M/S Chalet Hotels LTD vs. Commissioner Of Central Tax
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Cause title — parties, addresses and appearances
JUDGMENT
This appeal by the assessee has been admitted to consider the following substantial questions of law:
Whether the Tribunal is correct in law in rejecting the claim for refund of Service Tax paid against service to be provided which was not so provided when the advances were returned to the customers, the Appellant was eligible to take Credit of the said amount in terms of Rule 6(3) of the Service Tax Rules, 1994 and was eligible for refund of such credit in cash in terms of the transitional provisions contained in Section 142 (3) & (5) of the CGST Act, 2017?
Whether the Tribunal is correct in law in rejecting the claim for refund of Service Tax when no taxable service was provided and by completely ignoring the provisions of Section 76 of the Finance Act, 1994 and Rule 6(3) of the Service Tax Rules, 1994 and relying only on the
3 limitation period prescribed in Section 11B of the Central Excise Act, 1944 as made applicable to Service Tax?
Whether the Tribunal is correct in law in rejecting the refund of Service Tax when no taxable service was provided and the payment of service tax was a mistake of law and in which case the limitation provisions of Section 11 B of the Central Excise Act, 1944 as made applicable to Service Tax are not applicable as per the settled law?
Whether the relevant date for computation of the limitation period under Section 11 B of the Central Excise Act, 1944 should be reckoned from the date of cancellation of the agreement to provide the taxable service since the cause of action for refund of service tax arises only on cancellation of the agreement to provide taxable service?
Sri Nagaraja, learned Advocate for the appellant does not press substantial questions of law No.2, 3 and 4. 4
Brief facts of the case are, appellant, a builder, had undertaken to develop a residential complex with each tower comprising of 25 floors. He had obtained ‘No Objection Certificate’ (NOC) from Hindustan Aeronautics Limited (HAL) and Bruhat Bengaluru Mahanagara Palike (BBMP). HAL revoked the ‘No Objection Certificate’ vide communication dated 16.08.2013. Appellant challenged the same in W.P.No.37571/2013 in this Court and the same has been allowed on 29.05.2020. In the meanwhile, three persons sought cancellation of the agreements. They were cancelled and the appellant refunded the money. The details of transactions are as follows:
Sl. No. Name Flat No. Cancellation Date Invoice Value Tax Deposited 1 Sandeep Ballal VIVBFFF0602 31.07.2017 1,77,12,724/- 4,75,205/- 2 Arjun Imtiaz and Mohammed Imtiaz VIVBFH0701 15.07.2017 2,23,39,394/- 6,57,538/- 3 N S Vinodh And Sheela Vinodh VIVBFC1101 15.07.2017 3,04,51,451/- 7,93,252/-
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On 21.8.2017, appellant submitted a refund application. By Order-in-Original dated 07.08.2018 the Assistant Commissioner, ED-I, GST, East Commissionerate, Bengaluru, rejected the claim holding that the refund claimed was hit by limitation as per Section 11B of the Central Excise Act, 1944 and the same was confirmed in Order-in-Appeal dated 01.02.2019 passed by the Commissioner, Appeals-I. On further appeal, the CESTAT has dismissed the same by Final Order bearing No.20467/2019, dated 12.6.2019. 5. Sri Nagaraj submitted that in terms of Section 142(5) of the GST Act, 2017, any claim for refund could be decided notwithstanding anything contained with reference to Section 11B of the Central Excise Act, 1944. In support of his contention, he placed reliance on Commissioner of Central Excise & Sales Tax, Jalandhar v. Janta Travels (P) Ltd., [2009(13) STR 488 (Punjab and Haryana)].
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Smt Vanitha for the Revenue adverted to India, [(1997)5 SCC 536] and therefore, this appeal does not merit consideration.
The question that arise for consideration in this Appeal is, “Whether the view taken by the Assistant Commissioner in Order-in-Original that Section 11B is attracted in processing the application for refund is justified ?”
We have carefully considered the point that arises for consideration.
Admittedly, the GST Act has come into force w.e.f., 01.07.2017. It is not in dispute that agreements with three prospective purchasers have been cancelled during 2017. The writ petition filed against cancellation of
7 ‘No Objection’ by HAL has been disposed on 29.5.2020. It is obvious that if a project does not commence, the flat buyers might seek cancellation of agreements as they cannot wait indefinitely. The refunds have been made in July 2017 and the application has been filed in August, 2017. 10. Section 142(5) of the GST Act reads as follows: “(5) Every claim filed by a person after the appointed day for refund of tax paid under the existing law in respect of services not provided shall be disposed of in accordance with the provisions of existing law and any amount eventually accruing to him shall be paid in cash, notwithstanding anything to the contrary contained under the provisions of existing law other than the provisions of sub-section (2) of section 11B of the Central Excise Act, 1944.” (emphasis supplied)
The above provision makes it clear that the claim for refund must be processed notwithstanding
8 anything contrary contained in Section 11B of the Central Excise Act.
It may be relevant to record that in the case of M/s. Shiv Shankar Dal Mills etc. etc., v. State of Haryana and others etc., (AIR 1980 SC 1037), the Hon'ble Supreme Court of India speaking through Justice Krishna Iyer has held thus:
“This big bunch of writ petitions shows how litigation has a habit of proliferation in our processual system since cases are considered in isolation, not in their comprehensive implications and docket management is an art awaiting its Indian dawn. The facts, being admitted, obviate debate. All these appellants and writ petitioners had paid market fees at the increased rate of 3 per cent (raised from the original 2 per cent) under Haryana Act 22 of 1977. Many dealers challenged the levies as unconstitutional, and this Court, in a series of appeals (CAs Nos. 1083 of 1977 etc.) [Kewal Kishan Puri v. State of Punjab, (1980) 1 SCC 416] ruled that the excess of 1 per cent over the original rate of 2 per cent was ultra vires. This cast a consequential liability on the Market Committees to refund the illegal portion. They were not so ordered probably because they could not straightway be quantified. The petitioners who had,
9 under mistake, paid larger sums which, after the decision of this Court holding the levy illegal, have become refundable, demand a direction to that effect to the Market Committees concerned. There cannot be any dispute about the obligation or the amounts since the Market Committees have accounts of collections and are willing to disgorge the excess sums Indeed, if they file suits within the limitation period, decrees must surely follow. What the period of limitation is and whether Article 226 will apply are moot as is evident from the High Courts judgment, but we are not called upon to pronounce on either point in the view we take. Where public bodies, under colour of public laws, recover people's moneys, later discovered to be erroneous levies, the dharma of the situation admits of no equivocation. There is no law of limitation, especially for public bodies, on the virtue of returning what was wrongly recovered to whom it belongs. Nor is it palatable to our jurisprudence to turn down the prayer for high prerogative writs, on the negative plea of “alternative remedy”, since the root principle of law married to justice, is ubi jus ibi remedium. (Emphasis Supplied)
In view of the above, this appeal merits consideration. Hence, the following: ORDER i) Appeal is allowed.
10 ii) The order dated 12.06.2019 passed in Final Order No.20467/2019 by the CESTAT is set aside. iii) The respondent is directed to consider the application and refund the amount within an outer limit of three months from the date of receipt of a copy of this judgment. No costs. JUDGE JUDGE
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Reproduced from the public record of the Karnataka High Court. Verify against the court's own copy before relying on it. Income tax judgments are on bharattax.net.