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of <h1>Appeal allowed; refund ordered as activity from 2006-10 held Renting of Immovable Property, not Airport Service - Section 11B satisfied</h1> <h3>M/s Airport Retail Private Limited Versus Commissioner of Service Tax, Respondent Gurgaon-II</h3> M/s Airport Retail Private Limited Versus Commissioner of Service Tax, Respondent Gurgaon-II - TMI ISSUES PRESENTED AND CONSIDERED 1. Whether the licence granted by the airport lessee to run duty free shops is taxable as 'airport service' under clause 65(105)(zzm) of the Finance Act, 1994 for the periods in dispute, or is more appropriately classified as 'renting or letting of immovable property' under clause 65(105)(zzzz) after applying Section 65A? 2. Whether retrospective amendment(s) and Circulars affecting the taxable scope (in particular effect from 01.06.2007 and 01.07.2010) alter the classification and taxability for the relevant periods. 3. Whether a refund claim filed under Section 11B of the Central Excise Act read with Section 83 of the Finance Act, 1994 is maintainable: (a) as to timeliness (relevant date and one-year limitation) and (b) as to non-passage of incidence of service tax to any other person (unjust enrichment). 4. Whether rejection of the refund claim on the ground of failure to fulfil classification is sustainable where the classification issue has been finally determined by the High Court and accepted by the Department. ISSUE-WISE DETAILED ANALYSIS Issue 1 - Classification: Airport Service (zzm) v. Renting of Immovable Property (zzzz) Legal framework: Clause 65(105)(zzm) defines 'airport service'; clause 65(105)(zzzz) defines 'renting or letting of immovable property'; Section 65A(2) mandates that the sub-clause providing the most specific description is preferred over more general descriptions for classification. Precedent treatment: The Delhi High Court adjudicated the same licence arrangement and held that the licence could not be taxed under (zzm) prior to 01.07.2010 and that, after retrospective amendment, (zzzz) is the more appropriate entry for the period from 01.06.2007 to 2009-10. The judgment relied on prior authority (Home Solutions - I) and a Government Circular dated 17.09.2004 clarifying that renting or letting out was not part of airport services prior to certain dates. Interpretation and reasoning: The Court applied Section 65A(2), determining that if the transaction is characterized as letting of immovable property, clause (zzzz) is the specific entry and displaces (zzm). The Tribunal noted that the High Court analysed the temporal applicability of provisions and amendments, concluding that prior to 01.06/01.07.2007 renting was not exigible, and w.e.f. 01.06.2007 retrospective amendment made (zzzz) the appropriate entry until legislative exclusion of Section 65A recourse w.e.f. 01.07.2010. Ratio vs. Obiter: Ratio - application of Section 65A(2) to prefer (zzzz) over (zzm) for the relevant pre-01.07.2010 period where the transaction is essentially letting of immovable property. Obiter - contextual references to Circulars and Home Solutions authority supporting temporal non-taxability. Conclusion: For the period 2006-07 (w.e.f. 01.06.2007) to 2009-10 and April-June 2010, the more appropriate taxing entry is (zzzz) (renting of immovable property); the activity cannot be sustained as taxable under (zzm) (airport service) for the periods in dispute. The Tribunal accepts the High Court's classification and observes departmental acceptance thereof. Issue 2 - Effect of Retrospective Amendments and Temporal Applicability Legal framework: Retrospective amendments to taxable entries and the exclusion of recourse to Section 65A from 01.07.2010 affect which sub-clause governs classification for specific date ranges. Precedent treatment: The High Court considered the dates on which clauses and amendments became operative and concluded different taxability regimes for pre-01.06/01.07.2007, 01.06.2007-30.06.2010, and w.e.f. 01.07.2010. Interpretation and reasoning: The Tribunal follows the High Court's temporal mapping: (i) prior to 01.06/01.07.2007 renting not exigible (Circular and Home Solutions); (ii) retrospective operation of amendment makes (zzzz) applicable from 01.06.2007; (iii) w.e.f. 01.07.2010 the legislative scheme prevents recourse to Section 65A, making (zzm) applicable thereafter. The Tribunal treats these temporal distinctions as decisive for the refund periods claimed. Ratio vs. Obiter: Ratio - temporal application of taxing entries governs taxability and classification; Obiter - narrative on legislative history and administrative circulars supporting temporal conclusions. Conclusion: Temporal application of amendments and Section 65A results in (zzzz) being the proper entry for the claimed periods; therefore collection/invoicing under (zzm) for those periods was incorrect. Issue 3 - Maintainability of Refund under Section 11B/Section 83: Timeliness Legal framework: Section 11B provides refund where duty becomes refundable as consequence of judgment or order of an appellate authority; the claim must be filed within one year from the 'relevant date' as defined (including date of judgment). Precedent treatment: The High Court granted liberty to file refund application; the Tribunal considered the definition of 'relevant date' and the date on which liability became refundable by virtue of the Court's judgment. Interpretation and reasoning: The Tribunal identifies the relevant date as the date of the High Court judgment (30.07.2014). The refund was filed on 03.07.2015 (filed pursuant to liberty granted and within one year of the relevant date). The Tribunal holds the timeliness condition under Section 11B satisfied. Ratio vs. Obiter: Ratio - a refund claim filed within one year from the appellate judgment date satisfies the limitation requirement of Section 11B where the duty became refundable as a consequence of that judgment. Conclusion: The refund claim was filed within the statutory period and is timely under Section 11B/Section 83. Issue 4 - Maintainability of Refund: Non-passage of Incidence / Unjust Enrichment Legal framework: Section 11B requires that the incidence of duty has not been passed on to any other person; refund may be denied if the claimant has passed on the tax burden. Precedent treatment: The appellant relied on documentary confirmation from the service-provider (airport lessee) that service tax collected from the appellant was deposited with the department and that the service tax liability for the relevant period stood discharged by the provider. Interpretation and reasoning: The Tribunal places weight on the letter/confirmation from the lessee (DIAL) confirming payment of service tax collected from the appellant to the department, and on departmental record confirming completion of DIAL's assessments. On these facts the Tribunal finds the appellant has not passed on the incidence to others and therefore there is no unjust enrichment bar to refund. Ratio vs. Obiter: Ratio - documentary confirmation that the service-provider has deposited collected tax and completed assessment supports finding that claimant did not pass on incidence; Obiter - commentary on sufficiency of the provider's letter as evidence in absence of contrary proof. Conclusion: The non-passage condition of Section 11B is fulfilled; refund entitlement is not barred by unjust enrichment. Issue 5 - Legitimacy of Rejecting Refund Solely on Classification Grounds After Final Determination by High Court Legal framework: Principles of judicial protocol and finality of judgments require administrative/quasi-judicial authorities to give effect to court determinations; refund claims filed pursuant to court liberty must be considered on merits consistent with judicial findings. Precedent treatment: The High Court had adjudicated classification and granted liberty to seek refund; the Department has not appealed that High Court decision to the Supreme Court and has accepted the position. Interpretation and reasoning: The Tribunal notes that rejection of the refund by original and appellate authorities on the ground of classification ignored the High Court determination and the departmental acquiescence. Given the High Court's final ruling and the appellant's compliance with statutory preconditions for refund, refusal on classification alone is unsustainable and contrary to judicial protocol. Ratio vs. Obiter: Ratio - once classification has been finally determined by a competent Court and accepted by the Department, rejecting a refund claim on the same ground is impermissible; Obiter - remarks on administrative obligation to render assistance as earlier undertaken by the lessee. Conclusion: The rejection of the refund claim on classification grounds is unsustainable; the refund claim must be allowed in accordance with the Court's decision and statutory requirements. Final Disposition (as derived from conclusions) Both statutory conditions for refund under Section 11B/Section 83 (timeliness and non-passage of incidence) are satisfied. The classification issue in favour of 'renting or letting of immovable property' for the periods in dispute has been finally determined by the High Court and accepted by the Department. Consequently, rejection of the refund claim on classification grounds was unsustainable and the refund is to be allowed.
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