Construction company wins service tax refund after returning payments when no service provided under Section 11B

The CESTAT New Delhi allowed the appeal for service tax refund. The appellant, a construction company, had paid service tax but later refunded amounts to buyers when no service was actually provided. The tribunal held that the refund claim was not time-barred under Section 11B of the Central Excise Act, 1944, determining the relevant date as when amounts were refunded to service recipients, not the original payment date. The tribunal ruled that refund of duty paid through Cenvat credit was maintainable, citing Article 265 of the Constitution prohibiting retention of non-leviable amounts. Based on a chartered accountant's certificate confirming no burden was passed to others, the tribunal found no unjust enrichment and granted the full refund claim.

---

---

Issues Involved:
1. Timeliness of the refund claim u/s 11B of the Central Excise Act, 1944.
2. Entitlement to refund for the amount paid by Cenvat credit.
3. Bifurcation of duty payment.

Summary:

Issue 1: Timeliness of the Refund Claim u/s 11B of the Central Excise Act, 1944
The appellant filed a refund claim for Rs.7,40,816/- on 21.10.2020, which was received by the jurisdictional Division Office on 21.01.2021. The department observed that the refund claim was not filed within the stipulated time as per Section 11B of the Central Excise Act, 1944. The appellant argued that the relevant date for filing the refund claim should be the date of refund to the buyer, which was within one year of the refund. The Tribunal agreed with the appellant, citing that the necessity for the refund arose only after the cancellation of the agreement and the refund to the buyer. The Tribunal referenced previous decisions, including Pramukh Reality Vs. C.C.E & S.T.-Deman, to support this interpretation. The Tribunal held that the refund claim was not barred by time.

Issue 2: Entitlement to Refund for the Amount Paid by Cenvat Credit
The department contended that the appellant was not entitled to a refund for the amount paid by Cenvat credit. The Tribunal observed that the law permits the payment of duty by way of accumulated Cenvat credit and that there is no distinction created by the statute regarding the method of duty payment. The Tribunal held that once the duty stands discharged, there remains no difference whether it was discharged in cash or by using accumulated Cenvat credit. The Tribunal concluded that the appellant was entitled to a refund for the amount paid by Cenvat credit, citing Article 265 of the Constitution of India, which prohibits the retention of tax not leviable by law.

Issue 3: Bifurcation of Duty Payment
The department noted that the bifurcation of duty payment made in June 2015 was not provided. The Tribunal observed that the original adjudicating authority had discussed both the issues raised in the show cause notice, including the bifurcation of duty payment. The Tribunal also noted that a certificate issued by the Chartered Accountant of the appellant certified that the refund claim of Rs.7,40,816/- had not passed on the burden of service tax to another person. The Tribunal found no evidence to falsify this certificate and held that there was no unjust enrichment by the appellant.

Conclusion:
The Tribunal set aside the order under challenge and allowed the appeal, holding that the appellant was entitled to the refund of service tax, including the amount paid by Cenvat credit, and that the refund claim was within the prescribed time limit of one year from the relevant date.

---