Order date: 27 September 2022

Facts: 

• The Appellant, M/s S.P Builders, is engaged in the construction of individual/independent residential houses as per the work order given by the Rajasthan & Ors. Housing Board.
• The appellant has stated that the Resident Engineer of the Housing Board has given a certificate that the houses constructed as per the work orders issued by the Housing Board are independent residential houses having independent approaches and entry with separate electricity and water connections.
• The appellant, stated that service tax was deposited by the appellant on such constructed houses by mistake and even the Housing Board deposited 50% of the service tax under the reverse charge mechanism.
• The appellant claimed a refund of the service tax deposited by the appellant as also the Housing Board since the Housing Board had awarded the contract in favor of the appellant for a gross amount, inclusive of all taxes and 50% of the service tax paid by the Housing Board was deducted from the amount payable to the appellant by the Housing Board.
• The Commissioner ejected the refund claim on the ground of unjust enrichment.
• Aggrieved, this appeal is filed.

Issue:

• Whether the appellant would be entitled to refund of Service tax said to have been deposited by mistake on the construction of individual/independent residential houses during the aforesaid period from 01.04.2013 to 31.03.2014.

Order:

• The Authorities relied on the decision of a Division Bench of the Tribunal in Shri A.S. Sikarwar vs CCE, Indore observed that Service tax can be demanded only if the building concerned has more than 12 residential units in the building and such levy will not apply in cases where one compound has many buildings, each having not more than 12 residential units.  This decision of the Tribunal was also assailed before the Madhya Pradesh High Court. Central Excise Appeal No. 31 of 2012 was dismissed on 01.08.2013.
• Further, it was observed that on July 01, 2012 “construction of complex” was a declared service, but the Exemption Notification exempts services by way of construction, erection, commissioning or installation of original works pertaining to a single residential unit otherwise than as a part of a residential complex has been exempted.
• The authorities observed that in this view of the matter, the Commissioner (Appeals) was not justified in holding that the appellant would not be entitled to the benefit of the Exemption Notification.
• The authorities also find a refund can be claimed by a person who has borne the incidence of tax. Even in accordance with the Exemption Notification dated June 20, 2012, 50% of the tax to be deposited by the Housing Board under the reverse charge mechanism was deducted by the Housing Board from the amount payable to the appellant. 
• The authority allows this appeal. The order dated August 04, 2016, passed by the Commissioner (Appeals), therefore, cannot be sustained and is set aside. The appellant would be entitled to a refund in accordance with law.