TaxTMI 
TaxTMI 
2022 (12) TMI 907
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.... Engineering Pvt. Ltd. The said companies undertook construction of some building activities and other civil structures for the appellant. It is the case of the appellant that they misunderstood the invoice details given by the service providers and discharged service tax liability on the balance 60% of the total amount charged for the services. They paid service tax on 31.03.2014. They later came to know that they need not pay 60% of the total consideration and that as the works of construction were in the nature of original works, the service provider has to pay only 40% of the entire consideration. Meanwhile, they had taken credit of the service tax paid by them on 29.04.2014, 22.05.2014 and 30.06.2014. During audit, it was pointed out to them that construction services are not eligible for cenvat credit and that they have to reverse the credit availed on the service tax paid by them for these services. Therefore, they reversed the credit on 28.02.2015. On coming to know that they are not liable to pay any amount of service tax on the construction services provided to them, they filed refund claims on 07.04.2015 for refund of the service tax paid by them under mistake. After due....
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....y the service provider relatable to supply of labour and services; (c) where value added tax or sales tax has been paid or payable on the actual value of property in goods transferred in the execution of the works contract, then, such value adopted for the purposes of payment of value added tax or sales tax, shall be taken as the value of property in goods transferred in the execution of the said works contract for determination of the value of service portion in the execution of works contract under this clause; (ii) Where the value has not been determined under clause (i), the person liable to pay tax on the service portion involved in the execution of the works contract shall determine the service tax payable in the following manner, namely :- (A) in case of works contracts entered into for execution of original works, service tax shall be payable on forty per cent of the total amount charged for the works contract;..." (emphasis supplied) 3.2 It is argued by the Counsel for the appellant that when the construction works are in the nature of original works, the service provider has to pay only service tax @ 40% of the consideration received by him. In the present case,....
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....ion envisaged in Section 11B would not apply and the appellant is eligible for refund. 3.6 Further in SCN No.5/2015 dated 12.06.2015 there is no allegation of limitation even though refund was filed beyond the time of one year. In SCN No.4/2015 dt. 12.6.2015, the ground alleged for rejection of refund is that the appellant has not passed the test of unjust enrichment. It is argued by the Ld. Counsel that tax having been paid under reverse charge mechanism, there is no possibility of passing on the incidence of tax. The authorities below have wrongly held that the service provided being in the nature of construction of building, the same goes into the capital assets of the appellant and therefore the incidence of tax has to be construed to be passed on to the customer. To counter this, Ld. Counsel relied upon the decision in the case of Sunrise Spices Ltd. Vs CCE& ST Jaipur - 2019 (4) TMI CESTAT Chennai and Gurnani Infra Developers Pvt. Ltd. Vs CGST Jaipur - 2020 (37) G.S.T.L 318 (Tri.-Del.) to argue that when the service tax is paid by mistake under reverse charge mechanism, the issue of unjust enrichment does not arise. It is also submitted by the counsel that they had produced C....
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....ed Balance Sheet to prove that the amount has been maintained as 'receivable' in their balance sheet. The decision in the case of Rajasthan Spinning & Weaving Mills Ltd. Vs CCE Jaipur - 2006 (194) E.L.T 254 (Tri.-Del.) was relied by Ld. A.R to argue that it is not sufficient to merely furnish Chartered Accountant certificate to prove that the incidence of duty has not been passed to another. When the balance sheet and other related documents are not produced by the appellant, the Chartered Accountant certificate solely cannot be relied. She prayed that appeals may be dismissed. 5. Heard both sides. 6. The refund claims have been rejected on two grounds firstly, on the ground of limitation and secondly on the ground of unjust enrichment. 7. The contention of the appellant is that the tax having been paid under mistake, the period of limitation as envisaged in Section 11B will not apply. Interestingly, it has to be noted that the adjudicating authority as per OIO No.34/2015 dt. 30.09.2015 has held that tax has indeed been paid by mistake by the appellant. The adjudicating authority has even sanctioned the refund. However, the amount was ordered to be credited to the Consumer Welfa....
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....n the consideration received by them. It is clear from the invoice, a scanned copy of which is reproduced as under : In the above invoice, Sl.No.7 shows that service tax has been collected from the appellant @ 4.944% of the total amount charged which comes to Rs.2,65,339.48. It is the case of the appellant that as the invoice showed only collection of tax on 40% of the consideration paid by them, they were under the impression that they have to pay service tax for the balance 60% of the consideration. Thus they paid tax on the balance 60% as their own liability. This has been clearly discussed by the original authority in para 6.1 of the order No.33/2015 dt. 31.08.2015. I have to say that it is clearly brought out from evidence that appellant has paid the tax by mistake. Moreover, the original authority vide OIO No.34/2015 dt. 30.09.2015 has held that limitation will not apply as the tax has been paid by mistake. Taking note of these facts, I hold that tax has been paid by mistake by the appellant. The Hon'ble jurisdictional High Court in the case of 3E Infotech (supra) has held that when tax has been paid by mistake, the limitation envisaged in Section 11B will not apply. The rel....
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.... the opinion, that when service tax is paid by mistake a claim for refund cannot be barred by limitation, merely because the period of limitation under Section 11B had expired. Such a position would be contrary to the law laid down by the Hon'ble Apex Court, and therefore we have no hesitation in holding that the claim of the Assessee for a sum of Rs. 4,39,683/- cannot be barred by limitation, and ought to be refunded. 14. There is no doubt in our minds, that if the Revenue is allowed to keep the excess service tax paid, it would not be proper, and against the tenets of Article 265 of the Constitution of India. On the facts and circumstances of this case, we deem it appropriate to pass the following directions :- (a) The Application under Section 11B cannot be rejected on the ground that is barred by limitation, provided for under Section. (b) The claim for return of money must be considered by the authorities. 15. This Civil Miscellaneous Appeal is ordered accordingly. There shall be no order as to costs." After appreciating the facts and following the decision (supra), I hold that rejection of refund claim on the ground of limitation is not sustainable. 9. The second gr....
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.... amount which was paid without having a liability to pay. There was no authority of law to collect such amount from the appellant. 12. The Ld. A.R has strongly argued that as the work contract services were availed for constructing building / civil structure which is used in manufacture of finished goods, the amount must be considered to be factored in the cost of production. That therefore the incidence of tax has been passed on. The decision in the case of Grasim Industries (supra) does not apply to the facts of this case, as in the said case, capital goods were imported by manufacturer who used these goods for manufacture of finished products. The duty paid on capital goods on import was sought by the manufacturer to be refunded. When there is no liability to pay tax under the Finance Act, 1944 and the amount is not mentioned as tax in any invoice or like document, the amount paid cannot be considered to have the character of tax. The amount paid falls outside the purview of the enactment as discussed in para-10 of the judgement in the case of 3E Infotech (supra) wherein the Hon'ble High Court has relied on the judgment passed by Hon'ble Gujarat High Court. 13. Moreover, in th....