Order Date – 15 February 2023

Parties: Principal Commissioner, CGST, Delhi-South Vs M/s Emaar MFG Land Ltd.

Facts –

• The Respondent, M/s Emaar MFG Land Ltd, was engaged in undertaking construction activities for development of residential complexes and flats in southern India. They claimed that they have entered into two agreements during the period of July 2008 to January 2009, which falls under works contract service, which was taxable under the Act with effect from 01.06.2007.
• The Revenue alleged that the service rendered by the respondent falls under the definition of Service of ‘Construction of Complex’, which was chargeable to tax with effect from 01.07.2010. Thus, the services rendered by the respondent were not taxable at the material time, and it could not claim any Cenvat Credit in respect of input services for discharging its liability. 
• Consequently, the respondent was directed to refund the same along with interest.

Issue – 

• Whether the Respondent is liable to refund the credit availed by them?

Order – 

• The divisional bench of Hon’ble High Court observed that if a person collects any amount representing it as service tax, which is otherwise not to be collected, he is obliged to deposit that amount – in terms of Section 73A(2) of the Act – to the Credit of the Central Government. This amount is required to be credited to the Consumer Welfare Fund referred to in Section 12C of the Central Excise Act, 1944. The amount so deposited cannot be considered as deposit of tax; it is the deposit of an amount, which although collected as service tax, is not service tax. 
• In the present case, the learned Commissioner had dropped the demand of ₹2,44,48,095/- under Section 73A of the Act.  As noted above, the Revenue had not filed any appeal against the order-in-original and had accepted the said order. Thus, no demand can now be raised on the ground that the respondent had not deposited the entire amount collected from its customers as service tax, under Section 73A(2) of the Act.
• Further, it was held that that in Pushpam Pharmaceutical Company v. Collector of Central Excise, Bombay: 1995 Supp (3) SCC 462, the Supreme Court had interpreted the proviso to Section 11A of the Central Excise Act, 1944, which was similarly worded as the proviso to Section 73(1) of the Act, and held that “where facts are known to both the parties the omission by one to do what he might have done and not that he must have done, does not render it suppression.”
• The proviso to Section 73(1) of the Act could not be applied. The respondent had filed its return of service tax on the basis that its services were taxable as ‘Works Contract’ Services. It had availed the Cenvat Credit and had paid the balance amount in cash in discharge of the liability, which was computed on the aforesaid basis. There is no allegation that the respondent had concealed that it was carrying on the activity of construction and selling residential flats.
• Accordingly, the appeal dismissed.