Refund under Section 102: mandatory for contracts entered before the cut off; Entry 12A exemption applies to government construction services.

Whether construction of parking lots and an educational institute for municipal/local authorities falls within Notification Entry No.12A was decided by applying the contract date criterion and the commercial purpose test: contracts entered before the cut off qualify and nominal user charges do not make public utility works commercial, so exemption applies; whether a refund claim for tax collected on parking construction was rejectable was decided by applying the mandatory statutory refund rule tied to contract date, documentary sufficiency and unrebutted accountant certification on non passing on, resulting in allowance of the refund claim.

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Issues: (i) Whether the appellant is eligible for exemption under Entry No. 12A of Notification No. 25/2012-ST dated 20.06.2012 for services rendered to government/local authority; (ii) Whether the appellant's refund claim of service tax paid on construction of parking facilities for local authority was rightly rejected.

Issue (i): Whether services by way of construction of parking lots and an educational institute provided to government/local authority qualify for Entry No. 12A of Notification No. 25/2012-ST dated 20.06.2012.

Analysis: Entry No. 12A exempts construction services for civil structures meant predominantly for use other than commerce or industry and structures meant predominantly for educational establishments, where the contract was entered into prior to 01.03.2015. Section 102 of the Finance Act, 1994 provides retrospective exemption for services provided to government/local authority during 01.04.2015 to 29.02.2016 where contracts were entered into before 01.03.2015 and mandates refund of service tax so collected. The nature of an activity is commercial only if carried on with profit motive; nominal user charges for maintenance do not convert a government public-utility function into commercial activity. The parking works were commissioned by municipal/local authorities pursuant to statutory/public welfare functions under Article 243W and related municipal law; the school construction falls within structures predominantly for educational use. The contracts for the projects were executed prior to 01.03.2015 and no stamping requirement was shown to displace eligibility.

Conclusion: Issue (i) is decided in favour of the appellant; the construction services qualify for exemption under Entry No. 12A of Notification No. 25/2012-ST dated 20.06.2012 read with Section 102 of the Finance Act, 1994.

Issue (ii): Whether rejection of the refund claim for service tax paid on construction of parking facilities was justified on grounds of commercial character, non-production of documents, or passing on of tax.

Analysis: Section 102(2) makes refund mandatory for tax collected during the relevant period for services meeting the contract-date criterion. Documentary objections based on revised sanction dates ignored the original contract dates evidenced within the record; no evidence established a requirement of stamp duty that would defeat the contract-date criterion. Certification by a chartered accountant that incidence of tax was not passed on, supported by credit notes/refunds, was not rebutted by the department. Precedents and principles distinguishing the special statutory refund under Section 102 from ordinary refund regimes were applied to invalidate reliance on unrelated authorities concerning general refund principles.

Conclusion: Issue (ii) is decided in favour of the appellant; the rejection of the refund claim for construction of parking facilities is set aside and refund is mandated under Section 102 of the Finance Act, 1994.

Final Conclusion: The impugned order rejecting the refund claim is set aside and the appeal is allowed, with the appellant entitled to refund of service tax paid for the period 01.04.2015 to 29.02.2016 in respect of construction services falling within Entry No. 12A of Notification No. 25/2012-ST dated 20.06.2012, subject to compliance with statutory claim procedure.

Ratio Decidendi: Section 102 of the Finance Act, 1994 mandates mandatory refund of service tax collected for services to government/local authorities during 01.04.2015-29.02.2016 where contracts were entered into before 01.03.2015; nominal user charges do not convert a government public-utility construction into a commercial activity for the purposes of Entry No. 12A of Notification No. 25/2012-ST dated 20.06.2012.

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