CESTAT Remands KSRTC Service Tax on Rent Refund Dispute of ₹6.67 Lakh for Fresh Review [Read Order]

In a recent ruling, the Customs, Excise & Service Tax Appellate Tribunal (CESTAT),  Bangalore, has remanded a ₹ 6.67 lakh rent‑tax refund dispute involving the Karnataka State Road Transport Corporation (KSRTC) for fresh adjudication.

The applicant, Nerumbally and Co, a Bangalore‑based hotel operator, leased premises from the Karnataka State Road Transport Corporation (KSRTC). KSRTC charged service tax on the rent under the category “Renting of Immovable Property Service.”

The appellant argued that such a levy did not apply to their hotel operations and filed refund claims amounting to ₹ 4,25,937 for January–December 2011 and ₹ 2,42,406 for March–July 2012. Both claims were rejected by the adjudicating authority, and subsequent appeals were dismissed by the Commissioner (Appeals) on the ground that they were filed late.

Counsel for Nerumbally and Co submitted that the refund‑rejection orders dated 20.08.2013 and 26.08.2013 were actually received only on 12.12.2013. Since the appeals were filed on 06.02.2014, they were within the two‑month statutory period under Section 85 of the Finance Act, 1994. The Commissioner (Appeals), however, wrongly presumed the issue date of the orders to be the communication date.

On the other hand, the departmental representative reiterated the Commissioner (Appeals)’s finding that the appeals were time‑barred, maintaining that the delay exceeded three months from the date of communication.

The Tribunal observed that the short issue was whether the refund‑rejection orders had been communicated before 12.12.2013. Also noted that while the orders may have been issued or dispatched earlier, the department had not produced any proof of delivery—such as postal acknowledgments—to establish communication before December 2013.

Tribunal also stated that without such evidence, the Commissioner (Appeals) could not simply assume that the date of issue equaled the date of service.

The bench D.M. Misra, Member (Judicial member) found that the department failed to discharge its burden of proving communication, the Tribunal held that the appellant deserved a fair opportunity to present its case.

Accordingly, the matter was remanded to the Commissioner (Appeals) to verify the actual date of service and reconsider the refund claims afresh. The appeals were thus allowed by way of remand

Support our journalism by subscribing to Taxscan premium. Follow us on Telegram for quick updates