2013 (1) TMI 684 - AT - Service Tax

Denial of refund claim Relevant date for refund claim - Period of limitation Unjust enrichment Duty paid under protest - Section 11B of the Central Excise Act, 1944 - Hire purchase finance Assessee pay duty under protest - Dispute of liability of service tax have been settled by the Commissioner (Appeals) vide his order dated 27.8.2010 in favour of assessee - Refund claim filled on 22.9.2010 Department argue that appellants were required to file refund claim within one year from the date of tax paid Held that - As per the provision of Section 11B of the Central Excise Act, 1944, refund claim has to be filed within one year from the relevant date. Section 11B provides that if the duty is paid under protest, then the date relevant to be the date when the dispute is settled. Therefore, relevant date is 27.8.2010 and the appellant has filed the refund claim within one year from the relevant date. Therefore, it is held that refund claim is within time In favour of assessee Unjust enrichment Amount of service tax in interest - Amount of finance is added by interest and divided by the period thereafter the installment comes Held that - Service tax element is nowhere mentioned in the instalment, the same has been confirmed by the C.A after verifying the records. Although the appellant paid the service tax to the department by calculating the instalment as cum-service tax, but it does mean that they have collected / included the service tax amount in their instalment. They have also explained that the instalment is only principal plus interest divided by period In favour of assessee

Summary

Issues:
1. Refund claim denied on grounds of time bar and unjust enrichment.

Analysis:
The appellants, engaged in financing services, paid service tax for the period 16.7.2001 to 31.3.2009 based on the Revenue's view. However, following a Supreme Court decision stating that their activities were not liable for service tax, they challenged the levy. The lower Appellate Authority ruled in their favor, directing consideration of their refund claim. The adjudicating authority rejected the claim as time-barred and due to unjust enrichment. The Commissioner (Appeals) upheld this decision, leading to the present appeal.

The appellants argued that their refund claim, filed within one year of the issue's settlement, was wrongly rejected. They emphasized precedents supporting their position. Additionally, they contended that they never collected service tax from clients, as the amounts paid were considered as cum-tax, supported by a Chartered Accountant's certificate.

The Revenue opposed the refund, citing Section 11B of the Central Excise Act, requiring claims within one year of tax payment. They argued that the appellants' acceptance of liability precluded a refund beyond the prescribed period. On unjust enrichment, they claimed the appellants paid service tax as cum-tax, thus benefiting from it. They relied on relevant case law to support their stance.

After considering both sides, the Tribunal found the refund claim for Rs.5,64,818/- timely, as it was filed within one year of the liability settlement. Regarding unjust enrichment, the Tribunal accepted the appellants' explanation that service tax was not included in the installment amounts. Consequently, the Tribunal held that the bar of unjust enrichment did not apply in this case. Consequently, the Tribunal allowed the appeal, granting the refund claim for the entire service tax amount paid by the appellants.