CESTAT Holds Double Taxation Under Finance Act and GST Should Be Avoided, Orders Refund [Read Order]

The Ahmedabad Bench of Customs, Excise and Service Tax Appellate Tribunal ( CESTAT ) holds double taxation under the Finance Act and Goods and Service Tax ( GST ) should be avoided, directing a refund to the assessee.

Vistas Designers Private Limited, appellant-assessee, paid service tax on advance receipts during 2016-17 under the Finance Act, 1994. After the GST regime began on July 1, 2017, they paid tax again on the same advance amount along with the final tax on the entire supply. They sought a refund for the advance tax paid before June 30, 2017, but the department rejected it, stating it was correctly paid under the Finance Act, 1994.

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The assessee's counsel referred to M/s Thirumal Facade Solutions vs Commissioner GST and Central Excise Chennai [2023 (2) TMI 1252 CESTAT-Chennai], where a similar issue was remanded in favor of the assessee with observations on merits.

The revenue counsel opposed the refund, stating that tax was correctly paid under the Finance Act, 1994, and therefore, no refund was due.

Read More: CESTAT Allows Refund Claims: Holds Procedural Lapses Can’t Deny Exemption Benefits

A single member bench comprising Somesh Arora(Judicial Member) reviewed the issue of double taxation under two tax regimes, which had been addressed in a previous case. The appellant, involved in civil construction, had paid service tax on advances before GST was introduced and later reversed the prepaid tax, filing a refund claim. The tribunal found that double taxation could be avoided, as the Finance Act, 1994 required advance tax payments for long-term contracts, which the assessee followed.

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Under GST, taxes were due again on completed supplies, but the credit from the Finance Act was carried forward. The appellat tribunal concluded that double taxation was not allowed, as the transition from the Finance Act to GST was continuous. It directed the department to either refund the tax or provide credit under GST and instructed the department to process the refund according to the law.

In short,the appeal filed by the assessee was allowed.

To Read the full text of the Order CLICK HERE

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