2025-VIL-1418-CESTAT-ALH-ST
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SERVICE TAX CESTAT Cases

Service Tax - Government contracts, Short payment of service tax on exempt services, Recovery of erroneous refund - Appellant was engaged in construction of various Government buildings. Service tax became leviable on such construction from April 1, 2015, and the appellant started paying the tax. Later, service tax on such construction was exempted from April 1, 2015 to February 29, 2016 vide Section 102 of the Finance Act, 1994. The appellant applied for refund of the tax paid during this period, which was initially rejected but later allowed by the Commissioner (Appeals) -Department issued SCN alleging short payment of tax - Whether the department can demand service tax from the appellant when the services were exempted during the period under dispute and the refund claim had already been allowed – HELD - When the service tax was exempt during the period under dispute, the issue of short payment cannot be raised. Section 102 of the Finance Act, 1994 had exempted the services provided by the appellant during April 1, 2015 to February 29, 2016, and the refund claim for the tax paid during this period had already been allowed - Once the refund application is allowed under Section 11B of the Central Excise Act, a SCN for recovery of refund cannot be issued unless the refund has been held to be erroneous. In the present case, there was no allegation of the refund being erroneous at the time of sanctioning it – The impugned order is set aside and the appeal is allowed
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GSTAT Appeal filed wrongly...
By CA Vivek Jalan

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