Refund of service tax on cancelled flat bookings follows when no taxable service survives after full refund of consideration.

Service tax paid on flat booking amounts becomes refundable where the booking is cancelled before completion and the entire consideration, including tax, is returned. Once the underlying service arrangement is terminated, no taxable service survives and the amount earlier remitted is treated as a deposit rather than tax in substance. Retention of such amount by the department is unsupported by authority of law, and refund cannot be denied merely by relying on the Point of Taxation Rules, 2011 when no taxable service is established. The refund claim is therefore admissible on cancellation and refund of the booking consideration.

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Issues: Whether service tax paid on booking amounts for flats becomes refundable when the booking is cancelled and the consideration is returned, so that no taxable service survives.

Analysis: Service tax is payable only when a taxable service exists. Where the booking of flats is cancelled before completion and the amount collected, including service tax, is refunded to the buyer, the service arrangement stands terminated and the amount earlier remitted to the exchequer is no longer tax in substance but a deposit. In such a situation, retention of the amount by the department is not supported by authority of law. The cancellation of booking and refund of the consideration negate the existence of any service for which tax could validly be levied, and refund cannot be denied by invoking the Point of Taxation Rules, 2011 once no service is established.

Conclusion: The refund claim was admissible and the denial of refund was unsustainable.

Final Conclusion: The appeal succeeded and the assessee obtained refund relief on the cancelled flat bookings.

Ratio Decidendi: Where the underlying service contract is cancelled and the entire consideration is returned, no taxable service survives and any service tax earlier paid is refundable because the State cannot retain tax without authority of law.

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