Order date – 08 December 2022

Facts –

• The Appellant, M/s. Raheja Regency Cooperative, is providing the services under the category of Club or Association Services and is a Society Registered under the provisions of Maharashtra Cooperative Housing Society Act, 1960.
• They have filed two refund claims on the ground that they have paid service tax under protest as they are Co-operative Society not engaged in any activity of profit and as per the principle of mutuality, services provided by them to their members would not be liable to Service tax under the Club or Association Service.
• A show cause notice was issued that the grounds of refund claims are not sustainable and the refund claims are rejected on the ground of limitation u/s. 11B ibid as made applicable to Service Tax matters and also on merits by applying the provisions of Section 66B & 66D of Finance Act, 1994.
• Being aggrieved the appellant had filed an appeal.

Issue –

• Whether the appellant is entitled to refund claim?

Order –

• The Tribunal relied on the decision of the Hon’ble Larger Bench of the Supreme Court in the matter of Calcutta Club Limited while following its decision in the matter of Young Men’s Indian Association has laid down that from 2005 onwards, the Finance Act, 1994 does not purport to levy service tax on members’ club in incorporated form and held that show cause notices, demand notices and other action taken to levy and collect service tax from incorporated members’ club are void and of no effect.
• In view of series of decisions it is clear that the appellant cannot be said to be liable to pay service tax in any manner whatsoever inasmuch as what was paid by the appellant was not tax as envisaged under the Finance Act, 1994. Thus, the amount paid by the Appellant would not take the character of tax but is simply an amount paid under a mistake of law.
• Since the retention of the amount in issue by the department is without authority of law, the question of applying the limitation prescribed under Section 11B ibid would not arise. A similar view has been taken by the Hon’ble High Court of Judicature at Bombay in the matter of Parijat Construction v. Commissioner Excise, Nashik, reported in 2018 (359) E.L.T. 113 (Bom.). by holding that limitation prescribed under Section 11B of Central Excise Act, 1944 not applicable to refund claims for Service Tax paid under mistake of law.
• Since as per the settled law the appellant was not liable to pay any tax therefore whatever has been paid by them was due to mistake of law. If that is so then the limitation as prescribed by section 11B ibid is not applicable at all.
• Hence the appellant is entitle for refund as claimed by them. Accordingly, the appeal is allowed.