2011 (10) TMI 222 - AT - Service Tax

Service Tax Refund - Credited to Consumer Welfare Fund - Revenue contended amount has been included in the expenses and therefore the same has been passed on - appellants submitted that in this case, the appellant was receiver of service and not the provider. Therefore, the question of passing on the liability does not arise. - the amount was shown as capital work in progress (supported by CA certificate) - Held that - one more opportunity may be given to them to show that the capital work in progress included the Service Tax amount paid by them. Case remanded back.

Summary

Issues:
1. Admissibility of refund of Service Tax paid by the appellants.
2. Passing on the burden of Service Tax paid by the appellants.
3. Unjust enrichment and crediting of refund to Consumer Welfare Fund.

Admissibility of refund of Service Tax:
The appellants, engaged in manufacturing medicaments, received Technical Testing & Analysis services from a foreign provider and paid Service Tax under reverse charge mechanism. Subsequently, they realized the services were performed entirely in the foreign country, making it an imported service. The appellants filed a refund claim, initially rejected but later allowed by the Commissioner (Appeals) and Tribunal. The Tribunal settled the admissibility of refund in favor of the appellants on merit.

Passing on the burden of Service Tax:
The appellants sought a refund from the original authority, which was granted but credited to the Consumer Welfare Fund due to the inability to prove non-passing on the tax burden. The appellants argued they were service receivers, not providers, so the burden passing issue did not apply. They claimed the tax amount was treated as capital work in progress, supported by a Chartered Accountant's certificate. However, the authorities contended that without specific entries segregating the tax amount under capital work in progress, it was presumed to be passed on. The lower authorities ordered crediting the refund to the Fund based on the unjust enrichment principle.

Unjust enrichment and crediting to Consumer Welfare Fund:
The appellants' representative requested another opportunity to demonstrate that the tax amount was indeed part of capital work in progress, as indicated in the Chartered Accountant's certificate under the 'Assets' category. Considering the submissions, the Tribunal decided to remand the matter to the original adjudicating authority for a fresh decision, allowing the appellants a fair chance to establish the admissibility of the refund.