2022 (3) TMI 194 - AT - Service Tax

Appellant's Service Tax Refund Claim Not Time-Barred: Tribunal Determines Key Date for Limitation

Pramukh Realty Versus C.C.E. & S.T. -Daman

The tribunal held that the appellant's refund claim for service tax paid on the construction of a residential complex was not time-barred. It determined ... Refund of service tax paid - relevant date for cancellation of sale of flat - rejection of refund on the ground of time limitation - HELD THAT:- In the facts of the present case the appellant have paid service tax even though the service was not completed and subsequently when the sale agreement was cancelled the appellant have returned the value of flat along with service tax to their customers. The date of finalization i.e. Cancellation of sale of flat and refund of amount should be taken as a relevant date for computing the limitation under Section 11B - From the provision of clause (eb) of section 11B(B) it is clear that in the case where the service tax payment need to be adjusted at a later stage. The date of adjustment has to be reckoned for the purpose of computing limitation. In the present case the fund has arisen from cancellation of the sale of flats and refund of amount to the customers. In my view this stage should be considered as adjustment of service tax hence, the one year period should be computed from the date of refund of amount made to their customers against cancellation of sale of flats. Reliance placed in the case of M/S. RAMESH KUMAR AGARWAL VERSUS COMMISSIONER OF CENTRAL EXCISE & CENTRAL GST, JAIPUR-I [2021 (7) TMI 360 - CESTAT NEW DELHI] where it was held that The period of one year, in the given facts and circumstances, shall reckon from 15.10.2017 when appellant returned the amount of sale consideration to Shri K.K. Agarwal instead of 04.10.2016. The refund claim filed on 7th May, 2018 therefore, stands very much within the period of one year. The appellant’s refund claim is not time bar - Appeal allowed - decided in favor of appellant. Issues:Refund claim for service tax paid on the construction of a residential complex - Determination of relevant date for computing limitation under Section 11B.Analysis:The appellant paid service tax on the construction of a residential complex but later canceled the sale of flats, refunding the amount collected from customers along with service tax. The adjudicating authority sanctioned the refund, which the Revenue challenged on the grounds of time bar. The issue before the tribunal was to determine whether the refund claim was time-barred or not.Relevant Date for Limitation:The appellant argued that the relevant date for computing the limitation under Section 11B should be the date of refund to customers, as the service tax payment was finalized only upon the cancellation of flat sales. The tribunal agreed, citing Clause (eb) of Section 11B(B), which states that in cases where adjustment of duty is required, the date of adjustment should be considered for computing limitation.Precedent and Tribunal Judgment:The tribunal referred to a previous case involving M/s Ramesh Kumar Agarwal, where it was held that the relevant date for refund claims should be the date when the amount was refunded to customers. The tribunal emphasized that the date of adjustment in the present case was when the appellant refunded the amount to customers due to the cancellation of flat sales.Decision and Conclusion:Based on the analysis and precedent, the tribunal concluded that the appellant's refund claim was not time-barred. The tribunal held that the relevant date for computing the limitation under Section 11B should be the date of refund to customers, as it constituted an adjustment of service tax. Consequently, the tribunal allowed the appeal, setting aside the impugned order and upholding the original order for the refund of service tax.