2010 (8) TMI 247 - AT - Service Tax

Refund unjust enrichment assessee paid service tax at a higher rate than the rate applicable - onus is on the appellants to show that the burden of tax has not been passed on to their customers - appellants filed some balance sheets along with the appeal which also do not show that the burden of amount claimed as refund is borne by the appellants - no infirmity in the impugned order and the appeal is dismissed.

Summary

Issues:
1. Rejection of refund claim on the ground of burden of duty not proved.
2. Discrepancy in service tax payment rate.
3. Application of Section 12(b) of the Central Excise Act.
4. Unjust enrichment as the basis for rejecting the refund claim.

Analysis:
1. The appellant appealed against the rejection of their refund claim due to the failure to prove that the burden of duty had not been passed on. The appellant argued that they are a provider of taxable service and had mistakenly paid service tax at a higher rate than applicable during the disputed period. They contended that since the amount, including tax, was received from the customer, they should only be liable to pay service tax at the correct rate, justifying their refund claim.

2. The Revenue, on the other hand, relied on Section 12(b) of the Central Excise Act, which applies to service tax as well. This section presumes that the burden of tax has been passed on to the customer unless proven otherwise. They argued that since the appellants issued a consolidated invoice including service tax and failed to demonstrate that they collected tax at the correct rate from customers, the burden of duty was indeed passed on.

3. The presiding judge noted that the lower authorities rejected the refund claim based on the principle of unjust enrichment. The appellants had received the service tax amount from customers and issued invoices reflecting the tax payment. Despite the appellant's argument of paying at a higher rate by mistake, the judge emphasized that Section 12(b) presumes the tax burden to have been transferred to the customer unless proven otherwise. The burden of proof rested on the appellants to show that the tax burden was not passed on, which they failed to establish through submitted balance sheets.

4. Consequently, the judge found no fault in the lower authorities' decision to reject the refund claim, as the appellants could not demonstrate that the burden of tax had not been shifted to their customers. The appeal was dismissed based on the application of Section 12(b) and the principle of unjust enrichment, highlighting the importance of proving non-passing of tax burden in such cases.

(Dictated and pronounced in the open Court)