Service tax not applicable on non-commercial services provided to governmental bodies; refunds must adhere to statutory provisions, disregarding unjust enrichment principles.

RAJU

Appeals have been filed by both the Revenue as well as the assessee against the order of Commissioner (Appeals).

2. Learned counsel for the assessee pointed out that M/s Sintex BAPL Ltd (SBL) are a service provider of various categories of taxable services including construction services for industrial and commercial building and civil structure. SBL had filed a refund claim of Rs. 1,45,53,618/- for the period March 2011 to November 2011 on the grounds that they had paid the service tax for providing the construction services of building of structures of government and semi government organizations involved in providing education or health services. He argued that the said organizations to whom services were provided were non-commercial in nature, and therefore, no service tax was payable. During the scrutiny of refund claim, it was found that the said tax was payable under the category of erection and commissioning/ installation or pre-fabricated building. It was also noticed by the Revenue that during the period October 2010 to November 2011 no tax was paid under the head of construction service. The said refund claim was rejected by the original adjudicating authority both on the ground of merit as well as unjust enrichment. The SBL challenged the order in original before Commissioner (Appeals) who in the impugned order held that the services provided by the SBL were not taxable being non-commercial in nature. Commissioner (Appeals) also held that the provisions of Section 11B of the Central Excise Act, 1944 would be applicable to the instant case and refund claim can only be credited to the consumer welfare fund. Aggrieved by this order, SBL as well as Revenue has filed appeal before Tribunal.

3. Learned counsel for SBL has argued that in the instant case, no tax was payable and the tax was paid under mistake of law and therefore, provisions of section 11B are not applicable. He relied on case laws listed below.

4. Learned Authorized Representative relied on the grounds of appeal. He pointed out that Circular No. 116/10/2009-ST dated 15.09.2009 which has been relied by the Commissioner (Appeals) has been issued in respect of the ―Commercial or Industrial Construction Service‖ only. He argued that the Circular dated 15.09.2009 does not apply to service provided under the head of Erection, Commissioning and Installation Services.

5. We have considered the rival submissions. We find that the following issues are before us:

i) If the service provided by the SBL is chargeable to service tax or otherwise.

ii) If the provisions of section 11B are applicable in case it is held that no service tax was chargeable on the services provided by SBL.

6. It is seen that the Commissioner (Appeals) has observed as follows while granting relief.

“The services provided by the appellant is to the educational institute, state/central/semi government bodies which are generally not meant for commerce or industry. The basic principle for levy service tax is that services provided should be commercial in nature intended for commerce or industry. Though the Board has superseded all previous circulars, clarifications etc. vide circular dated 23.08.2007, the basic principle for levy of service tax remains the same i.e. wherever the services provided in non commercial in nature and not for commerce or industry, no service tax can be levied irrespective of its classification i.e. category of service provided whether it falls under Section 65(25b), 65(39a) or 65(105)(zzzza) ibid. The evidences produced by the appellant clearly indicates that services are provided to educational institute, semi/state/central government bodies w