By Puloma Dalal, Jayesh Gogri, Mandar Telang; Chartered Accountants
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Service Tax collected and deposited without authority of law by the service provider can be refunded to service receiver.
Facts
The appellants jointly purchased a house wherein service tax as well as VAT was collected from them. Even though the transaction between the appellants and its vendor was of transfer of immovable property, the vendor charged service tax. On understanding the facts, the appellants filed a refund claim with the department since tax was levied and collected without authority of law. The refund claim got rejected on the grounds that the appellants had not provided any proof of deposit of service tax by the service provider with the Government.
Held
Since the transaction of transfer of immovable property is squarely covered in the exclusion part of the definition, the activity of transfer of immovable property is not a taxable activity. Service recipient cannot be made liable to prove that the service tax paid by him to the service provider has been credited to the Government or not. Refund can be granted to the recipient on the basis of invoices held by them wherein service tax has been charged. Whether service tax has been deposited to the Government or not is to be looked by the department and not the service recipient. Service recipient having borne the incidence of tax can challenge taxability by claiming refund.
