Page 155 - GSTL_2nd April 2020_Vol 35_Part 1

2020 ] VASUDHA BOMMIREDDY v. ASSISTANT COMMR. OF S.T., HYDERABAD 57
plication was filed beyond the period of limitation prescribed under Section 11B,
though the amount paid by the assessee was not service tax, but it was in the na-
ture of deposit with the Department. The High Court held that the amounts col-
lected erroneously have to be returned to the assessee. It also held that the claim
of the petitioner that it was exempted from payment of service tax by virtue of
Circular dated 17-9-2004 was not denied by the Department and it is not even
denying that the nature of construction/services rendered by the petitioner was
exempted from the payment of service tax; that one has to see, whether the amount
paid by the petitioner under mistaken notion was payable by the petitioner at all; though
under the Act, such service tax was payable, by virtue of the circular, the peti-
tioner was not liable to pay it as there was an exemption because of the nature of
the institution for which they have made construction and rendered services. It
held that if the respondent had not paid those amounts, the authority could not
have demanded the assessee to make such payment and that it had lacked the
authority to levy and collect such service tax. It observed that if the department
were to demand such payments, petitioner could have challenged it as unconsti-
tutional and without authority of law. Therefore, in a converse situation, merely
because there is payment of amount, it would not authorize the department to
regularize such payment. It held that if the department had no authority to demand
service tax from the assessee because of its Circular dated 17-9-2004, the payment made
by the assessee would not partake the character of “service tax” paid by them and mere
payment made by the assessee will neither validate the nature of the payment nor the
nature of the transaction. In other words, mere payment of amount would not
make it a ‘service tax’ payable by them and once there is lack of authority to de-
mand service tax from the assessee, the department lacks authority to levy and
collect it. According to the Court, when once there is a lack of authority to collect
such service tax, it would not give the department the right to retain the amount paid by
the assessee, which would actually not payable by them.
18. Having regard to these decisions, we are of the opinion that if the
petitioners were not liable to pay ‘service tax’ on the transaction of the purchase
of the constructed area along with goods apart from undivided share of land at
all, the payment which was made by the petitioners would not be a payment of
service tax at all; that the department also could not have demanded payment of
the same from the petitioners; and merely because the petitioners made the pay-
ment, it would not partake the character of ‘service tax’ and the department can-
not retain the amount paid by the petitioners which was in fact not payable by
them.
19. The aspect whether the petitioners were liable to pay service tax at
all on the transaction is discussed separately below.
Re : Plea of revenue that documents were not produced before it as proof of pay-
ment of ‘service tax’
20. With regard to the second ground in the impugned order that the pe-
titioners did not furnish any document to prove that the said service tax amount
was actually deposited with the Central Government by 4th respondent is con-
cerned, it is not in dispute that the 1st respondent never asked the petitioners to
produce such material in the first place. It is also not the case of the 1st respond-
ent that it had asked the 4th respondent, who according to the petitioner received
the said payment on 19-6-2014, as to whether the 4th respondent had credited the
GST LAW TIMES  2nd April 2020  219