2025-VIL-677-CESTAT-KOL-ST
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SERVICE TAX CESTAT Cases

Service Tax - Refund claim for service tax paid on construction services for educational institutions - The appellant had provided construction services, namely, construction of academic buildings and other buildings of the Indian Institute of Technology (IIT), Ropar, Punjab during the period from 01.04.2015 to 29.02.2016. Initially, these services were exempt from service tax under the Mega Exemption Notification. However, this exemption was withdrawn from 01.04.2015, making the construction services provided by the appellant taxable. The appellant paid service tax amounting to Rs.4,57,28,992/- during this period, out of which Rs.2,65,12,410/- was paid in cash and Rs.1,92,71,550/- was paid by utilizing CENVAT credit. Later, Section 102 of the Finance Act, 1994 exempted such construction services to educational institutions retrospectively. The appellant filed a refund claim for the entire amount of service tax paid - Whether the appellant is eligible for refund of the entire amount of service tax paid during the period from 01.04.2015 to 29.02.2016 - HELD - The appellant is eligible for refund of the service tax amounting to Rs.2,65,12,410/- which was paid in cash, as it fulfills the conditions under Section 102 of the Finance Act, 1994 - However, the appellant is not eligible for refund of the service tax amounting to Rs.1,92,71,550/- which was paid by utilizing CENVAT credit, as the appellant was not eligible to avail CENVAT credit for the exempted output services during the relevant period - As per Section 102, the refund is to be made of the service tax "which has been collected but which would not have been so collected had sub-section (1) been in force at all the material times", and since the appellant was not eligible to utilize CENVAT credit for payment of service tax on the exempted output services, the amount paid through CENVAT credit cannot be refunded - The appeal is partly allowed - Whether the appellant is eligible for interest on the refund amount - HELD - The appellant is eligible for interest as provided under Section 11BB of the Central Excise Act, 1944 from the date of completion of three months from the date of filing of the refund claim till the date of sanction of the refund claim.
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