No Limitation Applicable For Refund Amount Lying With Dept. Having The Nature Of Revenue Deposit: CESTAT

The appellant/assessee is in the business of providing services under the category of "Construction Services", including commercial/industrial building or civil structure, works contract service, etc. The appellant is executing work for the state government, being CPWD and PWD, for which they were entitled to exemption under Mega Exemption Notification No.25/2012-ST.

As the exemption lapsed w.e.f. 1.4.2015, the appellant started depositing the tax. Subsequently, the government extended the exemption benefit by making retrospective amendments.

As per section 102 of the Finance Act, 1994, no service tax can be levied or collected for the period commencing from the 1st day of April, 2015 and ending on the 29th day of February, 2016 (both days inclusive) in respect of the taxable services provided to the government, a local authority or a government authority. Construction, erection, commissioning, installation, completion, fitting out, repair, maintenance, renovation, or alteration of civil structures or any other original works intended primarily for use other than commerce, industry, or any other business or profession are examples of services.

The appellant found that it was entitled to a refund for the services provided to government authorities, for which tax had already been deposited. However, the exemption was extended with retrospective effect and applied for a refund by dispatching the refund application by speed post.

The postal envelope sent by speed post containing the refund applications was returned by postal authorities on November 25, 2016 with the remarks "refused to accept" by the Department. Thereafter, the appellant filed the refund application in person on December 5, 2016.

During the course of the personal hearing, the appellant produced the original envelopes. However, the Adjudicating Authority doubted the filing of the refund application by speed post on 8.11.2016 and considered the date of filing as 5.12.2016, and held that the refund claim was barred by limitation. The Adjudicating Authority observed that from perusal of the envelope, it was difficult to ascertain as to which office applications were sent through speed post since the Service Tax Division was not clearly visible. The refund applications were rejected on the ground of limitation.

The appellant submitted that ​​retrospective exemption be given with respect to the specified services, service tax was not payable on the specified services, and the appellant is entitled to a refund of the service tax paid during this period. Thus, the amount of tax deposited has taken the character of a "revenue deposit" by operation of law. There are no restrictions on the refund of revenue deposits.

The court noted that there was sufficient evidence on record that the appellant had dispatched the refund applications by speed post on 8.11.2016, which were returned by the Department for refusing to accept them. The appellant had dispatched the refund application well within the period of limitation, which was expiring on November 14, 2016. The dispatch on 8.11.2016 is also proved by the fact that the appellant has, soon after the receipt of the mail with the remark "refused to accept", again filed the application by hand on 5.12.2011.

"I hold that the refund application has been filed within the limitation as prescribed under Section 102(3) of the Finance Act. I further hold that in view of Section 102(1) and (2) of the Finance Act, the service tax deposited by the appellant has taken the changed character of a revenue deposit by operation of law as the Government of India extended exemption with retrospective effect vide notification no.9/2016-ST read with Section 102 introduced by the Finance Act, 2016. Thus, the rejection of refund by revenue is also hit by Article 265 of the Constitution of India," the CESTAT said.

Case Title: M/s. Aadhar Stumbh Township Pvt.Ltd. Versus Commissioner of Central Excise & Central Goods & Service Tax Commissionerate

Citation: Service Tax Appeal No.50046 of 2020 (SM)

Dated: 08.06.2022

Counsel For Appellant: Advocate Rajesh Chhibber

Counsel For Respondent: Authorised Representative Ravi Kapoor

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