Appellant entitled to Service Tax refund for cancelled flat bookings as no service provided post-cancellation.

The Tribunal allowed the appeal, ruling that the appellant is entitled to a refund of Service Tax paid on cancelled flat bookings as no service was provided post-cancellation, emphasizing that tax is applicable only on taxable services rendered. The Tribunal highlighted the violation of Article 265 of the Constitution if tax is collected without legal authority and concluded that the Service Tax refund is admissible in this case.

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Issues Involved:
Refund of Service Tax amount on cancellation of booked flats.

Analysis:

Issue 1: Refund of Service Tax on cancellation of booked flats
The appellant, engaged in providing Construction of Residential Complex Service, filed refund claims for Service Tax paid on two cancelled flat bookings. The Adjudicating Authority rejected the refund claim, stating no provision for refund as the appellant paid only the due amount. The appellant argued that no service was provided upon cancellation, thus no Service Tax should be levied. The Tribunal emphasized that tax is applicable only on taxable services provided, and in the absence of service, no tax can be imposed. The Tribunal highlighted the violation of Article 265 of the Constitution if tax is collected without legal authority. It concluded that since no service was provided due to cancellation, the Service Tax refund is admissible.

Issue 2: Interpretation of Service Tax Rules
The Tribunal analyzed Rule 66E(b) of Service Tax Rules, 1994, which mandates payment of Service Tax on flat bookings before completion certificate issuance. It clarified that once a booking is cancelled, and consideration is returned, the service contract terminates, making the refund of tax applicable. The Tribunal disagreed with the lower authorities' view that cancellation of booking does not negate service provision. It emphasized that if no service is provided, the Point of Taxation Rules cannot be invoked. Therefore, the Tribunal held that the appellant is entitled to the refund as no service was rendered upon cancellation.

In conclusion, the Tribunal allowed the appeal, stating the appellant is entitled to the refund of Service Tax paid on cancelled flat bookings due to the absence of service provision post-cancellation.

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