2022 (8) TMI 645 - AT - Service Tax

Tribunal allows appeal, deems services exempt under Finance Act. Unjust enrichment issue left open for further examination.

Kanubhai Ramjibhai Makwana Versus C.C.E. & S.T. -Vadodara-I

The appeal was allowed by the Tribunal, setting aside the Commissioner's rejection based on a 24-day filing delay. The services provided to GSPHCL were ... Rejection of Refund claim - applicability of Section 102(1)(a) of FA - claimant had provided the services to M/s. Gujarat State Police Housing Corporation Ltd. (GSPHCL) is a company and not a Governmental Authority hence, the exemption is not applicable - incidence of service tax passed on or not - principles of unjust enrichment - sufficient reason for delay in filing the appeal before the Commissioner (Appeals), or not - Whether the services provided by the appellant to GSPHCL falls under the category of services provided to government or governmental authority and eligible for exemption under Section 102 of the Finance Act, 1994 consequential refund thereof? - HELD THAT:- The learned Commissioner (Appeals) has rejected the appeal despite the appellant’s filing of COD application showing difficulty for not filing the appeal within the stipulated time of 60 days. It is found that once the appellant have filed a COD application where delay is well within period of 30 days after stipulated period of 60 days, the learned Commissioner (Appeals) should have taken a lenient view and should have condoned the delay, by not condoning the delay the learned Commissioner (Appeals) has deprived the appellant from their right of appeal, therefore, the appellant should have been allowed condonation of the delay, accordingly, the order of rejection of the appeal by the Commissioner (Appeals) on time bar is not sustainable. Whether the service provided by the appellant to GSPHCL is service provided to a governmental authority? - HELD THAT:- The GSPHCL is a 100% owned by Government of Gujarat therefore, it clearly falls under the category of service provided to government authority - The corporation/board constituted under the act of State Government should be considered as a governmental authority and accordingly, exemption provided to the government or governmental authority is applicable in respect of service provided by a service provider to such board/corporation. In the present case also the service provider has provided service to GSPHCL which is a corporation of State Government incorporated under the State Government Act passed by the State Assembly accordingly, the GSPHCL is a governmental authority and exemption under Section 102 is clearly applicable. Principles of unjust enrichment - HELD THAT:- The lower authority have contended that the appellant have not submitted the necessary evidence to establish that the incidence of the service tax paid was not passed on to any other person. On this, the appellant may be given the opportunity to present the evidence and explanation on the aspect of unjust enrichment. Appeal allowed. Issues Involved:1. Whether the Commissioner was right in rejecting the appeal on the grounds of limitation due to a 24-day delay in filing.2. Whether the services provided by the appellant to GSPHCL fall under the category of services provided to a government or governmental authority and are eligible for exemption under Section 102 of the Finance Act, 1994, and the consequential refund thereof.3. Whether the appellant has provided sufficient evidence to establish that the incidence of service tax was not passed on to any other person (unjust enrichment).Issue-wise Detailed Analysis:1. Limitation in Filing the Appeal:The Commissioner (Appeals) rejected the appeal due to a 24-day delay in filing. The appellant argued that sufficient reasons were provided for the delay and that the delay was within the permissible period for condonation. The Tribunal found that the Commissioner (Appeals) should have taken a lenient view and condoned the delay since the appellant had filed a COD application within the additional 30-day period allowed after the stipulated 60 days. The rejection of the appeal on the grounds of time bar was deemed unsustainable, as it deprived the appellant of their right to appeal.2. Exemption Eligibility for Services Provided to GSPHCL:The core issue was whether the services provided to GSPHCL qualified for exemption under Section 102 of the Finance Act, 1994. The Tribunal found that GSPHCL, being 100% owned by the Government of Gujarat, qualifies as a governmental authority. This conclusion was supported by several judgments, including:- Senior Regional Manager, Tamil Nadu Civil Supplies Corporation, Thanjavur Vs. Principal Chief Commissioner of GST & C.Ex., Chennai: The court emphasized the reintroduction of the exemption through subsequent notifications and clarified that entities funded entirely by the government qualify for the exemption.- Commissioner of Central Excise & S.T., Kanpur Vs. Executive Engineer, UP State Construction & Infrastructure Development Corpn. Ltd.: The Tribunal upheld the exemption for services provided to government authorities and noted the legislative intent to refund service tax collected during the exemption period.- Bharat Bhushan Gupta & Company Vs. State of Haryana: The court held that services provided to governmental authorities, such as the Haryana Housing Board, are exempt from service tax, emphasizing that the Board is a governmental authority under state control.- Krishi Constructions Pvt. Ltd. Vs. Commissioner of C.T., Hyderabad: The Tribunal concluded that corporations established by state governments qualify as governmental authorities, thus entitling service providers to exemptions.Applying these precedents, the Tribunal concluded that the services provided to GSPHCL are exempt under Section 102, as GSPHCL is a governmental authority.3. Unjust Enrichment:The lower authority contended that the appellant did not provide necessary evidence to establish that the incidence of service tax was not passed on to any other person. The Tribunal noted that the appellant should be given an opportunity to present evidence and explanation on this aspect. Therefore, the matter of unjust enrichment was left open for further examination, allowing the appellant to submit the required evidence.Conclusion:The impugned order was set aside, and the appeal was allowed. The Tribunal directed that the appellant be given an opportunity to present evidence regarding unjust enrichment. The decision was pronounced in the open court on 12.08.2022.