2012 (11) TMI 115 - AT - Service Tax

Refund claim - unjust enrichment - appellant s contention was that they had deposited the service tax under protest Held that - Appellants have debited the impugned amount to the Profit and Loss Account and thus the cost of the finished goods has increased to this extent. The sound accounting principles require that against the current year s receipts, the true cost, which has been incurred for earning such receipts, has to be charged - against the current year s receipts the true cost which has been incurred for earning such receipts has to be charged - original adjudicating authority has rightly ordered to credit the amount of refund to the consumer welfare fund

Summary

Issues:
Application of principles of unjust enrichment in a service tax refund claim.

Analysis:
The appeal involved a dispute regarding the application of unjust enrichment principles in a service tax refund claim. The appellant contended that they had paid the service tax under protest and had not collected it from their clients, making them eligible for the refund. They argued that since they had not charged service tax and education cess in the invoices issued to customers, the refund should be granted. The appellant relied on a previous order of the Bench in a similar case to support their claim.

The respondent, however, argued that the refund should be credited to the Consumer Welfare Fund due to unjust enrichment. Citing precedents, the respondent contended that the appellant failed to prove that the incidence of service tax had not been passed on to any other person, as required by the provisions of the Finance Act, 1994. The respondent emphasized that the refund was admissible but not payable to the claimant.

Upon considering the arguments and judgments cited, the Tribunal noted that the appellant had recorded the service tax expenditure in their books, thereby increasing the value of output services. The Tribunal distinguished the appellant's case from the precedent cited by the appellant, emphasizing that the true cost incurred for earning receipts must be charged against the current year's receipts. Referring to relevant case law, the Tribunal upheld the order to credit the refund amount to the Consumer Welfare Fund, as directed by the original adjudicating authority.

In conclusion, the Tribunal found no error in the Commissioner (Appeals)'s order and upheld the decision to credit the refund to the Consumer Welfare Fund. Consequently, the appeal filed by the appellant was rejected, affirming the Commissioner (Appeals)'s order.