Transitional refund of service tax on cancelled bookings held recoverable when no taxable service ultimately arose.

Refund of service tax paid on booking advances, later returned on cancellation of the allotment, was held not to be barred by limitation because the claim was treated as falling within the transitional refund framework under the CGST Act rather than the one-year limit under section 11B of the Central Excise Act. Where the underlying service transaction never materialised and the consideration was refunded, no taxable service survived and the amount could not be retained by the Revenue. The Tribunal accordingly treated the excess tax as refundable and granted consequential relief.

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Issues: (i) Whether the refund claims for service tax paid on booking advances, later refunded on cancellation of the allotment, were barred by limitation under section 11B of the Central Excise Act, 1944. (ii) Whether refund was admissible where the underlying service transaction did not materialise and the claim arose in the post-GST regime.

Issue (i): Whether the refund claims for service tax paid on booking advances, later refunded on cancellation of the allotment, were barred by limitation under section 11B of the Central Excise Act, 1944.

Analysis: The refund was held to be relatable to a claim under section 142(5) of the Central Goods and Services Tax Act, 2017, and not to be defeated by the one-year period under section 11B of the Central Excise Act, 1944. The claim arose from cancellation of the booking and refund of the amount to the allottee, and the Tribunal accepted that the relevant limitation could not be computed from the original date of tax payment in the manner adopted by the lower authorities.

Conclusion: The refund claims were not time barred.

Issue (ii): Whether refund was admissible where the underlying service transaction did not materialise and the claim arose in the post-GST regime.

Analysis: On cancellation of the booking and refund of the consideration, no taxable service survived. Amounts retained by the department without authority of law could only be treated as a deposit, and the appellant's right to refund was protected by section 174 of the Central Goods and Services Tax Act, 2017 and section 142(5) of that Act. The Tribunal also treated the excess tax paid on an ultimately unprovided service as refundable.

Conclusion: Refund was admissible and the appellant was entitled to consequential relief.

Final Conclusion: The appeal succeeded, and the appellant's refund claim was allowed with consequential relief under the applicable transitional and refund provisions.

Ratio Decidendi: Where consideration is refunded on cancellation of the underlying transaction and no taxable service is ultimately provided, the amount earlier paid as service tax cannot be retained by the Revenue and is refundable under the transitional refund framework.

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