Custom, Excise & Service Tax Appellate Tribunal (CESTAT), New Delhi: In an appeal filed against order passed by the Commissioner (Appeals), Jaipur, wherein, the refund of service tax was rejected and the benefit of exemption of Notification No. 33/2012-ST dated 20 June 2012 (Notification) was denied, the Division Bench of Dr Rachna Gupta (Judicial Member) and Hemambika R. Priya (Technical Member)* dismissed the appeal and held that the appellant was not eligible for refund on merits as it crossed the threshold amount of ₹10 lakhs in accordance with Notification.
Background
The appellant, M/s Jal Mahal Resorts Pvt. Ltd. is a Private Limited Company was registered as service receiver in the category of legal consultancy services under Section 65(105)(zzzzm) and “other taxable services” under Section 65(105), Finance Act, 1994. An audit was conducted for the Financial Years starting from 2010-2011 to 2014-2015 (up to September 2014). The Department observed that the appellant should not have discharged service tax liability on legal services under the reverse charge mechanism and subsequently should not have availed CENVAT credit. The appellant was asked to reverse such CENVAT credit availed. The appellant reversed the CENVAT credit under intimation to the Department. Thereafter, the appellant filed a refund claim of Rs 7,23,239 for the period 1 August 2014 to 31 July 2015, which was sanctioned and paid to the appellant.
This sanction was set aside on appeal by the Department. Thereafter, on appeal, the Tribunal dismissed the appeal filed by the appellant, upholding the Commissioner (Appeals)’s order. The appellant then filed the present refund claim amounting to Rs 95,01,092. The order-in-original rejected the refund claim, and the benefit of exemption of the Notification was denied to the appellant. Thus, the present appeal.
The appellant submitted that the appellant, as a recipient of legal consultancy services, was eligible to claim exemption under
Issue for Determination
Whether the service tax deposited on legal consultancy services under the reverse charge mechanism liable for refund?
Analysis, Law and Decision
The Court noted that the conditions prescribed by the Notification, granted exemption to services provided by an individual advocate or a law firm to a business entity with a turnover up to Rs 10 lakhs in the preceding financial year. The appellant had claimed exemption under the Notification. In order to satisfy the condition, it was imperative to establish that the appellant was a business entity whose aggregate turnover in the preceding financial year was up to Rs 10 lakhs. The Tribunal noted on the submission of the appellant that the department erred in holding that the turnover of the appellant exceeded Rs10 lakhs, whereas the appellant was eligible for the refund.
The Tribunal relied on Mafatlal Industries Ltd. v. Union of India, (1997) 5 SCC 536 and observed that the term turnover was not restricted to mean turnover of only taxable services. The Tribunal noted that during the preceding financial years, the turnover, inclusive of nursery sales crossed the threshold of Rs 10 lakhs, the appellant was not eligible for the threshold exemption as per the Notification. It was held that theappellant did not qualify for the benefit of exemption provided under the Notification, therefore the refund was rightly rejected. Further held, that once it was established that the appellant was not eligible for refund on merits, there was no need for examination of submissions.
Accordingly, the Tribunal upheld the impugned order and dismissed the appeal.
[Jal Mahal Resorts (P) Ltd. v. CGST & CCE, 2026 SCC OnLine CESTAT 915, decided on 7-4-2026]
*Order by Hemambika R. Priya, Technical Member
Advocates who appeared in this case:
For the Appellant (s): Sanjiv Agarwal, Chartered Accountant
For Respondent(s): Ms Jaya Kumari, Authorised Representative
