2011 (1) TMI 670 - AT - Service Tax

Refund claim - Unjust enrichment - Business auxiliary services - job worker - Section 2(f) of Central Excise Act 1944 - The total consideration contracted between the respondent and their buyer was inclusive of all the taxes - As such the excess service tax paid by the respondent was only being shown as separate in the invoice and was not actually collected from their customers - By raising the subsequent credit notes it is only the entries in the books of accounts which were sought to be rectified - Further the Chartered Accountant certificate and the certificate of the buyer also show that the amount of service tax was not received by the respondent from their customers - Accordingly the appeal filed by the Revenue is rejected.

Summary

Issues:
Refund claim on unjust enrichment under business auxiliary services.

Analysis:
The case involves a dispute over a refund claim of service tax amounting to Rs.16,63,451/- filed by the respondent, who claimed to be a job worker not liable under business auxiliary services due to their manufacturing activity. The original adjudicating authority rejected the refund claim citing unjust enrichment, transferring the amount to the consumer welfare fund. The Commissioner (Appeals) set aside this order, leading to the Revenue's appeal before the Appellate Tribunal.

The Commissioner (Appeals) considered the contract clauses between the respondent and the buyer, noting that the price was inclusive of all taxes. He observed that the respondent issued credit notes to rectify the wrongly collected service tax amount, which was not actually received from customers. Supporting documents, including a Chartered Accountant certificate, confirmed this position. The appellate authority concluded that the refund was not barred by unjust enrichment, as the duty burden was not passed on to customers.

The Revenue contended that passing duty burden during goods clearance rendered subsequent credit notes ineffective, placing the onus on the assessee to prove non-collection from customers. However, the Tribunal emphasized that the total consideration in the contract covered all taxes, and the excess service tax shown separately in the invoice was not collected from customers. The rectification through credit notes was merely an accounting adjustment, supported by certificates confirming non-receipt of service tax from customers. Consequently, the Tribunal upheld the Commissioner (Appeals) decision, rejecting the Revenue's appeal.