The Customs, Excise and Service Tax Appellate Tribunal (CESTAT), Delhi bench has held that the refund is allowable in respect of the amount of service tax paid on liquor license fee to the Government.
The appellants, M/s. Rambagh Palace Hotel Pvt. Ltd. are engaged in providing different services relating to hotel business. For the purpose they were also serving liquor to their guests in the hotel under the license which was issued to them by the State Government.
The Department during the audit observed that the appellant had not paid Service Tax of Rs.234750/- on an amount of Rs.15,65,000/- paid to the Rajasthan State Excise Department during 2017-18, for the liquor license. However, vide the Finance Act, 2019 Clause 116 was introduced by virtue of which retrospective exemption was granted from levy of service tax on grant of liquor license. The clause 116 is made applicable for the period from 01.04.2016 to 30.06.2017. The amounts of service tax paid during this period were allowed to be refunded within six months from enactment of Finance Act, 2019.
Pursuant to the said amendment, the appellant filed the refund claim of the amount of Rs.2,34,750/- on 05.11.2019. Department, however, formed an opinion that the appellant is not entitled for the said refund.
The appellants argued that the payment of Service Tax was made in the year 2017. However, the amendment with retrospective effect, came into existence in 2019 within 6 months thereof the refund in question was filed. Hence there arises no question of recovering the amount in question from the customers.
CESTAT Judicial Member Mrs. Rachna Gupta observed that “the admitted facts when read with the aforesaid provision are sufficient for me to hold that there is utmost compliance of all statutory provisions on part of the appellant. There appears no evasion of duty. Question of malafide intent on part of the appellant, in the given circumstances, also does not appear. More so, Department did not issue any Show Cause Notice at the relevant time proposing imposition of penalty or for proposing the duty demand against the appellant. The impugned refund has also been filed in utmost compliance of the provisions of law i.e. the amendment by Finance Act, 2019. As such, I am of the opinion that refund was rightly sanctioned by the by the Original Adjudicating Authority.”
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