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2020 (2) TMI 632

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..... ice tax amount was actually deposited with the Central Government by 4th respondent is concerned, it is not in dispute that the 1st respondent never asked the petitioners to produce such material in the first place. It is also not the case of the 1st respondent that it had asked the 4th respondent, who according to the petitioner received the said payment on 19.06.2014, as to whether the 4th respondent had credited the same to the Central Government or not - Nothing prevented the 1st respondent from verifying whether the said payment of ₹ 33,77,539/- made by the petitioners on 19.06.2014 was passed on by the 4th respondent to the Central Government by verifying the Service Tax Returns filed by the 4th respondent. The third ground raised by the 1st respondent in the impugned order for rejecting the claim of the petitioners, the 1st respondent had relied upon the decision in GD. BUILDERS AND OTHERS VERSUS UOI AND ANOTHER [2013 (11) TMI 1004 - DELHI HIGH COURT], but the said decision was overruled by the Supreme Court in COMMISSIONER, CENTRAL EXCISE & CUSTOMS VERSUS M/S LARSEN & TOUBRO LTD. AND OTHERS [2015 (8) TMI 749 - SUPREME COURT] specifically. The Supreme Court hel .....

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..... ondent is directed to refund a sum of ₹ 33,77,539/- to the petitioners with interest @ 9% per annum from the date of payment of the same by the petitioners to the 4th respondent i.e., 19.06.2014 till the date of payment to the petitioners. - WRIT PETITION No. 5980 of 2017 - Dated:- 20-12-2019 - HONOURABLE SRI JUSTICE M.S.RAMACHANDRA RAO AND HONOURABLE SRI JUSTICE K. LAKSHMAN FOR THE PETITIONER : T BALA MOHAN REDDY FOR THE RESPONDENT : N RAJESHWAR RAOAST SOL GEN ORDER ( Per Sri Justice M. S. Ramachandra Rao ) 1. In this Writ Petition, petitioners assail the Order-in- Original No.49/2016 (Service Tax)(R) dt.24.10.2016 passed by the Assistant Commissioner of Service Tax, Division III, Hyderabad (1st respondent) refusing the claim of the petitioners for refund of an amount of ₹ 33,77,539/-, and for a direction to the 1st respondent to refund the same. 2. The petitioners, under a registered Sale Deed dt.09.05.2014, had purchased office space admeasuring 20,101 sft along with undivided share of land admeasuring 492 sq.yards in a complex named as Meenakshi s Techpark from M/s. Meenakshi Infrastructure Private Limited(4th respondent) for valuable consideration. 3. The 4th respo .....

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..... se Act, 1994 would apply to the refund under the service tax law as well. 9. The 1st respondent passed the impugned order on 24.10.2016 rejecting the claim of the petitioners for refund of the above amount on the following four(4) grounds: (a) The claim for refund is barred by limitation. (b) The petitioners did not furnish documents to prove that the said service tax amount had actually been deposited with the Central Government, i.e., a Chartered Accountant Certificate or undertaking from the vendor of the petitioner, M/s. Meenakshi Infrastructures Pvt. Ltd., certifying that the service tax has been deposited/credited to Central Government or ledger copies or challans or ST-3 returns of the vendor have not been produced by the petitioners. (c) That the Delhi High Court in GD Builders v. Union of India 2013(32) STR 673 (DEL) had taken the view that after 46th amendment to the Constitution, composite contracts can be bifurcated to compute value of the goods sold/supplied in contracts for construction of buildings with labour and material; that the service portion of the composite contracts can be made subject matter of service tax; that Aspect Doctrine is applied for bifurcating/vi .....

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..... nd the incidence of such duty and interest, if any, paid on such duty had not been passed on by him to any other person. 14. It is the contention of Sri Swaroop, counsel for respondents 1 to 3, that the said provision is applicable to the claim of refund made by the petitioners and therefore the claim of the petitioners is time barred. 15. This contention is refuted by the counsel for the petitioners by relying upon the decision of the Madras High Court in Natraj and Venkat Associates v. Assistant Commissioner, Service Tax, Chennai-II 2010(2) Taxmann.com 598 (Madras). 16. In Natraj and Venkat Associates (3 Supra), there was a claim for refund of service tax erroneously paid on construction activity undertaken in Srilanka by a firm rendering architectural services. The petitioner therein had received payment from a client in Srilanka on 27.05.2005 in US Dollars and the petitioner had paid a sum of ₹ 8,67,800/- on 04.07.2005 towards service tax. After realizing that the services rendered for construction of a building in Srilanka would not attract service tax, petitioner made a claim for refund on 20.09.2006. On 23.05.2007, the respondents therein rejected the claim of the peti .....

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..... at the claim of the petitioner that it was exempted from payment of service tax by virtue of Circular dt.17.09.2004 was not denied by the Department and it is not even denying that the nature of construction/services rendered by the petitioner was exempted from the payment of service tax; that one has to see, whether the amount paid by the petitioner under mistaken notion was payable by the petitioner at all; though under the Act, such service tax was payable, by virtue of the circular, the petitioner was not liable to pay it as there was an exemption because of the nature of the institution for which they have made construction and rendered services. It held that if the respondent had not paid those amounts, the authority could not have demanded the assessee to make such payment and that it had lacked the authority to levy and collect such service tax. It observed that if the department were to demand such payments, petitioner could have challenged it as unconstitutional and without authority of law. Therefore, in a converse situation, merely because there is payment of amount, it would not authorize the department to regularize such payment. It held that if the department had no .....

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..... service tax registration number of the vendor (4th respondent). Nothing prevented the 1st respondent from verifying whether the said payment of ₹ 33,77,539/- made by the petitioners on 19.06.2014 was passed on by the 4th respondent to the Central Government by verifying the Service Tax Returns filed by the 4th respondent. 21. In any event, petitioners have filed along with the reply affidavit in this Writ Petition, proof of payment of service tax by the 4th respondent collected from petitioner no.1 to the Central Government, in relation to the property sold to the petitioner under the sale deed dt.09.05.2014. This is not disputed by the respondents. So, even on this aspect there is no dispute now. 22. Therefore, this ground raised by the 1st respondent in the impugned order also cannot be accepted. RE: GD Builders case relied by the respondents 23. Coming to the third ground raised by the 1st respondent in the impugned order for rejecting the claim of the petitioners, the 1st respondent had relied upon the decision in GD Builders s case (2 supra), but the said decision was overruled by the Supreme Court in Commissioner, Central Excise and Customs, Kerala v. Larsen and Toubro .....

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..... Government in the above Rules to determine the value of service component in a composite contract for sale of immoveable property and goods including a service component mentioned in Clause (b) of Sec.66 E, it is the plea of the respondents that Rule 2A would apply to the situation as well. 31. We are of the opinion that Rule 2A of 2006 Rules deals only with determination of the value of the service portion in execution of a works contract referred to clause(h) of Section 66E of the Act; and even as of date, no rule has been enacted by the Central Government dealing with determination of value of service portion in a composite contract of sale involving not only a service component but also sale of built up area along with undivided share of land involving also sale of goods included in the total consideration paid for their purchase falling in clause (b) of Sec.66 E, as in the instant case. 32. This aspect has been dealt with by the Delhi High Court in Suresh Kumar Bansal s case (1 supra) and it explained that the contract between a buyer and the builder/promoter/developer in development and sale of a complex is of a composite one; that arrangement between the buyer and the devel .....

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..... rvice tax, the same cannot be levied. 33. We are in complete agreement with the above view. 34. Though Sri Swaroop, counsel for respondents sought to contend that construction of the complex is also a works contract and falls under Section 66E(h), we do not accept the said interpretation because if such an interpretation was to be correct, the Legislature would not have created a separate category of services relating to construction of a complex in clause(b) of Section 66E, and the same cannot be rendered otiose by the Court. 35. Though a plea was also raised by the respondents about the maintainability of the Writ Petition, we are of the opinion that the claim in the Writ Petition is for refund of the amount collected as service tax without authority of law. Article 265 of the Constitution of India states that no tax shall be levied or collected except by authority of law . 36. In Corporation Bank v. Sarawati Abharawsala 2009(1) SCC 540, the Supreme Court interpreted this constitutional provision and held that all acts relating to the imposition of tax providing, inter alia, for the point at which the tax is to be collected, the rate of tax as also its recovery must be carried ou .....

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