Refund of Service Tax Deposited is not allowable to Assessee when it was Transferred to Consumer: Allahabad HC [Read Order]

In a recent judgement, the Allahabad High Court (HC) held that the claim of refund of service tax deposited is not allowable to the assessee when it was transferred to the consumer.

Sri Prashant Shukla along with Sri Mohit Behari Mathur appeared for the petitioner, Sri Krishna Agarwal appeared for the revenue and Sri Gopal Verma appeared for the Union of India.

M/S Krishna Construction Co, the petitioner filed the appeal against the order of the Customs,Excise & Service Tax Appellate Tribunal, Allahabad dated 17.08.2022 in Service Tax Appeal whereby the appeal had been dismissed and the claim for refund filed by the assessee found barred by time.

The assessee stated that they had rendered service to the CPWD during the period 2015-16. On 17 April 2016 bythe provision of Section 102 of the Finance Act, 2016, such services were rendered non-taxable. Therefore, the assessee became entitled to claim a refund. Since the assessee had passed on the tax liability to the CPWD, it was for the CPWD to first seek a refund from the Central Excise Department. Instead of doing that the CPWD has recovered such an amount from the assessee.

It was evident that in face of the admission – the assessee had passed on the tax liability to the CPWD, and the claim for refund may have arisen only to the CPWD i.e. the consumer. The subsequent event of the recovery having been made by the CPWD may remain a dispute between the assessee and the CPWD.

It was viewed that the claim raised by the CPWD against the assessee would remain alien to the service tax authority. That authority was neither a party to the dispute between the assessee and the CPWD nor the conduct of the latter may give rise to any claim for refund in any proceeding arising under the Act.

While dismissing the appeal coram comprising of PritinkerDiwaker, Acting Chief Justice and Justice Saumitra Dayal Singh left the case open to the assessee to pursue such other remedy available against the CPWD.

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