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A peal No. 30/AlST/CHD/18-19~<) S ~\/' o ORDER-IN-APPEAL
o der-in-Appeal No: CHD-EXCUS-001-APP- 01 -2020-21
ame of the Appellants Mis Gautam Builders, H. No. 179, Sector 46-A, Chandigarh
rder-in-Original no. & date 41/AC/ST/GST/Div.1I1/18 dated 09.07.2018
Dated: 12/05/2020
djudicating Authority The Assistant Commissioner, CGST Division-III, Chandi arh.
mount of refund rejected
Period of Dispute
Rs. 31,71,754/- and Rs. 57,13,7701- uls 102 of the Finance Act, 1994 2015-2016.
Mis Gautam Builders, H. No. 179, Sector 46-A, Chandigarh (for brevity 'the ppellants") have filed the present appeal against the Order-in-Original No. 1/AC/ST/GST/Div.1I1/18 dated 09.07.2018 (for brevity 'the impugned order') passed by he Assistant Commissioner, Central Goods & Services Tax Division-III, Chandigarh for brevity 'the adjudicating authority').
2. The appellants who were registered under Service Tax Registration No AAEFG4397EST001 and engaged in Erection, Commissioning & Installation Services, Construction of Residential Complex Services and Works Contract Services filed a refund claim of Service tax amounting to Rs. 80,20,869/- on 14-09-2016, under Section 102 of the Finance Act, 1994 as amended (hereinafter referred to as the Act), paid during the period April 2015 to March, 2016 on the grounds that the contract fo construction of the following buildings was not taxable being Government buildings:-
a). Central Judicial Archives Building of Hon'ble Court of Punjab & Haryan at Plot No. 841, Industrial Area, Phase II, Chandigarh; (Service Tax pai & claimed as Refund, Rs. 13,65,975/-)
b) Construction of Officers flat at National Bank for Agriculture and Rur Development (UNABARD") at Plot No.3, Sector 66, Mohali, Punja ; (Service Tax paid & claimed as Refund, Rs. 34,83,137/-)
c) Construction of Permanent campus at National Institute of Electronics Information Technology Government of India (UNIELlT), Chandigarh Ropar, Punjab (Service Tax paid & claimed as Refund, Rs. 31,71,754/-)
2.1 That in continuation to their aforesaid refund application dated 14.09.2016 t e appellants vide their letter dated 14.02.2017 claimed refund of Rs. 57,13,7701- n addition to the refund claim of Rs. 80,20,869/- on account of service Tax paid und r Reverse Charge Mechanism by NBCC after deducting the same from the appellan s' account in case of construction of NIELIT which was finally borne by the appellants the period 01.04.2015 to 31.03.2016.
File No.APPL-COMMOST/1177/2019-GST - APL-CHD
Before deciding the refund claims, the adjudicating authority granted various op ortunities for Personal hearing with the observations that Contract entered into with NB C Ltd (for construction of "NIELlT") was on 30-04-2015 i.e. after 01-03-2015 and ex mption under Sec 102 of the Act was not admissible to the appellants; that the ref nd of the amount of service tax which had been collected from Service recipients wo Id amount to unjust enrichment and that co-relation of service tax paid with the
tracts could not be made, and thus the refund claim was liable for rejection. Instead of ppearing the appellants sent a reply vide a letter dated Nil received in the office of th adjudicating authority on 18-08-2017.
3. Vide the said letter the appellants withdrew part of the claim amounting to Rs. 4 ,49,115/- (out of the claim of Rs. 80,20,869/-) in respect of Construction of building of P & Haryana High Court amounting to Rs. 13,65,978/- and Officers Flats at NABARD P at No 3 Sec 66C, Mohali, Punjab amounting to Rs. 34,83,137/- as the appellants had r covered the service tax from the service recipients but requested for Refund of the r maining amount of Rs. 31,71,754/- (Rs. 80,20,869 - Rs. 48,49,115) in respect of onstruction of NIELIT alongwith Rs. 57,13,770/- on account of Service Tax paid
u der RCM by NBCC after deducting amount from the appellants' account.
Accordingly the adjudicating authority proceeded to decide the refund claim and bserved that the refund claim of the appellants was restricted to the extent of Rs. 1,71,754/- (Rs. 80,20,869/- - Rs. 48,49,115/-) only .
. 1 Further, as regards to the request of the appellants for refund of Rs. 57,13,770/ in addition to the refund claim of Rs. 80,20,869/-) applied vide letter dated 14.02.2017 eferred above, a finding was recorded in the impugned order that the appellants vide etter dated 14.02.2017 submitted to the range officer and vide letter dated Nil received n his office on 18.08.2017 simply stated that refund of Rs. 57,13,770/- in addition to he refund claim of Rs. 80,20,869/- on account of Service Tax paid under Reverse Charge Mechanism by NBCC after deducting the same from the appellants' account might also be considered for sanction. That neither the appellants had stated any legal backing of such payment of reverse charge by NBCC deducting the same from their account nor did they provide any document or challans for substantiating their claim. And further that despite of the above facts on record an amount of Rs. 57,13,770/ claimed by the appellants could not be considered for refund being time barred a section 102(3) of the Act clearly mentioned that an application for the claim of refund a service tax shall be made within a period of six months from the date on which th Finance Bill, 2016 received the assent of the President. As the Finance Bill 201 received the assent of the President on 14.05.2016 the refund was to be filed within si months from 14.05.2016 but the appellants had claimed the refund of Rs. 57,13,770 vide letter dated 14.02.2017 which was well beyond stipulated period of six month; that the refund claim was filed without any locus standi of the appellants in respect f Service Tax paid by the NBCC as its liability and that deduction of service tax by NBC from the appellants' account was their internal business adjustments.
4.2 It was further observed that any such refund claim of additional amount n different grounds (of Reverse Charge Mechanism) was to be filed separately otherwi e whole of the refund claim i.e. Rs. 80,20,869/- & Rs. 57,13,770/- was to be consider d as fresh and filed on the date of filing of additional refund claim i.e. on 14.02.2017 a d that in such a situation by virtue of Section 102 (3) of the Act (discussed supra) wh Ie of the refund claim of Rs. 80,20,869/- & Rs. 57,13,770/- would have become ti e barred.
4.3 However, notwithstanding the above the refund amount initially claimed by e appellants amounting to Rs. 80,20,669/- and restricted to the extent of Rs. 31,71,75 / (discussed supra) only, was taken up by the adjudicating authority for decision on merits.
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4. The refund claim of Rs. 31,71,7541- was rejected by observing that though the con ract of the main contractor NBCC with that of NIELET was entered into on 18. 7.2014 i.e. prior to 01.03.2015 [being the essence of the notification 25/2012-ST dat d 20.06.2012 as amended vide Notification no. 09/2015-ST dated 01.03.2016 and Se tion 102 of the Act subject to other conditions thereof] but the contract between the ap ellants and the NBCC came into existence on 30.04.2015 i.e. well beyond the sti ulated date of 01.03.2015 and that hence the benefits of exemption from service Ta w.e.f. 01.04.2015 was not admissible to the appellants. Further, that the clause 29 h) of the notification no. 25/2012-ST dated 20.06.2012 was not applicable in the in ant case in view of the express provisions & conditions inserted where under the da e of contract "entered into before the 1st day of March, 2015" was one of the most
ortant conditions.
Feeling aggrieved, the appellants filed the instant appeal on the facts and unds interalia as summarized below:-
5 1 That the appellants had duly discharged their liability by depositing the Service t x of Rs. 80,20,869/- on the above services for the year under consideration. That in t e Union Budget, 2016, Services provided to Government were exempted vide n tification no. 09/2016 dated 01.03.2016 under Exemption entry S. no. 12A. That this xemption was given retrospective effect as per section 102 of the Finance Act, 2016. hat accordingly, the above services provided by the appellants during the period April 015 to February 2016 stood exempted. That Section 102 of Finance Act, 2016 also rovided for the refund of amount so paid and that accordingly, the appellants filed an pplication for refund of service tax paid on the above services on 14.09.2016 & ubmitted all the relevant documents & information as required for the processing of efund application.
Further the appellants claimed refund of Rs. 57,13,770/- in addition to the refund laim of Rs. 80,20,869/- on account of Service Tax paid under Reverse Charge Mechanism by NBCC after deducting the same from the appellants' account in case of Construction of Permanent campus at National Institute of Electronics & Information Technology Government of India ("NIELlT), which was finally borne by the appellants and withdrew the service tax refund claim in respect of a) & b) above amounting to Rs. 48,49,115/-.
5.3 That the appellants were a sub-contractor for the construction of permanen campus of NIELlT, Chandigarh at Ropar, Punjab. That the said contract was entere
I into by the appellants with NBCC (National Building Construction Corporation kt61Ltd. on 30.042015. That, however, M/s NBCC was the main contractor for the said contrac "tho -had already entered into a contract for above mentioned construction work 0 ;18.07.2014 i.e. well before 01.03.2015 and that as the main contractor was not taxabl
. under service tax, no service tax should be leviable on the sub-contractor as well.
5.4 That the rejection of refund of Rs. 57,13,770/- u/s 102 of the Finance Act, 201 on account of Service Tax paid by NBCC under Reverse Charge Mechanism
I ded cfEl_d out of appellants account for Construction of permanentPermanent camp s of NIELIT was wrong as the refund claim application was already filed in time & t e above claim was in addition to the same application/contract & related to the sa e party.
6. Personal hearing in the case was granted on 12.12.2019. Sh. Atul Goyal, and Sh. S.R. Goyal, Advocate and Authorized Representative on behalf of t e appellants appeared for P.H., reiterated the submissions as made in their 'Grounds of Appeal' and written submissions dated 12.12.2019 submitted during personal heari g and requested to decide the case in the light of these.
7 Tha additional submissions made vide their letter dated 12.12.2019 submitted at Hie ime of personal hearing are summariz.ed as under :-
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7.1 That since the appellants (sub-contractor) had borne the burden of service tax am unting to Rs. 31,71,754/- and Rs. 57,13,7701·, the refund claim of the appellants in the present appeal is limited to the said amount. That the appellants were a sub co tractor for Construction of Permanent campus of NIELlT, Chandigarh at Ropar, Pu jab; that the said contract was entered into by the appellants with NBCC (National Bu Iding Construction Corporation Ltd) on 30.04.2015; that NBCC was the main co tractor for the said contract who had already entered into a contract with G vernment (NIELET) for above mentioned construction work on 18.07.2014 i.e. well be ore 01.03.2015 which fact is not in dispute.
That the adjudicating authority wrongly rejected the claim on the ground that the a pellants had entered into contract with NBCC on 30.04.2015 i.e. after the stipulated d te of 01.03.2015.
That the refund claim was filed by the appellants for the contract work done in r spect of permanent campus of NIELIT at Ropar for which initially a contract between
CC (main contractor) & NIELT (Government) was executed on 18.07.2014 and t ereafter NBCC sub-contracted the same work to the appellants (sub-contractor) and letter of award to do the above construction work at Ropar was given by NBCC to the ppellants vide no. NBCC/ZO/CHO/TECH/2015/1799 dated 30.04.2015.
That the above service tax was deposited after the withdrawal of exemption hich was earlier available both to the services provided to the Government by a ontractor as well as a sub-contractor as per notification no. 25/2012 dated 20.06.2012 entry No. 12) read with entry No. 29(h) ,respectively .
. 5 That in the Union Budget, 2015, Services provided to the Government were ade taxable by omitting clause (a), (c) and (f) of entry No. 12 of Notification No. 5/2012 dated 20.06.2012. Thus services provided by the main contractor to the
Government were made taxable vide notification no. 6/2015 dated 01.03.2015 and resultantly services provided by a sub-contractor also became taxable as per entry No. 29(h) of notification no. 25/2012 dated 20.06.2012 and that no changes 1 amendments were effected in entry No. 29 (h) of notification no. 25/2012 dated 20.06.2012 till date .
.7.6 That due to withdrawal of exemption in respect of services provided by contractor 1 sub-contractor to the Government, there was a lot of hue & cry as th contracts entered with the Government prior to 01.03.2015 were now made liable t service tax which forced the Government to bring back the exemption available earlie and thus in the Union Budget, 2016, Services provided by the contractorlsub-contracto to the Government were again exempted from levy of service tax vide notification n . 09/2016 dated 01.03.2016 under exemption entry no. 12A effecting amendment i notification no. 25/2012 dated 20.06.2012 read with 29(h).
7.7 That by virtue of the exemption being reintroduced the services provided main contractor to the Government were again exempted from levy of Service Tax vi e notification no. 9/2016 dated 01.03.2016. Pertinently that by virtue of entry No. 29(h) f notification no. 25/2012 dated 20.06.2012 to which no changes 1
I amedmentsamendments whatsoever have ever been effected till date, servic s provided by the sub-contractor also became exempt as the services of the m in contractor became exempted. And thus the appellants were entitled for a refund or which a refund application dated 14.09.2016 was submitted before the adjudicati g authority.
7.8 That initially entry no. 12 as per notification no. 25/2012 dated 20.06.2 provided unconditional exemption, as date of entering into contract with he
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G~·' rnment was not relevant at all; that w.e.f. 01.03.2015 this unconditional exemption v.:~s withdrawn vide notification no. 06/2015 dated 01.03.2015 to make aU services pro ided to Government irrespective of the date of entering into the contract as taxable and that w.e.f. 01.03.2016 the exemption was again brought back, however now with a con ition, that only those services shall be exempted from levy of service tax which had been provided under a contract entered into prior to 01.03.2015 i.e. date on which the blanket exemption was withdrawn. That the condition regarding the date of entering int of the contract was only to continue providing exemption from levy of service tax to co tracts already entered into with the Government prior to the date on which the
mption was withdrawn i.e. 01.03.2015.
That the date of entering into the contract by the main contractor with the ernment was relevant so as to determine the availability of exemption and that the
da e of entering into of the contract between the main contractor and sub-contractor w not relevant at all as the ultimate beneficiary of the exemption was to be the G vernment.
7. 0 That as per the version of the adjudicating authority - one chain of the tr nsaction (i.e. between the Government and main contractor) was exempt from levy of service tax and other chain of the transaction (i.e. between the main contractor and s b-contractor) was still leviable to tax. That the intention of the legislature was never to tax the sub-contractor. That had it been so, the tax so leviedlleviable on the a pellants would have in all likelihood had to be passed on to the Government, d feating the very purpose of exemption (being indirect tax). That it was with the in ention to exempt both the transactions (since both form part & parcel of same tr nsaction) that entry no. 29(h) of the notification no. 25/2012 dated 20.06.2012 was s ecifically incorporated.
That had there been no contract between NBCC (main contractor) and IELET (GovernmenUcontractee), there would have been no contract between the
a pellants (sub-contractor) and NBCC (Main contractor). That it was only on the basis main contract executed between NBCC & NIELIT that the sub-contract between the
ppellants and NBCC stood good. That by virtue of contract entered into between the ppellants and NBCC, the appellants stepped into the shoes of NBCC for executing the ontract on behalf of NBCC.
I
.12 That this Exemption was given retrospective effect as per section 102 of the inance Act, 2016. That accordingly, the above services provided by the appellants as sub-contractor during the period April, 2015 to February, 2016 stand exempted. That ection 102 of Finance Act, 2016 also provided for the refund of amount of service tax eposited when the exemption was temporarily withdrawn. That accordingly, the ppellants filed an application for refund of service tax paid in respect of the services rovided to the Government (NIELlT) vide refund application dated 14.09.2016 & ubmitted all the relevant documents & information as required for the processing of refund application.
7.13 That as per sub-section (2) of Section 102, it is clear that the refund was applicable for all those cases where service tax was not applicable at the first instance.
7.14 That Service Tax was levied on the nature of service and not on the nature 0 contract. Even if the service was rendered by the sub - contractor 1 agent of main contractor, the nature of service i.e "works contract service" did not change. That th category of service rendered was to be considered and not the category of the perso who rendered the service. That the service provided by sub-contractor, ultimately wa 'provided to Government, a local authority or a Governmental authority.
7.15 That Section 102 of the Act, nowhere mentioned about the person by whom th service was to be provided for claiming refund. It only mentioned that refund could b
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That basically the intention of the legislature was to assign similar treatment to a tran action involving sub-contractor & contractor with that of involving contractee and con ractor. It was with this background that entry no. 29(h) had been incorporated spe ifically laying that services provided by a sub-contractor shall have similar tre ment of that of the main contractor and that since the said services provided by the app lIants (sub-contractor) was exempt as per Section 93 of the Act read with noti ication 25/2012 dated 20.06.2012 as mentioned above, service tax paid was ref ndable.
Further reliance has been placed on the judgments of the following Hon'ble rts:-
Radhekrushna Construction, Shri Krishna Construction Vis Commissioner of Central Excise- Ahmedabad - CESTAT AHMEDABAD-2018(3) TMI1004
Lajpat Rai Chanana Vis CCE & ST, Rohtak - CESTAT CHANDIGARH- 2019(3) TMI669
I have carefully gone through the facts of the case, the grounds of appeal, itional submissions made at the time of personal hearing as well as the documents
pia ed on record and observe that there are two issues to be decided in the instant
(i) As to whether the sub-contractor would be exempted from payment of service tax when the main contract service was exempted from service tax?
(ii) As to whether the date of filing the additional refund claim by the appellants could be considered as the one on which the initial refund claim was filed?
In respect of the first issue I observe that while rejecting the refund claim of Rs.
~
"- 31 71,754/-, the adjudicating authority has observed that the stipulated date of 01 03.2015 was the essence of the notification 25/2012-ST dated 20.06.2012 as a ended vide Notification no. 09/2015-ST dated 01.03.2016 & Section 102 of the Act
"s,u ject to other conditions thereof, thus it should be construed strictly. That however, 1 ra~ the contract between the appellants and the NBCC came into existence on 30 04,2015 i.e. well beyond the stipulated date of 01.03.2015 the benefits of exemption fF -=service Tax w.e.f. 01.04.2015 was not admissible to the appellants. Further, that th clause of 29(h) was not applicable in the instant case in view of the express pr visions & conditions inserted where under the date of contract "entered into before th 1 st day of March, 2015" was made as one of the most important conditions.
8. .1 The appellants have contested the view taken by the adjudicating authority and h e mainly contended that the appellants were a sub-contractor for Construction of P rmanent campus of NIELIT at Ropar, contract for which was entered into by the a pellants on 30.04.2015 with NBCC (National Building Construction Corporation Ltd), th main contractor who had already entered into a contract with Government (NIELIT) fo above mentioned construction work on 18.07.2014 i.e. well before 01.03.2015 by vi ue of which Services provided by the contractor to the Government were exempted fr m levy of service tax vide notification no. 09/2016 dated 01.03.2016 under e emption entry no. 12A and this fact has not been disputed by the adjudicating a thority; that when services provided by the main contractor to the Government were m de taxable vide notification no. 6/2015 dated 01.03.2015 the services provided by a s b-contractor also became taxable as per entry No. 29(h) of notification no. 25/2012 d ted 20.06.2012 to which no changes I amendments were effected and that the s rvices provided by main contractor to the Government were again exempted from Ie y of Service Tax vide notification no. 9/2016 dated 01.03.2016 and thus, resultantly,
File No.APPL-COMMOST/1177/2019-GST - APL-CHD
a in by virtue of entry No. 29(h) of notification no. 25/2012 dated 20.06.2012 to which no changes 1 amedments whatsoever have ever been effected till date, services pr vided by the sub-contractor also became exempt as the services of the main co tractor became exempted. Further it has been canvassed that the condition in erted vide notification no. 09/2016 dated 01.03.2016 regarding the date of entering in of the contract was only to continue providing exemption from levy of service tax to co tracts already entered into with the Government prior to the date on which the
mption was withdrawn i.e. 01.03.2015 and that the date of entering into the contract the main contractor with the Government was relevant so as to determine the
a ilability of exemption and that the date of entering into of the contract between the in contractor and sub-contractor was not relevant at all as the ultimate beneficiary of exemption was to be the Government.
.2 I find that in the present case the exemption of the main contract service is not in di pute, therefore, I agree with the above contentions of the appellants and find that o ce the main contract service is exempt from service tax, sub-contractor would also b exempted from payment of service tax. There is no ambiguity on the above issue in vi w of the provisions under serial No. 29 sub-clause (h) of the mega Notification No. 2 12012-ST, dated 20.06.2012(as amended from time to time), which provides that s rvice provided by following person in respective capacities are exempt from service ta
(h) sub-contractor providing services by way of works contract to another contractor providing works contract services are exempt
8 .. 3 The above entry makes it clear that if the principal contractor is providing an e empt works contract service (in the instant case providing works contract service to G vt.) then in such case if some part of the works contract is sub-contracted then the
b-contractor would also be exempt from payment of service tax and thus the pellants were entitled for the refund of Rs. 31,71,7541- for which a refund application ted 14.09.2016 was submitted before the adjudicating authority.
Coming to the second issue regarding the date of filing of refund claim a ounting to Rs. 57,13,7701-, I observe that in the initial application for refund claim
ich was filed on 14.09.2016, no reference what so ever was made regarding the ount of Rs. 57,13,7701- paid as service tax under Reverse charge mechanism by CC and ultimately borne by the appellants. It was only after a lapse of five months t the appellants made a reference of the same in their letter dated 14.02.2017
s bmitted to the jurisdictional range office and claimed the refund of the said amount. I a in consonance with, the view of the adjudicating authority that such refund claim of a ditional amount ~r(differ'ent grounds (of reverse Charge mechanism) was to be filed b the appellanJt, separately, otherwise the whole of the refund claim of Rs. 8 ,20,869/- & RS'( 57,13,770/- should have been considered as fresh and filed on the d te of additiorl~~ refund claim i.e. on 14.02.2017 which would have rendered the w ole of the refJnd claim of Rs. 80,20,869/- as well as Rs. 57,13,770/- as time barred
per the proviSions of Section 102(3) of the Act. Further, even if it is considered that application for f;efund for the amount of Rs. 57,13,770/- on account of the service paid by the recipient of the service under reverse charge mechanism, burden of
w ich was borne by the appellants was made on 14.02.2017, the same is liable to r iection as time barred.
ORDER
9 In wake of the above, the instant appeal is partially accepted and the impugned o der is modified to the extent that refund of Rs. 31,71,7541- is admissible to the a pellants. The appeal stands disposed of, accordingly.
1. The Chief Commissioner (CZ), Central Goods & Service Tax, Chandigarh. 2. The Pro Commissioner, CGST Commissionerate, Chandigarh. 3. The Assistant Commissioner, CGST Division-III, Chandigarh. 3. Guard file.
File No.APPL-COMMOST/1177/2019-GST - APL-CHD Digitally signed by SUMAN BALA(Dr. Suman Bala) ~m~llef*~ "~}27' 6 I~ 2020 "l.A" ~1 v Reason: Appr ved ,,. I
MI Gautam Builders, H. 0.179, Sector 46-A, C andigarh.
![[LEC_OLESON] CHD](https://static.documents.pub/doc/80x56/577d2e911a28ab4e1eaf66e8/lecoleson-chd.jpg)
