Service tax refund granted for construction errors on individual residential houses, overturning previous denial.

The Tribunal allowed all service tax appeals, granting the refund claims for service tax deposited by mistake during the construction of individual residential houses. It held that such construction was not subject to service tax, the refund was not barred by unjust enrichment, and the denial based on potential CENVAT credit utilization was unfounded. The order dated 16.02.2016 was set aside, and the appellant's refund claims were approved.

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Issues Involved:
1. Refund of service tax deposited by mistake.
2. Applicability of service tax on construction of individual/independent residential houses.
3. Unjust enrichment.
4. Limitation period for refund claims.
5. Admissibility of CENVAT credit for works contract services.

Summary:

1. Refund of Service Tax Deposited by Mistake:
The appellant sought the quashing of the order dated 16.02.2016, which denied the refund of service tax deposited by mistake for the construction of individual/independent residential houses during 2012-13 to 2014-15. The appellant argued that the construction of such houses was not taxable prior to 01.07.2012 and was exempted under the Notification dated 20.06.2012.

2. Applicability of Service Tax on Construction of Individual/Independent Residential Houses:
The Tribunal examined the definition of 'residential complex' under Section 65(91a) of the Finance Act, 1994, which requires a complex to have more than twelve residential units to be taxable. The appellant constructed individual houses, each with separate entry, electricity, and water connection, and none of the buildings had more than twelve residential units. The Tribunal accepted the appellant's submission that these houses do not fall under the taxable category of 'residential complex' and thus were not subject to service tax.

3. Unjust Enrichment:
The Commissioner (Appeals) had rejected the refund claim on the grounds of unjust enrichment. However, the Tribunal found that the service tax was to be borne by the appellant as per the work orders, and the contract specified that the contractor would bear the service tax. The Tribunal referred to the Allahabad High Court decision in Commr. Of Cus., C. Ex. & S.T. vs. Indian Farmers Fertilizers Coop. Ltd., which allowed refund claims by the person who bore the incidence of tax. Therefore, the Tribunal held that the refund was not hit by unjust enrichment.

4. Limitation Period for Refund Claims:
Except for Service Tax Appeal No. 51458 of 2018, the Commissioner (Appeals) had held that the refund claims were barred by limitation. However, this issue was not elaborated upon in the Tribunal's final decision.

5. Admissibility of CENVAT Credit for Works Contract Services:
The Commissioner (Appeals) had also denied the refund on the grounds that the Rajasthan Housing Board (RHB) might have taken CENVAT credit for works contract services. The Tribunal found this reasoning conjectural and not based on facts, as it was not a ground mentioned in the show cause notice.

Conclusion:
The Tribunal set aside the order dated 16.02.2016, allowing all four service tax appeals and granting the refund claims. The Tribunal concluded that the construction of individual/independent residential houses did not attract service tax, the refund was not hit by unjust enrichment, and the denial of refund on the grounds of potential CENVAT credit utilization by RHB was unfounded.

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