2011 (6) TMI 353 - AT - Service Tax

Refund claim - Doctrine of unjust enrichment - Business Auxiliary Service - Services rendered by assessee amounts to export of services in terms of Rule 3(2) - Held that - As in the case of Sparkler Ceramics Pvt. Ltd. Vs. Commissioner of C. Ex. 2011 (1) TMI 320 - CESTAT MUMBAI & the refund under Notification No. 41/2007-ST dated 6.10.2007 wherein it was held that question of unjust enrichment will not be applicable to the case which involved export of goods - Decided in favour of assessee.

Summary

Issues:
1. Appeal against rejection of refund claim based on unjust enrichment doctrine.
2. Interpretation of Notification No. 41/2007-ST dated 06.10.2007 regarding refund of service tax for exported goods.

Issue 1 - Appeal against rejection of refund claim based on unjust enrichment doctrine:
The case involved a respondent engaged in providing Business Auxiliary Service who claimed a refund of service tax paid, arguing that the services rendered amounted to export of services. The refund claim was rejected based on the doctrine of unjust enrichment. The respondent challenged this rejection, and the Commissioner (Appeals) allowed the refund claim, stating that unjust enrichment was not a ground taken in the show-cause notice. The respondent cited the proviso to Section 11B(2) of the Central Excise Act, 1944, which excludes rebate of duty from the doctrine of unjust enrichment. They also referenced tribunal decisions supporting that unjust enrichment does not apply to exported goods. The Revenue contended that the exemption claimed by the exporter should be in the form of a refund under Section 11B of the Central Excise Act, 1944, and that unjust enrichment applies to service tax matters under Section 83 of the Finance Act, 1994. The Revenue argued that the respondent had charged service tax to their client, thus unjust enrichment applied.

Issue 2 - Interpretation of Notification No. 41/2007-ST dated 06.10.2007 regarding refund of service tax for exported goods:
The Revenue contended that the Ld. Commissioner (Appeals) misinterpreted the scope of the notification, which provides that the exemption claimed by the exporter should be in the form of a refund of service tax paid on specified services used for export of goods. The Revenue argued that since the assessee did not avail the exemption but applied for a refund, Section 11B of the Central Excise Act, 1944, including the clause of unjust enrichment, should apply. The judgment highlighted that the Ld. Commissioner (Appeals) set aside the lower adjudicating authority's order based on the absence of unjust enrichment grounds in the show-cause notice. The Tribunal's decisions in similar cases were referenced to support the position that unjust enrichment does not apply to exported goods. Ultimately, the Ld. Commissioner (Appeals) decision was upheld, and the Revenue's appeal was dismissed.

This detailed analysis of the judgment provides insights into the issues raised, the arguments presented by both parties, and the legal interpretations applied by the Tribunal in reaching its decision.