2004 (3) TMI 5 - AT - Service Tax

Service Tax (1) Refund claim (2) Unjust enrichment (3) Any refund is subject matter to values of unjust enrichment

Summary

Issues:
Refund claim rejection based on unjust enrichment principle and legality of service tax payment.

Analysis:
The appellant, engaged in glass fiber manufacturing, filed an appeal against the rejection of their refund claim for service tax paid to a goods transporter. The adjudicating authority rejected the claim, stating that the tax was paid without legal authority, even though the burden was not passed on. The Commissioner (Appeals) upheld the rejection citing the principle of unjust enrichment. The appellant argued that since they deposited the amount, they were entitled to a refund, referencing a Tribunal decision supporting refund for erroneously collected taxes not in force.

The Revenue contended that unjust enrichment applies even when duty paid is not leviable. However, the adjudicating authority confirmed that the burden was not transferred to the transporter. The Tribunal, citing a previous case, held that refunds are permissible for amounts paid as service tax erroneously. The Commissioner's rejection on unjust enrichment grounds was overturned due to the clear finding that the burden was on the appellant, not the customer. The judgment emphasized that the refund claim was valid as the service tax was not legally leviable, and the burden was not passed on, leading to the allowance of the appeal.