2010 (11) TMI 78 - AT - Service Tax

Refund - unjust enrichment - refund claim time-barred - appellants have not produced the necessary document to prove that the excess tax paid has not been passed on to their customers assessee produced a certificate from the Chartered Accountant certifying that the excess tax has been borne by the appellants and that the same has not been passed on to any one else assessee prays for a second chance to be given to the appellants to prove before the original authority that they have not passed on the extra tax burden to anyone else Held that - appellants need to be given a second chance order set aside and the matter is remanded to the original authority for passing a fresh order - appeal is thus partly allowed by way of remand.

Summary

Issues: Denial of refund for time-barred period (April 2008 to June 2008), rejection of refund claim for remaining period (July 2008 to March 2009) on grounds of unjust enrichment.

The judgment by the Appellate Tribunal CESTAT, CHENNAI, dealt with the denial of a refund claim for excess service tax paid by the appellants. The refund claim for the months of April 2008 to June 2008 was deemed time-barred as it was filed on 9-7-2009, thus requiring no interference. However, for the period from July 2008 to March 2009, the refund claim was rejected on the basis of unjust enrichment. The authorities held that the appellants failed to provide sufficient evidence that the excess tax paid was not passed on to their customers. The appellants, represented by counsel Ms. Uma Maheshwari, argued that they had obtained a certificate from a Chartered Accountant confirming that the excess tax burden was borne by them and not transferred to others. They also committed to presenting the relevant balance sheet to demonstrate that the excess tax amount was shown as 'receivable' from the Department. Consequently, they requested a second opportunity to prove before the original authority that they did not pass on the extra tax burden to any other party.

After considering the arguments from both sides, the Member (T) Dr. Chittaranjan Satapathy opined that the appellants should be granted a second chance to submit the necessary documents, including the balance sheet and the Chartered Accountant's certificate, to establish before the original authority that they indeed bore the tax burden and did not transfer it to others. As a result, the impugned order concerning the period from July 2008 to March 2009 was set aside, and the matter was remanded to the original authority for a fresh decision. The appellants were instructed to be given a fair hearing during this process. The appeal was partially allowed through remand, providing the appellants with an opportunity to substantiate their claim of unjust enrichment and secure the refund rightfully due to them.

This judgment underscores the importance of providing concrete evidence to support refund claims and highlights the significance of demonstrating that the excess tax burden was not passed on to customers to avoid the doctrine of unjust enrichment. The decision also emphasizes the right to a fair hearing and the opportunity for parties to present relevant documentation to substantiate their claims before the appropriate authority.