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2023 (6) TMI 309 - AT - Service TaxRefund of Service Tax amount - advance amount returned/ refunded to the buyer, upon the cancellation of the flats booked by the said buyer - HELD THAT:- The first principle of service tax is that tax is to be paid only on the services which are taxable under the said statute and for that purpose there has to have some ‘service’. Unless service is there no service tax can be imposed. If any service has been provided which is taxable as specified in the Finance Act, 1994 as amended from time to time then certainly the assessee is liable to pay, but when no such service has been provided then the assessee cannot be saddled with any such liability and in that case the amount deposited by the assessee with the exchequer will be considered as ‘deposit’ only and keeping the said amount by the department is violative of Article 265 of the Constitution of India which specifically provides that “No tax shall be levied or collected except by authority of law.” It is not the case of the department that the appellant is raising a fake claim. The only ground of rejection is section 11B ibid. When no service has been provided, as the booking has been cancelled, then how the tax on it can be retained by the exchequer and in what capacity? This amount has been paid by the customers and when they have cancelled the booking they want to get refund of their entire amount including the amount of service tax paid by them separately, which they are entitled to. Since Service Tax in issue, is not backed by any authority of law, the department has no authority to retain the same. Buyer booked the flat with the appellant and paid some consideration. The appellant as a law-abiding citizen entered the same in their books of accounts and paid the applicable service tax on it after collecting it from the buyer. But once the said bookings have been cancelled, where is the question of providing any service by the appellant to those customers. If there is no service then question of paying any tax on it does not arise and the department can’t keep it with them as service tax. Once the buyer cancelled the booking and the consideration for service was returned, the service contract got terminated and once it is established that no service is provided, then refund of tax for such service become admissible. In view of the peculiar facts of this case, the appellant cannot be said to be liable to pay service tax as no service has been provided and the amount paid by them would not take the character of tax. The provisions of Section 11B ibid would, therefore, not be applicable to such applications and the question of applying the limitation prescribed u/s.11B ibid would not arise. The appellant is entitled for the refunds as claimed by them. Accordingly the appeals filed by them are allowed, with consequential relief, as per law.
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