The Delhi Bench of Customs, Excise and Service Tax Appellate Tribunal (CESTAT) while allowing the service tax refund held that no service tax on land use conversion charges was paid to Rajasthan State Industrial Development & Investment Corporation Limited (RIICO).
The bench of Binu Tamta (Judicial Member) and Hemambika R. Priya (Technical Member) has observed that respondent/assessee has submitted the certificate dated 31.10.2017 issued by the Chartered Accountant certifying that the said amount of Rs.1,50,44,629 paid to RIICO has not been passed on to any other person. As per the books of accounts of the company, the said amount has been shown as recoverable from the Government. In the balance sheet for the financial year 2013–14 and 2016–17, the said amount has been shown as “Service Tax Refundable‟ in the Note No.1.09 as “Loans and Advances‟. The incidence of service tax has not been passed on to any other person and consequently, the refund is admissible to the assessee.
The respondent/assessee is 100% EOU and is engaged in the manufacture of natural health, sesame seeds, extra virgin sesame oil, and sesame cake etc.
The respondent was initially allotted Plot No.SP–20 ad-measuring 20,000 sq. mts. for undertaking industrial activity by Rajasthan State Industrial Development and Investment Corporation Ltd. vide registered lease dated 21.05.1999 for a period of 99 years.
The respondent applied for change of land use from industrial to commercial which was approved by RIICO on payment of conversion charges along with service tax amounting to Rs.1,50,44,629 to RIICO, which the respondent paid to RIICO who deposited the same to the Government exchequer.
As no service tax was leviable on conversion charges, the respondent filed a refund claim on 15.05.2015. The refund application was returned by the Assistant Commissioner vide letter dated 20.05.2014 due to absence of service tax payments as well as ST-3 returns and also that the amount needs to be claimed from RIICO.
The respondent once again submitted the claim, however, the same was rejected on the ground that service tax amount of Rs.1,50,44,629/- of which refund is being claimed was deposited by RIICO on self-assessment basis which can be challenged by RIICO alone, for the purpose of reassessment.
The respondent preferred an appeal before the Commissioner (Appeals), who was pleased to remand the case back to the Adjudicating Authority with the direction to pass a speaking order.
A Show cause notice was issued proposing to reject the refund claim on the ground that the service tax was correctly paid by respondent to RIICO. The Assistant Commissioner rejected the refund claim, which was once again challenged before the Commissioner (Appeals) and has resulted in the impugned order, allowing the refund application in terms of Section 104 of the Act. On perusal of the balance sheet and financial records of the respondent, it was also noticed that the incidence of service tax has been borne by the respondent and has not been passed on to any other person.
The tribunal has held that in the balance sheet for the financial year 2013–14 and 2016–17, the said amount has been shown as ‘Service Tax Refundable’ in the Note No.1.09 as ‘Loans and Advances’. On that basis, it was concluded that the incidence of service tax has not been passed on to any other person and consequently, the refund is admissible to the respondent.
Case Details
Case Title: Commissioner of Central Goods & Service Tax, Customs and Central Excise Versus M/s. Sesame Foods Pvt. Ltd.
Case No.: Service Tax Appeal No.51277 of 2018 (DB)
Date: 16.05.2025
Counsel For Appellant: Manoj Kumar
Counsel For Respondent: B.L. Narsimhan and Shivam Bansal
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