Where service tax has been paid wrongly under old category considering as taxable - but statute makes the same taxable under a new category - whether refund claim is admissible? "

Honorable tribunal in an important judgment (reported in 2007 -TMI - 1724 - CESTAT, NEW DELHI) has held that where the services were not taxable before a particular date, but service tax was paid wrongly considering that the same was taxable, refund should be allowed.

The ratio of this decision is squarely application on the provider of services involved in the execution of works contract.

The services involved in the contracts in the nature of works contract has been brought into tax net with effect from 1-6-2007 vide Finance Act, 2007.

The new category (zzzza) has been introduced without making any change in the existing categories. Therefore, it can be safely said that a service provider who has paid the service tax on these services before 1-6-2007, would be eligible for file a refund claim with the department.

Refund claim can be filed if the conditions of section of Section 11B of Central Excise Act, 1944 (As extended to Chapter V of the Finance Act, 1994 - Service Tax vide section 83)

Refund can be filed on a plain paper / letter head of the applicant with the Assistant Commissioner / Deputy Commissioner of central excise as the case may be.

Refund for wrongly paid service tax: mistaken pre taxation payments on works contracts may be reclaimed under statutory refund procedures. A refund is available where service tax was paid before a service category became taxable; amounts paid under the mistaken belief of taxable status for services now classed as works contract may be reclaimed. Claimants must comply with the statutory refund procedure and submit a written claim to the Assistant or Deputy Commissioner of Central Excise, on plain paper or letterhead, meeting the statutory conditions for refund.