Remanded

Sri v. R Janarthanam v Principal Commissioner of Service Tax-I

Karnataka HC7 Sept 2021WP/56677/2018

Case brief

AI extract

What is this about?

Three petitioners, flat owners of Ranka Nest, filed a writ petition seeking to set aside the CESTAT order dismissing their service tax refund claim on limitation grounds. The High Court observed that the Tribunal failed to record factual findings on whether the builder actually remitted the collected tax. Consequently, the court remanded the matter to the Tribunal for reconsideration of the genuin

What did the court decide?

Writ petition remanded to CESTAT to reconsider the matter regarding genuineness of the refund claim and limitation.

Sri v R Janarthanam Vs Principal Commissioner of… — Service and Employment | Karnataka HC (2021)

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IN THE HIGH COURT OF KARNATAKA AT BENGALURU

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DATED THIS THE 7^TH DAY OF SEPTEMBER, 2021

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PRESENT

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THE HON’BLE MRS. JUSTICE S. SUJATHA

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AND

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THE HON’BLE MR. JUSTICE RAVI V. HOSMANI

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WRIT PETITION NO.56677 OF 2018 (CESTAT)

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BETWEEN:

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SRI. V.R. JANARTHANAM, FLAT NO.133, RANKA NEST APARTMENTS, NO.35/1, KKS ROAD, SRIRAMAPURAM, BENGALURU – 560 021.

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SRI. V.R. JANARTHANAM, FLAT NO.134, RANKA NEST APARTMENTS, NO.35/1, KKS ROAD, SRIRAMAPURAM, BENGALURU – 560 021.

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SRI. MURALI VISWANATHAN AND SMT. LATHA VISHWANATH, FLAT NO.323, RANKA NEST APARTMENTS, NO.35/1, KKS ROAD, SRIRAMAPURAM, BENGALURU – 560 021.

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SRI. RAJESH M. GANDHI, FLAT NO.231, RANKA NEST APARTMENTS, NO.35/1, KKS ROAD, SRIRAMAPURAM, BENGALURU – 560 021.

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SRI. G. RAGHAVENDRA, FLAT NO.241, RANKA NEST APARTMENTS, NO.35/1, KKS ROAD, SRIRAMAPURAM, BENGALURU – 560 021.

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DR. R. SHASHIKANTH, FLAT NO.364, RANKA NEST APARTMENTS, NO.35/1, KKS ROAD, SRIRAMAPURAM, BENGALURU – 560 021.

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SRI. NILESH JAIN, FLAT NO.144, RANKA NEST APARTMENTS, NO.35/1, KKS ROAD, SRIRAMAPURAM, BENGALURU – 560 021.

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SRI. S. SRIDHAR, FLAT NO.341, RANKA NEST APARTMENTS, NO.35/1, KKS ROAD, SRIRAMAPURAM, BENGALURU – 560 021.

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SRI. ASHOK R. DOSHI, FLAT NO.361, RANKA NEST APARTMENTS, NO.35/1, KKS ROAD, SRIRAMAPURAM, BENGALURU – 560 021.

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SRI. ASHWIN C. VAKHARIA, FLAT NO.365, RANKA NEST APARTMENTS, NO.35/1,KKS ROAD, SRIRAMAPURAM, BENGALURU – 560 021.

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…PETITIONERS

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(BY SMT. VANI H., ADVOCATE (PHYSICAL HEARING))

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AND:

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PRINCIPAL COMMISSIONER OF SERVICE TAX-I 1^ST TO 5^TH FLOOR, TTMC BUILDING, ABOVE BMTC BUS STAND,DOMLUR BANGALORE – 560 071. KARNATAKA.

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UNION OF INDIA, MINISTRY OF FINANCE, DEPARTMENT OF REVENUE, REPRESENTED BY ITS SECRETARY, NORTH BLOCK, NEW DELHI – 110 001.

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… RESPONDENTS

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[BY SRI. JEEVAN J. NEERALGI, ADV. (PHYSICAL HEARING)]

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THIS PETITION IS FILED UNDER ARTICLES 226 & 227 OF THE CONSTITUTION OF INDIA PRAYING TO SET ASIDE THE ORDER OF THE CESTAT BEARING FINAL ORDER NO.21177 TO 21196/2016 DATED 14.10.2016 VIDE ANNEX-G IN SO FAR AS THE PETITIONERS ARE CONCERNED AND ETC.

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THIS PETITION COMING ON FOR HEARING THIS DAY, S.SUJATHA J., MADE THE FOLLOWING:

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O R D E R

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This writ petition is filed by the petitioners claiming to be the

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flat owners of the residential apartment "Ranka Nest" constructed by the Builder M/s. Ranka International (Pvt.) Ltd. The Builder M/s. Ranka International (Pvt.) Ltd., was an assessee registered with the erstwhile Service Tax Department for payment of service tax on the

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taxable services under the heading 'construction of residential complexes'. It is claimed that by insertion of clause (zzzh) to Section 65 (105) of the Finance Act, 1994 bringing construction of complex services under the service tax ambit by Finance Act, 2005, service tax was paid by the assessee, collected from the petitioners herein after issuance of Circular bearing No.108/2009-ST dated 29.01.2019 by the Central Board of Excise and Customs (Service Tax) clarifying that any services provided by the seller of the flats in connection with the construction of residential complex till the execution of sale deed would be in the nature of self-service and consequently would not attract service tax, the petitioners approached the builder and filed a common refund application dated 09.09.2009 through the builder before the respondent authorities seeking refund of service tax paid under the mistaken understanding of law. The same was rejected by the Adjudicating Authority pursuant to which, an appeal was preferred before the First Appellate Authority and being unsuccessful on appeal, the petitioners approached the Customs, Excise & Service Tax Appellate Tribunal, South Zonal Bench, Bengaluru. The said appeals having been dismissed, Central Excise Appeal No.09/2017 and connected

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matters were filed before this Court. In the said appeal proceedings, the petitioners sought for a permission to withdraw the appeals with liberty to file writ petition and hence, this writ petition.

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Learned counsel appearing for the petitioners placing reliance on the ruling of the Co-ordinate Bench in the case of COMMISSIONER OF CENTRAL EXCISE (APPEALS), BANGALORE VS. KVR CONSTRUCTION reported in 2012 (26) S.T.R. 195 (Kar.) submitted that the petitioners are entitled to refund.

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Learned counsel appearing for the respondents would submit that the fact finding authorities have adjudicated upon the issue and rejected the claim. Hence, no interference is warranted in the writ petition proceedings.

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We have carefully considered the rival submissions of

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the parties and perused the material on record.

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At the outset, it is significant to note that this petition is

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filed by the petitioners claiming to be the owners of the residential

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flats of "Ranka Nest". The Adjudicating Authority while passing the order in original has categorically observed that no evidence was placed before the authority correlating that the service tax amount collected from the claimant has been remitted to the government account and there is no evidence to show that the service tax amount received from the claimant is actually remitted to the government account by M/s.Ranka International Pvt. Ltd., Bangalore. The same having been observed by the Appellate Authority without further examining on this factual aspect merely relying upon the order of the Hon'ble CESTAT, Bangalore in its Final Order Nos.21349 to 21469/2014 dated 20.08.2014 has held that the claimants are not liable to pay service tax to the builder / developer during the relevant period for purchase of residential unit / flat; however as the claims are filed after expiry of one year from the date of payment of Service tax said to have been made to the builder / developer, held that the claims are hit by limitation as per Section 11 B of the Central Excise Act, 1944, applicable to Service tax matters by virtue of Section 83 of the Finance Act, 1994 and hence rejected the appeal.

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On further appeal, the Tribunal relying upon the judgment of the Hon'ble Apex Court in the case of ASSISTANT COLLECTOR OF CUSTOMS AND OTHERS vs. ANAM ELECTRICAL MANUFACTURING CO reported in 1997 (90) ELT 260 (SC) and the judgment of this Court in M/S. MCI LEASING (P) LTD., MYSORE vs. CCE, MYSORE reported in 2012-TIOL54-HC-KAR-ST, held that the claims made by the appellants are time barred. There is no finding on the factual aspect in as much as the genuineness of the petitioners for seeking refund of the service tax said to have been filed by the assessee M/s.Ranka International (Pvt.) Ltd., it was necessary for the fact finding authority first to give a finding on this point and then to examine the correctness or otherwise of the claim made by the petitioners. In the absence of factual findings before the Court, in the writ petition proceedings, this Court cannot exercise the functions of the assessing authority or the fact finding authority to ascertain the genuineness of the claim, in the absence of material documents like original invoices raised by the service providers and the details of the service tax paid by the petitioners.

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For the foregoing reasons, we deem it appropriate to

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set aside the impugned order of the Tribunal and remand the matter to the Tribunal to reconsider the matter keeping in mind the decision of this Court in Commissioner of Central Excise (Appeals), Bangalore vs. KVR Construction , (supra ) vis-a-vis the factual aspects in as much as the claim made by the petitioners, who are not assessees. The parties are at liberty to adduce evidence, if any. Parties are directed to appear before the CESTAT on 04.10.2021 without waiting for any notice and shall take further orders.

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The Tribunal is directed to reconsider the matter and pass appropriate orders, in accordance with law, in an expedite manner.

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Writ petition stands disposed of as indicated above.

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Sd/JUDGE

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Sd/JUDGE

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Sri v. R Janarthanam v Principal Commissioner of Service Tax-I

Case brief

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Sri v. R Janarthanam v Principal Commissioner of Service Tax-I

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