By Puloma Dalal, Jayesh Gogri, Mandar telang Chartered Accountants
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Service tax paid on advance received, ultimately no service was provided. If no service is provided the amount paid has to be considered as a deposit.
Facts:-
The Appellant received mobilisation advance, they paid service tax under works contract composition scheme. However, the contract was terminated and the advance received was recovered by the customer. The refund application filed was rejected on the ground that it had been filed beyond the limitation period u/s. 11B of the Central Excise Act. On appeal, the first appellate authority allowed the appeal, aggrieved by which the present appeal is filed.
Held:
Once service is not rendered then no service tax is payable, any duty paid by mistake cannot be termed as ‘duty’. The payment made has to be considered as a ‘deposit’ to which provisions of section 11B of the Central Excise Act, 1944 will not be applicable. Similar view was taken in the case of M/s. Barclays Technology Centre India P. Ltd vs. CCE [2015] – TIOL-82-CESTAT-MUM, where it was decided that refund cannot be denied for procedural infraction when service tax was not required to be paid. On slightly different facts, in the case of Jyotsana D Patel vs. CCE, Nagpur [2014] 52 taxmann.com 255 (Mumbai CESTAT), it was also held on similar lines that when the service tax is not required to be paid, the amount paid cannot constitute service tax and thus the provisions of section 11B are not applicable.
