2025 (5) TMI 575 - AT - Service Tax

Service tax refund denied for works contract awarded after March 1, 2015 cut-off date under Notification 09/2016-ST

Nikunj Mangubhai Patel Versus Principal Commissioner of CGST & Central Excise, Ahmedabad

Nikunj Mangubhai Patel Versus Principal Commissioner of CGST & Central Excise, Ahmedabad - TMI 1. ISSUES PRESENTED and CONSIDERED- Whether the appellant is entitled to claim refund of service tax paid on works contract services under Notification No. 09/2016-ST dated 01.03.2016 and Section 102 of the Finance Act, 2016, given that the contract was awarded on 11.03.2015, i.e., after the stipulated cut-off date of 01.03.2015.- Whether the date of submission of tender (10.02.2015) or the date of opening of financial bid (19.02.2015) can be treated as the effective date of contract award for the purposes of eligibility for refund under the relevant provisions.- Interpretation and applicability of Section 102 of the Finance Act, 2016, and Notification No. 09/2016-ST dated 01.03.2016 in the context of refund claims for service tax paid on government works contracts.2. ISSUE-WISE DETAILED ANALYSISIssue 1: Eligibility for refund of service tax under Section 102 of the Finance Act, 2016 and Notification No. 09/2016-ST dated 01.03.2016 based on contract award dateRelevant legal framework and precedents: Section 102 of the Finance Act, 2016, contained a non-obstante clause and prescribed that refund claims for service tax paid on works contracts would be allowed only if the contract was awarded prior to 01.03.2015. Notification No. 09/2016-ST dated 01.03.2016 further clarified the exemption conditions linked to the date of contract award. Prior exemption under Notification No. 12/2012-ST dated 20.06.2012 was withdrawn effective 01.04.2015 but restored for contracts awarded before that date via Notification No. 09/2016-ST.Court's interpretation and reasoning: The Court emphasized that the cut-off date of 01.03.2015 is the decisive factor in determining eligibility for refund. The non-obstante clause in Section 102 indicates that any contrary provisions are overridden by this specific limitation. The date of contract award, not the tender submission or bid opening date, governs the entitlement.Key evidence and findings: The appellant was awarded the contract on 11.03.2015, which is eleven days beyond the prescribed date of 01.03.2015. The refund claim of Rs. 7,82,919/- was rejected on this ground by the adjudicating authority and upheld by the Commissioner (Appeals).Application of law to facts: Since the contract was awarded after the stipulated date, the appellant does not qualify for the refund under the relevant provisions, notwithstanding the fact that the tender was submitted earlier or that service tax was paid during the financial year 2015-16.Treatment of competing arguments: The appellant argued that since the tender was submitted on 10.02.2015 and the financial bid was opened on 19.02.2015, the contract should be deemed awarded before 01.03.2015, thus qualifying for refund. The Court rejected this, holding that neither tender submission nor bid opening constitutes contract award. The contract award date is the date when the contract is formally granted by the competent authority, which in this case was 11.03.2015.Conclusions: The appellant is not eligible for refund as the contract award date falls beyond the prescribed cut-off date. The refund claim rightly stands rejected.Issue 2: Whether the financial bid opening date can be treated as deemed contract award dateRelevant legal framework and precedents: There is no provision in the Finance Act or related notifications that treats the financial bid opening date as the date of contract award. Contract award is a formal act distinct from tender submission or bid evaluation.Court's interpretation and reasoning: The Court found the appellant's contention that the financial bid opening date (19.02.2015) should be treated as the contract award date to be without legal basis or substance. The Court noted that no term or condition can be changed after the contract award, but this does not imply that bid opening is equivalent to contract award.Key evidence and findings: The appellant failed to demonstrate any legal or factual basis for treating the financial bid opening as contract award. The contract was formally awarded on 11.03.2015.Application of law to facts: The Court applied the clear statutory language and procedural understanding that contract award date is the relevant date for refund eligibility, not the bid opening date.Treatment of competing arguments: The appellant's argument was dismissed as illogical and unsupported by the statutory framework or procedural norms.Conclusions: The financial bid opening date cannot be treated as the contract award date for the purposes of refund eligibility.Issue 3: Interpretation of the non-obstante clause in Section 102 of the Finance Act, 2016Relevant legal framework and precedents: The non-obstante clause in Section 102 indicates that the provisions contained therein override any other conflicting provisions in the Finance Act or related notifications.Court's interpretation and reasoning: The Court relied on this clause to affirm that the specific limitation of contract award date in Section 102 takes precedence over any other provision or argument put forth by the appellant.Key evidence and findings: The refund claim was filed under Section 102, which explicitly restricts refund eligibility to contracts awarded before 01.03.2015.Application of law to facts: The Court applied the non-obstante clause to reject any arguments based on tender submission date or bid opening date, as they conflict with the express statutory limitation.Treatment of competing arguments: The appellant's reliance on tender submission and bid opening was effectively negated by the overriding effect of the non-obstante clause.Conclusions: The non-obstante clause decisively limits refund eligibility to contracts awarded before 01.03.2015.3. SIGNIFICANT HOLDINGS'The limiting factor for finalizing the contract in this case is the date 01.03.2015. The argument of the appellant has no force that the last date for filing tender was 10.02.2015 and they have filed the tender before that date and therefore, they have fulfilled the conditions of Notification number 09/2016-ST dated 01.03.2016 read with Section 102 of the Finance Act, 2016. In fact the contract was awarded to the appellant on 11.03.2015, therefore, they are not eligible to get the benefit of Notification No. 9/2016-ST dated 01.03.2016 as prescribed in the notification.''The argument of the appellant also cannot be accepted that their financial bid was qualified on 19.02.2015 therefore, it can be treated as deemed contract and it can be considered having been allotted to them on 19.02.2015 which is earlier to 01.03.2015.''The learned adjudicating authority has rightly rejected the refund claim filed by the appellant and the appeal has been rightly dismissed by the learned Commissioner (Appeals). Therefore, the impugned order passed by the learned Commissioner is liable to be upheld and the appeal is liable to be dismissed.'Core principles established include:The date of contract award is the determinative date for eligibility of refund under Section 102 of the Finance Act, 2016 and related notifications.Tender submission date or financial bid opening date do not constitute contract award dates.The non-obstante clause in Section 102 overrides any conflicting provisions, firmly establishing the cut-off date for refund claims.Refund claims filed for contracts awarded after 01.03.2015 are not maintainable, notwithstanding payment of service tax or other procedural factors.Final determination: The appellant's refund claim was correctly rejected as the contract was awarded on 11.03.2015, beyond the prescribed date of 01.03.2015. The appeal against the rejection was rightly dismissed.