2014 (1) TMI 413 - AT - Service Tax

Disallowance of refund claim - Bar of limitation - Unjust enrichment - Tax paid due to mistake of law - Duty paid under protest - Held that - When duty was paid under protest or when an assessee is contesting the leviability of a tax by filing appeals the entire payment of tax, during the period of contest, is treated as deemed protest and time bar is not applicable in such cases. Further, it is also a case of payment of service tax under mistake of law and as per the case laws relied upon by the appellant in Para - 2 above the present refund claim will not be time barred - aspect of unjust enrichment has not been examined by the original adjudicating authority and the first appellate authority in para 13 of his OIA dt 29/8/2009 has also observed that appellant has not submitted any proof in this regard. In the interest of justice, this matter is required to be remanded back to the original adjudicating authority to decide the issue in the light of principles of unjust enrichment laid down by the supreme court. Appellant will produce all the documentary evidences available with them in support of their claim that the duty refund sought for has not been recovered from any other person - Decided in favour of assessee.

Summary

Issues:
Refund disallowed on grounds of time bar and unjust enrichment applicability.

Analysis:
1. The appellant contested the disallowance of the refund based on the grounds of time bar and unjust enrichment applicability. The appellant argued that since the service tax was paid due to a mistake of law, no time limit should apply. They cited various case laws to support their argument, emphasizing that the refund claim should not be time-barred.

2. The appellant presented a certificate from a cost accountant stating that unjust enrichment did not apply in this case. On the other hand, the Revenue defended the decision of the first appellate authority disallowing the refund.

3. The Tribunal examined the case records and noted that the duty was paid under protest, which exempts the application of unjust enrichment. Referring to previous judgments, the Tribunal concluded that when an assessee contests the tax liability, the entire payment during the contest period is considered under protest, making the time bar inapplicable.

4. The Tribunal further highlighted that the case involved a payment of service tax under a mistake of law, aligning with the case laws cited by the appellant. The Tribunal referenced specific observations from previous cases to support the decision to allow the refund claim despite the time bar issue.

5. Regarding the issue of unjust enrichment, the Tribunal referred to a Supreme Court case emphasizing the distinction between the rights of a manufacturer and a buyer to claim a refund. The Tribunal noted that the aspect of unjust enrichment had not been adequately examined by the adjudicating authority and the first appellate authority. Therefore, the matter was remanded back to the original adjudicating authority for a detailed examination of unjust enrichment principles in light of the Supreme Court's directives.

6. The Tribunal allowed the appeal by remanding the case to the adjudicating authority for further consideration, emphasizing the need to thoroughly assess the unjust enrichment aspect in line with the principles established by the Supreme Court. The appellant was instructed to provide all necessary documentary evidence to support their claim that the duty refund sought had not been recovered from any other party.