Refund allowed for service tax paid on cancelled property bookings under Section 142(5) CGST Act 2017

CESTAT Allahabad allowed the appellant's refund claim for service tax paid on cancelled bookings. The appellant had collected and deposited service tax on property bookings, but when customers cancelled and received full refunds including service tax, no service was actually provided. The tribunal held that Section 11B Central Excise Act time limitations cannot reject refund claims under Section 142(5) CGST Act 2017. Since no service was rendered after cancellation, the appellant was entitled to refund the excess service tax paid, with such right protected under Section 174 CGST Act.

---

---

Issues Involved:

a) Whether the refund applications filed by the Appellant were proper and accordingly, whether the refund of the amounts claimed by the Appellant ought to have been grantedRs.
b) Whether the Ld. Commissioner (Appeals) was correct in observing that there is no provision under the GST Laws, which provides for refund of the service tax deposited by the AppellantRs.

Summary:

Issue a: Refund Applications and Entitlement

The Appellant filed refund applications for Rs.12,09,213/- paid as service tax on a cancelled booking. The learned Commissioner (Appeals) dismissed the refund claim as time-barred under Section 11B of the Central Excise Act, 1944, which prescribes a one-year limitation period from the date of payment of duty. The Appellant argued that the limitation period should start from the date of refund to the allottee, citing the Supreme Court's decision in Union of India vs. ITC Ltd. and the Gujarat High Court's decision in Indo-Nippon Chemicals Co. Ltd. vs. Union of India. The Tribunal held that the refund applications were not time-barred, as the time limit under Section 11B cannot be invoked to reject a refund claim filed under Section 142(5) of the CGST Act, 2017. The Tribunal found that the service tax paid by the Appellant became merely a deposit upon cancellation of the booking, and thus, the Appellant was entitled to a refund.

Issue b: Provision under GST Laws for Refund

The Tribunal examined whether it had jurisdiction to entertain appeals against orders passed under Section 142 of the CGST Act, 2017. The Larger Bench of the Tribunal had previously decided that appeals against such orders lie with the Tribunal. The Tribunal noted that the Appellant's right to a refund of the excess service tax paid was protected under Section 174 of the CGST Act, 2017, and that Section 142(5) of the CGST Act, 2017, provides for refunds of taxes paid under erstwhile laws. The Tribunal concluded that the Appellant was entitled to a refund and allowed the appeal with consequential relief.

(Order pronounced in open court on - 11th March, 2024)

---