Exemption and Refund of Service Tax u/s 102 applicable only to the Contract which has entered before 01.03.2015: CESTAT [Read Order]

The Chennai Bench of the Customs, Excise & Service Tax Appellate Tribunal (CESTAT) has held that Exemption and refund of service tax u/s 102  is applicable only to the contract which has entered before 01.03.2015.

M/s.P. Natesan & Co., the appellant is engaged in providing Works Contract Services and is registered with the Department for providing such services.  The appellant provided works contract service to Military Engineer Services, INS Agrani, Red Fields Post, Coimbatore.

They undertook and completed such services during the period  2015-16 and then filed refund claim for a refund of the service tax paid by them in terms of Section 102 of the Finance Act, 1994 which exempted services provided to the Government for the period 01.04.2015 to 29.02.2016.

The original authority rejected the refund claim. On appeal, the Commissioner (Appeals) upheld the order of rejection of refund by the original authority.

It was contended by the appellant that Section 102 which was inserted by Finance Act, 2016 and submitted that the contractor who has provided works contract services is not liable to pay service tax on such services if such services are provided to the Government during the period 01.04.2015 to 29.02.2016.

The lower authority has rejected the refund claim stating that though the tender was opened by the office of the Military Engineer Services on 23.01.2015, the contract was signed only on 19.03.2015 submitted that there is no variation between the tender amount and the contract entered into between the parties. On the other hand, the department contended that as per Section 102, the exemption is available only if the contract has been entered before 01.03.2015. 

A Coram of single member Ms Sulekha Beevi C.S., Member (Judicial) observed that merely receiving a tender or opening a tender cannot be considered as acceptance. There should be communication or intimation of the acceptance. 

Further held that as per Section 102, the service provider is eligible for exemption of service tax only if the contract is entered before 01.03.2015.  Since the contract has been entered on 19.03.2015, the appellant is not eligible for exemption from service tax. While dismissing the appeal, the impugned order was upheld by the Tribunal.

To Read the full text of the Order CLICK HERE

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