observed that the respondent had filed the refund claim on 15.05.2015, well before the insertion of Section 104 and the limitation cut-off date. Hence, the refund claim is within the prescribed limitation period. Key evidence and findings: The refund application was filed before the statutory limitation date, and the respondent satisfied all conditions under Section 104. Application of law to facts: The refund claim is timely and admissible under the statutory provisions. Treatment of competing arguments: The Revenue did not successfully contest the limitation aspect. Conclusion: The refund claim is valid and within the limitation period under Section 104(3). Issue 3: Unjust Enrichment and Passing on of Service Tax Incidence Relevant legal framework: Refund of service tax is generally not allowed if the claimant has passed on the incidence of tax to another person, constituting unjust enrichment. Court's interpretation and reasoning: The Commissioner (Appeals) and the Tribunal considered whether the respondent had passed on the service tax burden. The respondent produced a Chartered Accountant's certificate dated 31.10.2017 confirming that the amount paid was not passed on to any other person. The respondent's books of accounts showed the amount as recoverable from the Government and classified as "Service Tax Refundable" under loans and advances. Key evidence and findings: The financial records and CA certificate supported the claim that the respondent bore the service tax incidence. Application of law to facts: Since the respondent did not pass on the tax burden, the refund is not barred by unjust enrichment principles. Treatment of competing arguments: The Revenue did not provide evidence to the contrary. Conclusion: The respondent is entitled to refund as there is no unjust enrichment. Issue 4: Sustainability of Revenue's Appeal Court's reasoning: The Tribunal found no error in the impugned order allowing the refund claim under Section 104 on merit and limitation grounds. It also noted that other grounds raised by the respondent need not be examined as the statutory provisions suffice to decide the matter. Conclusion: The Revenue's appeal is dismissed, affirming the refund claim. 3. SIGNIFICANT HOLDINGS "No service tax can be levied on these conversion charges and since the respondent has already paid the service tax in respect thereof they are entitled to seek refund of it." "The amended Lease Deed dated 21.04.2014 is for the period of more than 30 years and falls within the period commencing from 1st day of June, 2007 and ending with 21st day of September, 2016." "Refund shall be made of all such service tax which has been collected, but which would not have been so collected, had sub-section (1) been in force at all material times." "The Commissioner (Appeals) has concluded that the respondent is eligible to claim refund both on the ground of merit as well as on limitation and we do not find any error in the same." "The incidence of service tax has not been passed on to any other person and consequently, the refund is admissible to the respondent." Core principles established include:
Final determinations:
|
