2011 (7) TMI 886 - AT - Service Tax

Demand - Business Auxiliary Service - Circular No. 66/15/2003-ST dated 5.11.2003 - It is the argument of the Respondent that it had borne the incidence from the total amount paid by Asset Management companies and, therefore, there was no question of passing on the incidence of Service Tax - the assessee applied for refund and the issue of unjust enrichment was to be decided - Held that this matter is no longer res integra and the Respondent is eligible for the refund claim and, therefore, we order that the refund amount should be paid to the Respondent forthwith - Appeal is rejected

Summary

Issues:
1. Whether commission received by the Respondent for distribution of Mutual Fund units is liable to service tax under Business Auxiliary Service.
2. Whether the Respondent passed on the service tax incidence to the Asset Management Companies.
3. Whether the Respondent is eligible for a refund claim of the service tax paid.

Detailed Analysis:
1. The Respondent acted as an agent for the distribution of Mutual Fund units and received commission from Asset Management Companies. A circular by the Ministry of Finance clarified that such commission is subject to service tax under Business Auxiliary Service. However, the Respondent challenged this circular in the Delhi High Court, which struck it down. Subsequently, the Respondent filed a refund claim for the service tax paid. The Deputy Commissioner rejected the refund claim, alleging that the Respondent had passed on the service tax to the Asset Management Companies.

2. The Respondent presented letters from various Asset Management Companies certifying that the commission paid to the Respondent included all statutory levies, including service tax. The argument was that the Respondent bore the incidence of the service tax and did not pass it on. The Commissioner (Appeals) agreed with this contention and ordered a refund. The Revenue appealed this decision, claiming that since the commission amount paid by the Asset Management Companies included all taxes, including service tax, refunding the tax could lead to unjust enrichment for the Respondent.

3. The Respondent's advocate cited a similar case before the Tribunal where the issue of unjust enrichment was considered. In that case, it was held that there was no unjust enrichment as the total price was fixed, and the disputed duty was paid from the total consideration offered by the buyer. Referring to this precedent and other relevant cases, the Tribunal concluded that the Respondent was entitled to the refund claim. The Tribunal rejected the Revenue's appeal, affirming that the Respondent should receive the refund amount promptly.