2007 (4) TMI 92 - AT - Service Tax

Revision - Appellant claim for refund of service tax was rejected by the commissioner which is granted by the adjucating authority by contending appellant has made unjust enrichment - Held that refund allowed to appellant and commissioner order is set aside

Summary

Issues:
1. Whether the service receiver is liable to pay service tax.
2. Whether the levy on the appellant, who is an SSI falling under the exempted category, was unjust and illegal.
3. Whether the impugned order holding the refund as erroneous is sustainable.
4. Whether the Revisionary Authority's conclusion of unjust enrichment was justified.

Analysis:

Issue 1: The appellant contended that they were a service receiver and not a service provider, arguing that no provision sanctioned the realization of service tax from a service receiver during the material period. Citing the case of Laghu Udyog Bharti v. Union of India, the appellant claimed that as an SSI under an exempted category, the levy on them was unjust and illegal.

Issue 2: The appellant sought a refund of the levy earlier realized from them, challenging the impugned order passed by the ld. Commissioner under Section 84 of the Finance Act, 1994. The appellant argued that the levy was not collectible from them during the material period, as per Notification No. 43/97-S.T., dated 5-11-1997, as amended by Section 160 of the Finance Act, 2003.

Issue 3: The ld. SDR for the Revenue acknowledged that the Service Receiver was not liable to make any illegal recovery, referencing the case of Laghu Udyog Bharti v. Union of India. The Revisionary Authority concluded that there was unjust enrichment, but the order lacked proper reasoning and evidence to support this finding.

Issue 4: Upon hearing both sides and examining the record, it was observed that the Revisionary Authority did not consider the specific provision of law regarding the levy on the Service Receiver. The order also failed to demonstrate any inquiry conducted as required by Section 84 of the Finance Act, 1994. The Revisionary Authority's decision was deemed excessive, lacking proper reasoning and evidence to support the conclusion of unjust enrichment.

In conclusion, the Tribunal found that the Revisionary order lacked proper reasoning and evidence, and set it aside to ensure justice was served. The appeal was allowed, indicating that the appellant was entitled to the refund of the levy earlier realized from them.